6 Questions
Which of the following is a fundamental concept in accounting?
Credit
Which financial statement provides a snapshot of a company's financial position at a specific point in time?
Balance sheet
What is the purpose of double-entry bookkeeping?
To ensure accuracy and completeness of financial records
Which of the following is NOT a basic term of accounting?
Sales
Which financial statement summarizes a company's revenues and expenses over a period of time?
Income statement
Which of the following is an example of an external user of financial information?
Suppliers
Study Notes
Accounting Fundamentals
- Accounting is based on the concept of accrual accounting, matching principle, and materiality.
Financial Statements
- The Balance Sheet provides a snapshot of a company's financial position at a specific point in time.
- The Income Statement summarizes a company's revenues and expenses over a period of time.
Double-Entry Bookkeeping
- The purpose of double-entry bookkeeping is to ensure accuracy and transparency in financial reporting by recording each transaction twice, as both a debit and a credit.
Basic Terms of Accounting
- The basic terms of accounting include assets, liabilities, equity, revenues, expenses, gains, and losses.
- "Profit" is not a basic term of accounting; instead, the correct term is "net income" or "net profit".
Users of Financial Information
- Examples of external users of financial information include investors, creditors, and regulatory bodies.
- They use financial statements to make informed decisions about investments, credit, and other business relationships.
Test your knowledge of basic accounting terms with this quiz. Explore fundamental concepts, financial statements, and the purpose of double-entry bookkeeping. Perfect for beginners or those looking to refresh their understanding of accounting principles.
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