Accounting Basics Quiz

Assets = Resources owned by a business Liabilities = Claims against assets Equity = Owner's residual interest in assets after liabilities Revenue = Income generated from business activities

Liquidity = Ability to meet short-term obligations Solvency = Ability to meet long-term obligations Profitability = Ability to generate profits relative to sales Efficiency = Ability to use assets effectively to generate revenues

Mortgage = A loan specifically for purchasing real estate Equity Financing = Raising capital by selling shares in the property Amortization = Gradual reduction of debt through payments Appraisal = Assessment of property value

<p>Recording = Documenting economic events systematically Summarizing = Aggregating financial data into reports Analyzing = Evaluating financial data for decision-making Budgeting = Planning future financial activities</p> Signup and view all the answers

<p>Current Assets = Expected to be converted to cash within a year Fixed Assets = Long-term resources used in operations Intangible Assets = Non-physical assets with value Liquid Assets = Assets easily convertible to cash</p> Signup and view all the answers

<p>Current Liabilities = Obligations due within one year Long-term Liabilities = Obligations due in more than one year Contingent Liabilities = Potential obligations depending on future events Secured Liabilities = Debts backed by collateral</p> Signup and view all the answers

<p>Common Stock = Ownership shares in a corporation Preferred Stock = Shares that have priority over common stock Retained Earnings = Cumulative profits not distributed to shareholders Additional Paid-In Capital = Funds raised above par value of stock</p> Signup and view all the answers

<p>Accrual Principle = Revenues recognized when earned, not received Consistency Principle = Use of the same methods from period to period Going Concern Principle = Assumes business will continue operations indefinitely Matching Principle = Expenses matched with revenues they help generate</p> Signup and view all the answers

<p>Assets = Resources owned by a company Liabilities = Obligations or debts a company owes Equity = Owner's claim on assets after liabilities are deducted Accounts Payable = Money owed to suppliers for purchases on credit</p> Signup and view all the answers

<p>Cash = Asset Equipment = Asset Share Capital = Equity Accounts Payable = Liability</p> Signup and view all the answers

<p>Balance Sheet = Shows financial position at a specific point in time Income Statement = Reports profitability over a period Cash Flow Statement = Details cash inflows and outflows Statement of Changes in Equity = Shows changes in equity from transactions</p> Signup and view all the answers

<p>Debt Financing = Funding through borrowed money Equity Financing = Funding through selling shares of stock Asset-Based Financing = Loans secured by assets Credit Purchases = Acquisition of goods with deferred payment</p> Signup and view all the answers

<p>Going Concern = Assumes a company will continue operations indefinitely Accrual Basis = Revenue and expenses are recorded when incurred Matching Principle = Expenses should be matched with revenues earned Conservatism = Recognizes potential losses but waits on recognizing gains</p> Signup and view all the answers

<p>Current Assets = Expected to be converted to cash within a year Fixed Assets = Long-term assets used for operations Intangible Assets = Non-physical assets, like patents Operating Assets = Assets used in day-to-day operations</p> Signup and view all the answers

<p>Current Liabilities = Obligations due within one year Long-term Liabilities = Debt obligations due beyond one year Contingent Liabilities = Potential liabilities that may arise in the future Deferred Liabilities = Revenue received before services are performed</p> Signup and view all the answers

<p>Accounts Payable = Debt to suppliers for purchases Supplies = Inventory of consumable goods Equipment = Tangible long-term assets used in production Cash = Liquid asset readily available for use</p> Signup and view all the answers

<p>Vertical Analysis = Analyzes financial statements at a point in time Horizontal Analysis = Compares financial data over different periods Ratio Analysis = Analyzes relationships between financial statement items Trend Analysis = Identifies patterns and trends over time</p> Signup and view all the answers

<p>Total Assets = Total Liabilities + Equity Equity = Assets - Liabilities Liabilities = Claims against assets Assets = Resources owned by the business</p> Signup and view all the answers

<p>Balance Sheet = Snapshot of financial position at a specific date Income Statement = Shows revenues and expenses over a period Cash Flow Statement = Reports cash inflows and outflows Statement of Equity = Shows changes in owner's equity over time</p> Signup and view all the answers

<p>Current Assets = Expected to be converted into cash within a year Fixed Assets = Long-term investment for business operations Intangible Assets = Non-physical assets with value Liquid Assets = Assets that can be quickly converted to cash</p> Signup and view all the answers

<p>Current Liabilities = Debts due within one year Long-term Liabilities = Debts due beyond one year Contingent Liabilities = Potential obligations pending a future event Operating Liabilities = Obligations arising from day-to-day operations</p> Signup and view all the answers

<p>Budgeting = Planning future financial activities Performance Measurement = Assessing efficiency and effectiveness Decision Making = Evaluating financial information for choices Financial Reporting = Communicating financial status to stakeholders</p> Signup and view all the answers

