Questions On Accounting: Quiz! Test

Reviewed by Editorial Team
The ProProfs editorial team is comprised of experienced subject matter experts. They've collectively created over 10,000 quizzes and lessons, serving over 100 million users. Our team includes in-house content moderators and subject matter experts, as well as a global network of rigorously trained contributors. All adhere to our comprehensive editorial guidelines, ensuring the delivery of high-quality content.
Learn about Our Editorial Process
| By Tcarteronw
T
Tcarteronw
Community Contributor
Quizzes Created: 38 | Total Attempts: 31,927
| Attempts: 604
Quiz Flashcard
SettingsSettings
Please wait...
Please wait...
About This Quiz

Dive into the fundamentals of accounting with this interactive quiz. Assess your understanding of sole proprietorships, liabilities, the accounting equation, types of businesses, and more. Perfect for learners aiming to enhance their financial literacy and accounting skills.

Questions On Accounting: Quiz! Test - Quiz

Quiz Preview

  • 2. 

    All profits go to the owner is an advantage of a sole proprietorship.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    A sole proprietorship is a type of business structure where there is only one owner who has complete control over the business and its profits. Since the owner is the sole proprietor, all profits generated by the business go directly to them. This is an advantage because the owner gets to keep all the profits for themselves, without having to share it with any partners or shareholders. This can be financially beneficial for the owner as they have full control over how the profits are used or reinvested in the business.

    Rate this question:

  • 3. 

    The 3 forms of businesses (ownership structures) are:

    • Revenue, profit, income

    • Service, Manufacturing, Corporation

    • Sole proprietorship, Partnership, Corporation

    • Partnership, Withdrawal, Owner's equity

    Correct Answer
    A. Sole proprietorship, Partnership, Corporation
    Explanation
    The correct answer is Sole proprietorship, Partnership, Corporation. These three forms of businesses represent different ownership structures. A sole proprietorship is a business owned and operated by a single individual. A partnership is a business owned and operated by two or more individuals who share the profits and liabilities. A corporation is a legal entity separate from its owners, with shareholders who own the company and a board of directors who manage its operations. These three forms represent the most common types of businesses and each has its own advantages and disadvantages in terms of liability, taxation, and decision-making.

    Rate this question:

  • 4. 

    A service business __________

    • Has only one owner

    • Never earns a profit

    • Buys raw materials, uses labor and machinery to transforms them into finished products

    • Provides a needed service for a fee

    Correct Answer
    A. Provides a needed service for a fee
    Explanation
    A service business provides a needed service for a fee. This means that the business offers a specific service that is in demand by customers, and in return, they charge a fee for providing that service. Unlike businesses that produce and sell physical products, a service business focuses on delivering intangible services such as consulting, healthcare, or transportation. The revenue of a service business primarily comes from the fees charged for the services rendered, rather than from the sale of products.

    Rate this question:

  • 5. 

    A merchandising business _______________.

    • Bakes bread and packages it for the grocery store

    • Buys finished products and resells them to individuals or other businesses

    • Does not need accountants

    • Buys raw materials, uses labor and machinery to transforms them into finished products

    Correct Answer
    A. Buys finished products and resells them to individuals or other businesses
    Explanation
    A merchandising business buys finished products from manufacturers or wholesalers and then sells them to individuals or other businesses. This type of business does not involve baking bread or packaging it for grocery stores, nor does it involve the need for accountants. Instead, it focuses on the buying and reselling of already completed products.

    Rate this question:

  • 6. 

    Owner's Equity is the owner's claims to the business' cash only.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    This statement is false. Owner's Equity represents the owner's claims to all the assets of the business, not just cash. It includes the owner's investment in the business, retained earnings, and any profits or losses. Owner's Equity is calculated by subtracting liabilities from the total assets of the business.

    Rate this question:

  • 7. 

    The amount of money earned after the costs of operating a business are paid is_____________.

