Accounting Exam: Basic Principles! Quiz

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| By Cyd2012

Cyd2012

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Quizzes Created: 1 | Total Attempts: 2,578

Questions: 7 | Attempts: 2,584 | Updated: Mar 21, 2023

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Accounting Exam: Basic Principles! Quiz - Quiz

There are some basic principles that every accountant needs to be aware of when it comes to accounting practices. Have you just begun your accounting course and have the final exam in less than a week? If so, then this Accounting 1 final exam practice test is what you need to ace it. Why don’t you give it a shot!

Questions and Answers

1.

Planning, recording, analyzing, and interpreting financial information is called...
- A.
  
  Withdrawals
- B.
  
  Accounting
- C.
  
  Asset
- D.
  
  Chart of Accounts
Correct Answer
B. Accounting

Explanation
Accounting refers to the process of planning, recording, analyzing, and interpreting financial information. It involves the systematic recording and reporting of financial transactions, as well as the preparation of financial statements such as balance sheets, income statements, and cash flow statements. Through accounting, businesses are able to track their financial performance, make informed decisions, and comply with legal and regulatory requirements.

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2.

__________ = Liabilities + _____________
- A.
  
  Owner's Equity; Assets
- B.
  
  Accounting; Revenue
- C.
  
  Withdrawals; Credit
- D.
  
  Assets; Owner's Equity
Correct Answer
D. Assets; Owner's Equity

Explanation
The equation "Assets = Liabilities + Owner's Equity" is a fundamental principle in accounting known as the accounting equation. It states that the total assets of a company must be equal to the sum of its liabilities and owner's equity. This equation helps in understanding the financial position of a business and how its resources are financed.

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3.

An amount OWED by a business:
- A.
  
  Liability
- B.
  
  Asset
- C.
  
  Revenue
- D.
  
  Expense
Correct Answer
A. Liability

Explanation
An amount owed by a business refers to a liability. A liability represents an obligation or debt that a business owes to another party. It can include things like loans, accounts payable, and accrued expenses. Liabilities are recorded on the balance sheet and are considered a crucial aspect of a company's financial obligations.

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4.

What is accounting?
- A.
  
  A business that performs an activity for a fee.
- B.
  
  Planned process for providing financial information.
- C.
  
  Planning, recording, analyzing, and interpreting financial information.
- D.
  
  None of the above
Correct Answer
C. Planning, recording, analyzing, and interpreting financial information.

Explanation
The correct answer is "Planning, recording, analyzing, and interpreting financial information." Accounting involves the systematic process of planning, recording, analyzing, and interpreting financial information to provide accurate and reliable financial reports and statements. This process helps businesses and individuals make informed financial decisions, track their financial performance, and comply with legal and regulatory requirements.

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5.

Which journal columns are used to record receiving cash from sales?
- A.
  
  Cash Debit and Sales Credit
- B.
  
  Cash Credit and Sales Debit
- C.
  
  Cash Credit and Sales Owner's Equity
- D.
  
  Cash Owner's Equity and Sales Credit
Correct Answer
A. Cash Debit and Sales Credit

Explanation
The correct answer is Cash Debit and Sales Credit. When cash is received from sales, it is recorded as a debit in the Cash column of the journal to increase the cash balance. On the other hand, the sales amount is recorded as a credit in the Sales column to show an increase in sales revenue. This follows the basic accounting principle of recording increases in assets (cash) as debits and increases in revenue (sales) as credits.

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6.

Determining that the amount of cash agrees with the accounting records...
- A.
  
  Check
- B.
  
  Revenue
- C.
  
  Invoice
- D.
  
  Proving Cash
Correct Answer
D. Proving Cash

Explanation
Proving cash refers to the process of verifying that the amount of cash on hand matches the amount recorded in the accounting records. This involves reconciling the physical cash with the cash balance shown in the books. By comparing the two, any discrepancies can be identified and investigated. This is an important control procedure to ensure the accuracy and integrity of the financial records.

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7.

A business that performs an activity for a fee...
- A.
  
  Wholesale Merchandising Business
- B.
  
  Service Business
Correct Answer
B. Service Business

Explanation
A business that performs an activity for a fee is classified as a service business. This type of business provides intangible services to customers in exchange for payment. Unlike a wholesale merchandising business, which deals with selling physical products in large quantities, a service business focuses on offering expertise, skills, or labor to fulfill the needs of clients. Examples of service businesses include consulting firms, hair salons, law firms, and healthcare providers.

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Current Version
Mar 21, 2023

Quiz Edited by
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Nov 15, 2011

Quiz Created by
Cyd2012

Accounting Exam: Basic Principles! Quiz

Planning, recording, analyzing, and interpreting financial information is called...

__________ = Liabilities + _____________

An amount OWED by a business:

What is accounting?

Which journal columns are used to record receiving cash from sales?

Determining that the amount of cash agrees with the accounting records...

A business that performs an activity for a fee...

= Liabilities + ___