Accounting Basics Quiz
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Questions and Answers

Which side of a standard account is known as the debit side?

  • The top side
  • The right side
  • The bottom side
  • The left side (correct)

    • What does the term 'demographics' refer to?

  • The study of human emotions
  • The study of human populations (correct)
  • The study of human behavior
  • The study of human anatomy

    • What is depreciation?

  • The loss in value of a fixed asset (correct)
  • The maintenance cost of a fixed asset
  • The profit generated by a fixed asset
  • The increase in value of a fixed asset

    • What is a drawing account?

    <p>An account used for recording owner's withdrawals</p> Signup and view all the answers

    What does the earnings valuation approach focus on?

    <p>Estimating the projected future income of a business</p> Signup and view all the answers

    What is the right side of a standard account known as?

    <p>The bottom side</p> Signup and view all the answers

    What does the term 'demographics' study?

    <p>Human populations</p> Signup and view all the answers

    What is depreciation a result of?

    <p>The loss in value of a fixed asset</p> Signup and view all the answers

    What is recorded in a drawing account?

    <p>Owner's withdrawals</p> Signup and view all the answers

    What does the earnings valuation approach estimate?

    <p>Projected future income of a business</p> Signup and view all the answers

    Which of the following accurately defines the accounting equation?

    <p>Assets = Liabilities + Owner's Equity</p> Signup and view all the answers

    What does the term 'accounts payable' refer to?

    <p>An unwritten promise to pay creditors for property purchased on credit</p> Signup and view all the answers

    What is the purpose of accrual accounting?

    <p>To record expenses and income regardless of when they are paid or collected</p> Signup and view all the answers

    What is the definition of 'accrued expense'?

    <p>An expense incurred in operating a business but not yet paid</p> Signup and view all the answers

    What is the definition of 'accrued income'?

    <p>Income earned during an accounting period but not yet received</p> Signup and view all the answers

    What does the term 'acquisition' refer to?

    <p>A company that is inherited or bought</p> Signup and view all the answers

    What is the purpose of advertising in business?

    <p>To make the public aware of the business's services or commodities for sale</p> Signup and view all the answers

    What does the term 'age of accounts receivable' measure?

    <p>The average time required to collect receivables</p> Signup and view all the answers

    What does the Age Discrimination in Employment Act require?

    <p>Employers to treat applicants and employees equally regardless of age</p> Signup and view all the answers

    What does the term 'age of inventory' measure?

    <p>The average time required to sell inventory</p> Signup and view all the answers

    Which one of the following is a definition of balance sheet?

    <p>A formal financial statement illustrating the assets, liabilities, and owner’s equity of a business as of a specific date.</p> Signup and view all the answers

    Which one of the following is a definition of branding?

    <p>A method of applying verbal and/or symbolic means to identify a product and/or service.</p> Signup and view all the answers

    Which one of the following is a definition of break-even analysis?

    <p>The point at which total sales revenue equals total operating costs.</p> Signup and view all the answers

    Which one of the following is a definition of cash flow statement?

    <p>A financial report showing a firm’s sources of cash as well as its uses of cash.</p> Signup and view all the answers

    Which one of the following is a definition of business interruption insurance?

    <p>Insurance that protects companies during the period necessary to restore property damaged by an insured peril.</p> Signup and view all the answers

    Which one of the following is a definition of business plan?

    <p>A summary of how a business owner, manager, or entrepreneur intends to organize the business endeavor and implement the activities necessary for the venture to succeed.</p> Signup and view all the answers

    Which one of the following is a definition of cash basis accounting?

    <p>An accounting practice in which revenue is not recognized in the accounting records until received and in which expenses are not recognized until paid.</p> Signup and view all the answers

    Which one of the following is a definition of casualty insurance?

    <p>Insurance that provides monetary benefits to a business that has experienced an unforeseen peril, such as flood, fire, etc.</p> Signup and view all the answers

    Which one of the following is a definition of closed end credit?

    <p>Balance of costly goods paid for in small monthly (fractional) payments over a period of time.</p> Signup and view all the answers

    Which one of the following is a definition of controlling (evaluating)?

    <p>A process of measuring organizational and individual performance with predetermined standards or expected results.</p> Signup and view all the answers

    Study Notes

    Accounting Basics

    • The left side of a standard account is known as the debit side.
    • The right side of a standard account is known as the credit side.

    Demographics

    • Demographics refer to the characteristics of a population, such as age, gender, and income level.
    • Demographics study the characteristics of a population, including age, gender, and income level.

    Depreciation

    • Depreciation is the decrease in value of an asset over time.
    • Depreciation is a result of the wear and tear of an asset.

    Drawing Account

    • A drawing account is a record of withdrawals made by the owner of a business.
    • Withdrawals made by the owner of a business are recorded in a drawing account.

    Earnings Valuation Approach

    • The earnings valuation approach focuses on the earnings of a company.
    • The earnings valuation approach estimates the value of a company based on its earnings.

    Accounting Equation

    • The accounting equation is Assets = Liabilities + Equity.

    Accounts Payable

    • Accounts payable refer to the amount of money a business owes to its suppliers.

    Accrual Accounting

    • The purpose of accrual accounting is to match revenues with the expenses incurred to generate them.
    • Accrual accounting is used to recognize revenues and expenses when they are earned, regardless of when payment is received.

    Accrued Expenses and Income

    • Accrued expense is an expense that has been incurred but not yet paid.
    • Accrued income is revenue that has been earned but not yet received.

    Acquisition

    • Acquisition refers to the process of one company buying another company.

    Advertising

    • The purpose of advertising in business is to promote products or services to potential customers.

    Age of Accounts Receivable and Inventory

    • The age of accounts receivable measures the average time it takes for a business to collect its debts.
    • The age of inventory measures the average time it takes for a business to sell its inventory.

    Age Discrimination in Employment Act

    • The Age Discrimination in Employment Act requires employers to treat employees of all ages fairly.

    Financial Statements

    • A balance sheet is a financial statement that provides a snapshot of a company's financial position at a specific point in time.
    • A break-even analysis is a calculation that determines the point at which a business's revenue equals its expenses.
    • A cash flow statement is a financial statement that shows the inflows and outflows of cash over a specific period.
    • Branding refers to the process of creating a unique identity for a business or product.

    Business and Insurance

    • A business plan is a document that outlines the goals and objectives of a business.
    • Business interruption insurance is a type of insurance that provides coverage for a business that is forced to close due to unforeseen circumstances.
    • Cash basis accounting is a method of accounting that recognizes revenues and expenses when payment is received or made.
    • Casualty insurance is a type of insurance that provides coverage for accidental losses or damages.
    • Closed end credit is a type of loan that has a fixed amount and a fixed repayment period.
    • Controlling (evaluating) is the process of monitoring and correcting the performance of a business.

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    Description

    Test your knowledge of accounting basics with this quiz! From understanding the accounting equation to identifying accounts payable, this quiz will challenge your understanding of key concepts in the language of business.

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