    • Revenue

    • Income

    • Profit

    • Capital

    Correct Answer
    A. Profit
    Explanation
    Profit refers to the amount of money earned after deducting the costs of operating a business. It represents the financial gain or benefit that a company or individual receives from their business activities. Revenue, on the other hand, refers to the total amount of money generated from sales or services before deducting any expenses. Income is a broader term that can encompass various sources of earnings, including wages, salaries, and investments. Capital refers to the financial resources or assets owned by a business or individual.

    Rate this question:

  • 8. 

    Which of the following would NOT be considered a service business?

    • General Motors

    • North American Van Lines

    • Delta Airlines

    • Alamo Rent A Car

    Correct Answer
    A. General Motors
    Explanation
    General Motors would not be considered a service business because it primarily manufactures and sells automobiles, which are tangible products, rather than providing intangible services. While they may offer some services such as maintenance and repairs, their main focus is on the production and sale of vehicles. On the other hand, North American Van Lines, Delta Airlines, and Alamo Rent A Car are all service businesses as they provide transportation services to customers.

    Rate this question:

  • 9. 

    The accounting equation is ____________________

    • Revenue - expenses = Net income

    • Assets + Liabilities = Owner's Equity

    • Assets - Liabilities = Owner's Equity

    • Liabilities + Owner's Equity = Assets

    Correct Answer
    A. Liabilities + Owner's Equity = Assets
    Explanation
    The accounting equation states that the sum of a company's liabilities and owner's equity is equal to its total assets. This equation is the foundation of double-entry bookkeeping, which ensures that every financial transaction is recorded accurately and maintains the balance between the company's resources (assets) and its obligations (liabilities and owner's equity). By understanding this equation, businesses can assess their financial health and make informed decisions about their operations and investments.

    Rate this question:

  • 10. 

    The following are Types of businesses.

    • Service, Merchandising, Manufacturing

    • Service, Sole Proprietorship, Manufacturing

    • Sole Proprietorship, Partnership, Corporation

    • Assets, Expenses, Income

    Correct Answer
    A. Service, Merchandising, Manufacturing
    Explanation
    The correct answer is Service, Merchandising, Manufacturing. These three options represent different types of businesses. Service businesses are those that provide intangible services to customers, such as consulting or accounting. Merchandising businesses involve buying and selling tangible goods, such as retail stores. Manufacturing businesses involve producing goods by using raw materials, such as factories that produce cars or electronics.

    Rate this question:

  • 11. 

    The most common form of business organization is the ________________.

    • Partnership

    • Sole proprietorship

    • Corporation

    • Not-for-profit

    Correct Answer
    A. Sole proprietorship
    Explanation
    A sole proprietorship is the most common form of business organization because it is the simplest and easiest to set up. In this type of business, there is only one owner who has complete control and receives all the profits. Additionally, the owner is personally liable for all the debts and obligations of the business. This form of organization is often chosen by small businesses or individuals starting out on their own due to its simplicity and low cost.

    Rate this question:

  • 12. 

    Which of the following is an example of a liability?

    • Cable bill

    • Mortgage

    • Accounts recievable

    • Car

    Correct Answer
    A. Mortgage
    Explanation
    A mortgage is an example of a liability because it represents a debt that an individual or organization owes to a lender. When someone takes out a mortgage to purchase a property, they are borrowing money and agreeing to make regular payments to repay the loan over a specific period of time. The mortgage is considered a liability because it is an obligation to repay the borrowed funds, and failure to make the required payments can result in consequences such as foreclosure or legal action by the lender.

    Rate this question:

Quiz Review Timeline (Updated): Mar 20, 2023 +

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

  • Current Version
  • Mar 20, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Feb 28, 2014
    Quiz Created by
    Tcarteronw
Back to Top Back to top
Advertisement
×

Wait!
Here's an interesting quiz for you.

We have other quizzes matching your interest.