Can You Pass This Test On Business Accounting?

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  • 1/10 Questions

    Which word do liabilities often have in their account title?

    • Profitable
    • Payable 
    • Risked
    • Losing
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About This Quiz

Business accounting us a field under accounting. If you own a business or work for a business as an accountant, then this quiz is definitely for you. It has the most pertinent questions we bet you won't be able to answer. Try it!

Can You Pass This Test On Business Accounting? - Quiz

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  • 2. 
    What are obligations (amounts owed) reported on the balance sheet referred to as? - ProProfs

    What are obligations (amounts owed) reported on the balance sheet referred to as?

    • Profits

    • Losses

    • Risks

    • Liabilities 

    Correct Answer
    A. Liabilities 
    Explanation
    Obligations (amounts owed) reported on the balance sheet are referred to as liabilities. Liabilities represent the company's debts or obligations to pay money or provide goods or services in the future. They can include loans, accounts payable, accrued expenses, and other obligations. Liabilities are an important component of the balance sheet as they reflect the company's financial obligations and can impact its overall financial health and stability.

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  • 3. 
    What is the initial investment by an owner of a sole trader (sole proprietorship) or partnership business called? - ProProfs

    What is the initial investment by an owner of a sole trader (sole proprietorship) or partnership business called?

    • Capital 

    • Asset

    • Drawing

    • Liability

    Correct Answer
    A. Capital 
    Explanation
    The initial investment made by the owner of a sole trader or partnership business is called "Capital." This refers to the owner's contribution of funds or assets into the business to start its operations. It represents the owner's equity in the business and is recorded on the balance sheet as a liability.

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  • 4. 
    Which of these is the most important feature of accounting? - ProProfs

    Which of these is the most important feature of accounting?

    • Drinking lots of coffee

    • Noting down the debits and credits

    • Interpreting the accounts and financial activity

    • Recording transactions and financial activity 

    Correct Answer
    A. Recording transactions and financial activity 
    Explanation
    The most important feature of accounting is recording transactions and financial activity. This is because it is the foundation of all accounting processes and provides the necessary data for analysis, interpretation, and decision-making. Without accurately recording transactions, it would be impossible to track and analyze financial information, create financial statements, or ensure compliance with accounting principles and regulations.

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  • 5. 
    Accounting entries involve a minimum of how many accounts? - ProProfs

    Accounting entries involve a minimum of how many accounts?

    • Three

    • Two 

    • One

    • Four

    Correct Answer
    A. Two 
    Explanation
    Accounting entries involve a minimum of two accounts because every transaction affects at least two accounts. One account is debited, representing the increase in that account, while another account is credited, representing the decrease in that account. This double-entry system ensures that the accounting equation (Assets = Liabilities + Equity) remains balanced. Therefore, a minimum of two accounts is required to record any transaction accurately.

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  • 6. 
    Which of the following items would be accounted for as an expense? - ProProfs

    Which of the following items would be accounted for as an expense?

    • Repayment of a bank loan

    • Dividends to stockholders

    • The purchase of land

    • Payment of the current period's rent 

    Correct Answer
    A. Payment of the current period's rent 
    Explanation
    Payment of the current period's rent would be accounted for as an expense because it is a cost incurred in order to use the rented property for a specific period of time. Expenses are typically incurred to generate revenue or to support the operations of a business, and rent is a common operating expense for many businesses. Repayment of a bank loan, dividends to stockholders, and the purchase of land are not considered expenses as they do not directly relate to the day-to-day operations of a business.

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  • 7. 
    Which of the following would not be included on a balance sheet? - ProProfs

    Which of the following would not be included on a balance sheet?

    • Accounts receivable

    • Accounts payable

    • Sales 

    • Cash

    Correct Answer
    A. Sales 
    Explanation
    Sales would not be included on a balance sheet because a balance sheet is a financial statement that provides a snapshot of a company's financial position at a specific point in time. It includes assets, liabilities, and equity. Sales, on the other hand, represents revenue generated by the company over a period of time and is reported on the income statement, not the balance sheet.

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  • 8. 
    When a company pays a bill, the account Cash will be - ProProfs

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

    • Debited

    • Credited 

    • Depends on what kind of payment

    • Nothing changes

    Correct Answer
    A. Credited 
    Explanation
    When a company pays a bill, the account Cash will be credited. This is because when a company pays a bill, it is using its cash reserves to make the payment. By crediting the Cash account, it reflects a decrease in the company's cash balance. This transaction follows the basic accounting principle of double-entry, where every transaction affects at least two accounts, with one account being debited and the other being credited. In this case, the Cash account is credited to show the decrease in cash.

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  • 9. 
    Assets are usually reported on the balance sheet at which amount? - ProProfs

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

    • Cost 

    • Current Market Value

    • Expected Selling Price

    • Selling price

    Correct Answer
    A. Cost 
    Explanation
    Assets are usually reported on the balance sheet at their cost. This means that the amount recorded for an asset on the balance sheet is the original purchase price of the asset, including any additional costs incurred to bring the asset into use. The cost is considered a reliable and objective measure of the asset's value and is used for reporting purposes. Current market value, expected selling price, and selling price may all fluctuate and are not typically used to report assets on the balance sheet.

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  • 10. 
    Gerald had beginning total stockholders’ equity of $160,000. During the year, total assets increased by $240,000, and total liabilities increased by $120,000. Gerald’s net income was $180,000. No additional investments were made; however, dividends did occur during the year. How much were the dividends? - ProProfs

    Gerald had beginning total stockholders’ equity of $160,000. During the year, total assets increased by $240,000, and total liabilities increased by $120,000. Gerald’s net income was $180,000. No additional investments were made; however, dividends did occur during the year. How much were the dividends?

    • $20,000

    • $60,000 

    • $220,000

    • $140,000

    Correct Answer
    A. $60,000 
    Explanation
    During the year, Gerald's total assets increased by $240,000, and total liabilities increased by $120,000. This means that the net increase in total stockholders' equity is $240,000 - $120,000 = $120,000.

    Gerald's net income was $180,000, which means that his retained earnings increased by $180,000.

    To find the amount of dividends, we need to subtract the increase in retained earnings from the net increase in total stockholders' equity: $120,000 - $180,000 = -$60,000.

    Since dividends represent a distribution of earnings to stockholders, a negative value indicates that dividends were paid out. Therefore, the amount of dividends paid out by Gerald is $60,000.

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Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Mar 22, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Jul 06, 2019
    Quiz Created by
    AdewumiKoju
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