Financial Fluency: Small Business Accounting Quiz

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1. Which of the following is a liabilities account?

Explanation

This is a liabilities account.

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About This Quiz
Financial Fluency: Small Business Accounting Quiz - Quiz

Dive into the world of numbers and financial acumen with the "Financial Fluency: Small Business Accounting Quiz." This quiz is your ticket to mastering the essential principles and practices that drive the financial success of small businesses. Challenge yourself with questions that unravel the intricacies of bookkeeping, budgeting, and financial... see morereporting, vital for small business owners and aspiring entrepreneurs.

Whether you're navigating the financial landscape of your own venture or seeking to boost your financial literacy, this quiz provides an engaging and informative exploration. From understanding cash flow dynamics to decoding profit and loss statements, "Financial Fluency" is designed to sharpen your skills and enhance your grasp of small business accounting. Immerse yourself in the quiz adventure and elevate your financial fluency, gaining insights that will empower you on your entrepreneurial journey. see less

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2. Company XYZ Inc has variable costs associated with delivering widgets to customers. In December, delivery driving went up 30%. Total variable costs for December increased by:

Explanation

Variable costs are costs that are proportionate with the changes in an activity level.

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3. Which of the following is an expense account?

Explanation

Rent is considered an expense account because it represents the cost incurred by a business for utilizing a property or space. It is a regular expenditure that a company needs to pay in order to operate its business activities. Rent is categorized as an expense on the income statement and is deducted from the revenue to calculate the net income or profit of the business. Unlike common stock, retained earnings, and dividends, which are not expenses, rent directly impacts the profitability of a company and is therefore classified as an expense account.

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4. Which of the following is considered an external user of accounting?

Explanation

Customers are external users of the accounting practices of an organization or business.

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5. In the basic accounting equation, Assets= Liabilities + ________?

Explanation

In the basic accounting equation, Assets= Liabilities + Stockholders’ Equity

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6. Which of the following is NOT one of the 3 main business activities?

Explanation

While this may be an important part of marketing for a business, it is not considered one of the 3 main business activities.

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7. What are the three components of manufacturing costs?

Explanation

These are the three components of manufacturing costs.

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8. Which of the following is NOT a type of cost?

Explanation

The types of costs are fixed, mixed, and variable.
Percentage is not a type of cost.

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9. Joe is a manager of a local business. He is faced with an ethical dilemma in the accounting department. According to the three steps to follow when facing ethical dilemmas, which of the following is NOT a step he should follow to analyze the situation?

Explanation

While this may be a solution at some point for Joe, he should first recognize the situation, identify the elements, and identify the alternatives when analyzing the ethical dilemma.

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10. Which of the following is a financial statement used to indicate how successfully the business performed during a period of time?

Explanation

Income statements are used to indicate how successfully the business performed during a specific point in time.

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11. Which of the following is a characteristic of a corporation?

Explanation

A characteristic of a corporation is its separate legal existence. This means that a corporation is considered a legal entity separate from its owners. It has its own rights and obligations, can enter into contracts, and can be held liable for its actions. This characteristic provides the advantage of limited liability, as the owners' personal assets are generally protected from the corporation's debts and liabilities. Additionally, a corporation can continue to exist even if the ownership or management changes, ensuring its continuity and stability.

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12. Which of the following is NOT a function of a journal entry?

Explanation

Journal entries show individual transactions-not the profitability of the company as an overall unit.

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13. All of the following are benefits of budgeting EXCEPT:

Explanation

Creating incentives for managers to be rewarded is not a benefit or budgeting and can potentially lead to unethical behavior.

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14. How often are reports created in managerial accounting?

Explanation

In managerial accounting, managers determine the
frequency and types of reports to be created.

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15. Which of the following is a period cost?

Explanation

Selling expenses are included in the list of period cost.

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16. Which of the following is NOT considered a primary management function?

Explanation

The primary management functions are planning, directing, and controlling.

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17. Which of the following is NOT a reason a company would hold Treasury Stock for future use?

Explanation

Holding onto Treasury Stock will actually reduce the number of shares outstanding, thus increasing earnings per share.

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18. In 2013, XYZ Inc had sales revenues of $400,000, costs of goods sold: $310,000, and operating expenses of $60,000. What is the gross profit?

Explanation

In order to find gross profit, we take the sales revenue and subtract cost of goods sold ($400,000 - $310,000)

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19. During 2011, Softball Kingdom had its assets decrease $50,000. Which of the following transactions would ensure that the basic account equation would balance?

Explanation

If an asset decreases, another asset must increase.

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20. Which of the following is included in the content for reports for Managerial Accounting?

Explanation

In managerial accounting, managers want only the relevant data and reports for a specific sub-unit of a company.

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21. There are three requirements necessary for a company to pay out dividends. They are:

Explanation

A company must have retained earnings, adequate cash, and declared dividends for the period in order to pay our dividends.

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22. Which of the following is NOT a measure of liquidity?

Explanation

This is a ratio frequently used when measuring liquidity.

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23. Which of the following is typically the budget that is prepared first?

Explanation

This is typically the budget that is prepared first since all other budgets depends on the sales budget.

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Which of the following is a liabilities account?
Company XYZ Inc has variable costs associated with delivering widgets...
Which of the following is an expense account?
Which of the following is considered an external user of accounting?
In the basic accounting equation, Assets= Liabilities + ________?
Which of the following is NOT one of the 3 main business activities?
What are the three components of manufacturing costs?
Which of the following is NOT a type of cost?
Joe is a manager of a local business. He is faced with an ethical...
Which of the following is a financial statement used to indicate how...
Which of the following is a characteristic of a corporation?
Which of the following is NOT a function of a journal entry?
All of the following are benefits of budgeting EXCEPT:
How often are reports created in managerial accounting?
Which of the following is a period cost?
Which of the following is NOT considered a primary management...
Which of the following is NOT a reason a company would hold Treasury...
In 2013, XYZ Inc had sales revenues of $400,000, costs of goods sold:...
During 2011, Softball Kingdom had its assets decrease $50,000. Which...
Which of the following is included in the content for reports for...
There are three requirements necessary for a company to pay out...
Which of the following is NOT a measure of liquidity?
Which of the following is typically the budget that is prepared first?
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