<p>Liquidity Ratio = Measures ability to cover short-term obligations Profit Margin = Indicates profitability relative to sales Return on Investment (ROI) = Measures gains from investments relative to cost Debt-to-Equity Ratio = Compares total liabilities to shareholders' equity</p> Signup and view all the answers

<p>Cash = Currency on hand or bank deposits Inventories = Goods available for sale Equipment = Machinery used in production Real Estate = Land and buildings owned by the business</p> Signup and view all the answers

<p>Horizontal Analysis = Comparing financial data across periods Vertical Analysis = Analyzing data as a percentage of a whole Ratio Analysis = Evaluating relationships between financial statement items Trend Analysis = Identifying patterns in financial performance over time</p> Signup and view all the answers

<p>Accrual Basis = Revenue recognized when earned, regardless of cash flow Going Concern = Assumption business will continue operations indefinitely Consistency = Using the same accounting methods over time Materiality = Only significant information impacts financial statements</p> Signup and view all the answers

<p>Accounts Payable = Obligations a business owes to its suppliers for goods and services received on credit Equity = The ownership claim on total assets after liabilities are deducted Liabilities = Obligations that a company has to settle in the future Assets = Resources owned by a business that provide future economic benefits</p> Signup and view all the answers

<p>Salaries Payable = Amounts owed to employees for work performed Note Payable = Loan obligations to financial institutions Sales Tax Payable = Taxes collected on sales that are due to the government Accounts Payable = Money owed to suppliers for credit purchases</p> Signup and view all the answers

<p>Total Assets = Resources that provide value to the business Total Liabilities = Total obligations and debts of the business Share Capital = Funds raised by issuing shares to investors Retained Earnings = Cumulative profits retained in the business instead of distributed as dividends</p> Signup and view all the answers

<p>Financial Reporting = Providing stakeholders with information about financial performance Budgeting = Planning for future financial activities Auditing = Verifying the accuracy of financial statements Tax Reporting = Ensuring compliance with tax obligations</p> Signup and view all the answers

<p>Collateral = Asset pledged to secure a loan Mortgage = Loan specifically for purchasing real estate Equity Financing = Raising capital through selling shares in the property Foreclosure = Legal process by which the lender takes ownership of property due to unpaid debt</p> Signup and view all the answers

<p>Assets = Resources owned by a business Liabilities = Claims against a company’s assets Equity = Owner's claim on the assets of a company Creditors = Entities to whom the business owes money</p> Signup and view all the answers

<p>Total assets = €10.6 billion Total liabilities = €6.0 billion Owner’s equity = €4.6 billion Basic accounting equation = Assets = Liabilities + Equity</p> Signup and view all the answers

<p>Balance Sheet = Shows the financial position at a specific time Income Statement = Reports revenue and expenses over a period Cash Flow Statement = Shows inflow and outflow of cash Statement of Changes in Equity = Shows changes in owner's equity over time</p> Signup and view all the answers

<p>Down payment = The initial upfront portion of the total amount due Mortgage = A loan used for purchasing real estate Equity financing = Using ownership interest as a means of raising funds Amortization = The process of paying off debt over time with regular payments</p> Signup and view all the answers

<p>Current Assets = Cash, inventory, receivables Fixed Assets = Property, plant, and equipment Intangible Assets = Goodwill, patents, trademarks Deferred Assets = Prepaid expenses and deferred tax assets</p> Signup and view all the answers

<p>Financial Accountant = Reports financial information to external parties Management Accountant = Provides information for internal management decisions Tax Accountant = Focuses on compliance with tax laws and regulations Forensic Accountant = Investigates financial discrepancies and fraud</p> Signup and view all the answers

<p>Going Concern = Assumption that a business will continue to operate Accrual Basis = Recognizing revenue and expenses when they occur Conservatism = Recording potential losses but not potential gains Materiality = Threshold for recognizing the significance of an item</p> Signup and view all the answers

<p>Cap Rate = Indicates the return on an investment property Cash-on-Cash Return = Measures annual return relative to cash invested Gross Rent Multiplier = Estimates value based on rental income Debt Service Coverage Ratio = Measures ability to cover debt obligations</p> Signup and view all the answers

<p>Short-term liabilities = Accounts payable and accrued expenses Long-term liabilities = Mortgages and bonds payable Contingent liabilities = Legal disputes or warranties Operating liabilities = Obligations arising from normal business operations</p> Signup and view all the answers

<p>Equity Financing = Raising funds by selling ownership in the company Debt Financing = Borrowing funds to be repaid with interest Crowdfunding = Raising small amounts of money from many people Venture Capital = Funding from investors for startups with high potential</p> Signup and view all the answers