#1
Which of the following is an example of a financial transaction?
Buying groceries with cash
Reading a book
Taking a walk in the park
Watching a movie
#2
Which of the following is NOT an example of an asset?
Cash
Inventory
Accounts Payable
Land
#3
Which of the following is an example of an expense?
Sale of goods
Purchase of equipment
Payment of dividends
Payment of rent
#4
Which financial statement reports a company's financial position at a specific point in time?
Income statement
Balance sheet
Statement of cash flows
Statement of retained earnings
#5
Which of the following is NOT a component of the statement of cash flows?
Operating activities
Investing activities
Financing activities
Accrual activities
#6
In accounting, what does the term 'debit' represent?
Increase in assets or expenses
Decrease in liabilities or equity
Decrease in assets or expenses
Increase in liabilities or equity
#7
Which financial statement summarizes a company's revenues and expenses over a period of time?
Balance sheet
Income statement
Statement of cash flows
Statement of retained earnings
#8
Which of the following is a characteristic of a liability in accounting?
It represents ownership in the company
It decreases with time
It is an obligation to transfer economic benefits
It is recorded on the income statement
#9
What is the formula to calculate net income?
Revenue - Expenses
Assets - Liabilities
Assets + Liabilities
Revenue / Expenses
#10
What is the accounting equation?
Assets = Liabilities - Equity
Assets = Liabilities + Equity
Assets = Liabilities / Equity
Assets = Liabilities * Equity
#11
What is the primary function of a general ledger?
To record daily financial transactions
To prepare financial statements
To calculate taxes
To approve financial transactions
#12
What is the term used for the process of matching transactions in a company's records with those in a bank statement?
Reconciliation
Amortization
Depreciation
Accrual
#13
What is the purpose of double-entry accounting?
To prevent fraud in financial statements
To ensure every transaction is recorded twice
To simplify the recording process
To eliminate the need for financial statements
#14
Which accounting principle states that revenue should be recognized when it is earned, regardless of when payment is received?
Matching principle
Revenue recognition principle
Consistency principle
Materiality principle
#15
What is the purpose of the accrual basis of accounting?
To record transactions only when cash is received or paid
To record transactions when they occur, regardless of when cash is exchanged
To record transactions at their market value
To record transactions based on historical cost