Wyrnkaa - Chapter 3 Review Questions

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  • 1/10 Questions

    What are the three sections of the Balance Sheet?

    • Assets, Expenses, and Equity
    • Assets, Equity, and Net Cash
    • Assets, Accounts Payable, and Retained Earnings
    • Assets, Liabilities, and Equity
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About This Quiz


This quiz will test your understanding of the material covered in the third chapter of "What You Really Need to Know About Accounting". Visit https://www. Notforaccountants. Com/learning-tools. Php for more quizzes.

Wyrnkaa - Chapter 3 Review Questions - Quiz

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  • 2. 

    What is an Asset, in simple terms?

    • Something your business owns

    • Something your business owes

    • Both a & b

    • Neither a nor b

    Correct Answer
    A. Something your business owns
    Explanation
    Assets are what a business OWNS. What a business OWES is a liability.

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  • 3. 

    The Income Statement is made up primarily of:

    • Cash and Expenses

    • Revenue and Expenses

    • Gains and Expenses

    • Losses and Expenses

    Correct Answer
    A. Revenue and Expenses
    Explanation
    The Income Statement is made up primarily of Revenues and Expenses. The Income Statement can also include Gains and Losses, but the primary categories are Revenues and Expenses.

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  • 4. 

    Net Income is shown on the:

    • Balance Sheet

    • Income Statement

    • Net Cash Statement

    • Net Accrual Statement

    Correct Answer
    A. Income Statement
    Explanation
    Revenues, Expenses, and Net Income are shown on the Income Statement.

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  • 5. 

    The "statement of what you've earned" is the:

    • Balance Sheet

    • Income Statement

    • Statement of Cash Flows

    • Statement of Retained Earnings

    Correct Answer
    A. Income Statement
    Explanation
    The Income Statement can be considered a statement of what you've earned because it shows your revenue, expenses, and net income/earnings over a period of time.

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  • 6. 

    Accrual basis accounting seeks to match:

    • Revenues with the Expenses used to generate those Revenues

    • Cash inflows with Cash outflows

    • Revenues with Cash inflows

    • Expenses with Cash Outflows

    Correct Answer
    A. Revenues with the Expenses used to generate those Revenues
    Explanation
    Accrual basis accounting seeks to match revenues with the expenses used to generate those revenues. This means that revenues are recognized when they are earned, regardless of when the cash is received, and expenses are recognized when they are incurred, regardless of when the cash is paid out. This method provides a more accurate representation of a company's financial performance and allows for better decision-making based on the matching principle.

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  • 7. 

    The Statement of Cash Flows shows:

    • How much operating income a business has earned

    • How well a business is managing its overhead

    • How a business generated and used cash

    • How many assets a business has

    Correct Answer
    A. How a business generated and used cash
    Explanation
    The statement of cash flows is concerned with how a company generated and used cash during a given period.

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  • 8. 

    The Statement of Cash Flows shows cash from:

    • Current Activities, Discontinued Activities, and Future Activities

    • Primary Activities, Secondary Activities, and Discontinued Activities

    • Financing Activities, Net Income, and Net Liabilities

    • Operating Activities, Investing Activities, and Financing Activities

    Correct Answer
    A. Operating Activities, Investing Activities, and Financing Activities
    Explanation
    The three sections of a cash flow statement are Cash from Operating Activities, Cash from Investing Activities, and Cash from Financing Activities.

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  • 9. 

    The "statement of what you've got" is the:

    • Balance Sheet

    • Income Statement

    • Statement of Cash Flows

    • Statement of Retained Earnings

    Correct Answer
    A. Balance Sheet
    Explanation
    The Balance Sheet can be considered a statement of what you've got because it shows what your company owns (assets), owes (liabilities), and the net value to the owners (equity).

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  • 10. 

    The Income Statement and Balance Sheet utilize:

    • The Cash basis of accounting

    • The Net Receipts basis of accounting

    • The Gross Income basis of accounting

    • The Accrual basis of accounting

    Correct Answer
    A. The Accrual basis of accounting
    Explanation
    The accrual basis of accounting is required by GAAP in most cases.

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  • Feb 05, 2024
    Quiz Edited by
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  • Mar 26, 2011
    Quiz Created by
    Nfapublishing
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