Accounting Basics (Quiz)

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If you have difficulty answering the following questions, learn more about this topic by reading our Accounting Basics (Explanation).

  1. 1.

    The financial statement that reports the revenues and expenses for a period of time such as a year or a month is the

    Balance Sheet
    Wrong.
    The balance sheet reports assets, liabilities, and stockholders' equity.
    Income Statement
    Right!
    Statement Of Cash Flows
    Wrong.
    This financial statement explains how a company's cash balance changed during the accounting period.
  2. 2.

    The financial statement that reports the assets, liabilities, and stockholders' (owner's) equity at a specific date is the

    Balance Sheet
    Right!
    Income Statement
    Wrong.
    The income statement reports revenues and expenses and the resulting net income.
    Statement Of Cash Flows
    Wrong.
    This financial statement explains how a company's cash balance changed during the accounting period.
  3. 3.

    Under the accrual basis of accounting, revenues are reported in the accounting period when the

    Cash Is Received
    Wrong.
    Service Or Goods Have Been Delivered
    Right!
  4. 4.

    Under the accrual basis of accounting, expenses are reported in the accounting period when the

    Cash Is Paid
    Wrong.
    Expense Matches The Revenues Or Is Used Up
    Right!
  5. 5. Revenues minus expenses equals
    __________
    net income
    .
  6. 6. Resources owned by a company (such as cash, accounts receivable, vehicles) are reported on the balance sheet and are referred to as
    __________
    assets
    .
  7. 7.

    Assets are usually reported on the balance sheet at which amount?

    Cost
    Right!
    This is true because of the cost principle.
    Current Market Value
    Wrong.
    Because of the cost principle, assets are generally not reported at their current market value.
    Expected Selling Price
    Wrong.
    This would violate the cost principle.
  8. 8. Obligations (amounts owed) are reported on the balance sheet and are referred to as
    __________
    liabilities
    .
  9. 9. Liabilities often have the word
    __________
    payable
    in their account title.
  10. 10.

    Unearned Revenues is what type of account?

    Asset
    Wrong.
    Liability
    Right!
    The company that is to perform the service or is to deliver the product has received the cash in advance and therefore has an obligation (liability) to deliver the service or the product.
    Stockholders' (Owner's) Equity
    Wrong.
  11. 11.

    Accounting entries involve a minimum of how many accounts?

    One
    Wrong.
    Two
    Right!
    Because of double-entry, every transaction will affect at least two accounts.
    Three
    Wrong.
  12. 12. The listing of all of the accounts available for use in a company's accounting system is known as the
    __________
    chart of accounts
    .
  13. 13. Assets minus liabilities equals
    __________
    stockholders' equity or owner's equity
    (net assets if a nonprofit)
    .
  14. 14.

    Which term is associated with "left" or "left-side"?

    Debit
    Right!
    Credit
    Wrong.
  15. 15.

    Which term is associated with "right" or "right-side"?

    Debit
    Wrong.
    Credit
    Right!
  16. 16.

    When cash is received, the account Cash will be

    Debited
    Right!
    Credited
    Wrong.
  17. 17.

    When a company pays a bill, the account Cash will be

    Debited
    Wrong.
    Credited
    Right!
  18. 18.

    What will usually cause an asset account to increase?

    Debit
    Right!
    Credit
    Wrong.
  19. 19.

    What will usually cause the liability account Accounts Payable to increase?

    Debit
    Wrong.
    Credit
    Right!
  20. 20.

    Entries to expenses such as Rent Expense are usually

    Debits
    Right!
    Credits
    Wrong.
  21. 21.

    Entries to revenues accounts such as Service Revenues are usually

    Debits
    Wrong.
    Credits
    Right!

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