Financial Accounting Overview Quiz

Accounting is a system that records economic events and transactions, then processes data into a format that is helpful to various users. It is considered the art of recording, classifying, and summarizing financial data in terms of money, interpreting the results.

Financial accounting focuses on providing financial and economic information to external users like investors, creditors, and regulators. Managerial accounting, on the other hand, provides internal reports to guide management decisions and improve operational efficiency.

<p>Investors</p> Signup and view all the answers

<p>True</p> Signup and view all the answers

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

<p>Assets = Liabilities + Capital - Drawings + Revenues - Expenses</p> Signup and view all the answers

<p>Resources owned by a business, used to generate income or perform operations. They are classified into current assets (short-term) and fixed assets (long-term).</p> Signup and view all the answers

<p>Obligations that the business owes to external parties. They are classified into short-term liabilities (due within a year) and long-term liabilities (due after a year).</p> Signup and view all the answers

<p>The owner's claim on the business's assets, representing the owner's investment and accumulated profits. It's also known as shareholders' equity in corporations.</p> Signup and view all the answers

<p>Increases in owner's equity resulting from business activities, typically from selling goods or services.</p> Signup and view all the answers

<p>This transaction increases the business's cash (asset) and owner's equity. The owner contributes personal funds to invest in the business.</p> Signup and view all the answers

<p>This transaction increases a fixed asset (car) and decreases cash (asset). Cash is used to purchase the car, which will be used for business purposes.</p> Signup and view all the answers

<p>This transaction increases an asset (equipment) and increases a liability (accounts payable). The business acquires equipment but does not pay for it immediately, incurring a debt to the supplier.</p> Signup and view all the answers

<p>This transaction increases an asset (accounts receivable) and increases revenue. The business has provided a service but has not yet received payment, creating a receivable from the customer.</p> Signup and view all the answers

<p>This transaction increases cash (asset) and decreases accounts receivable (asset). The business receives payment for the service previously billed to the customer.</p> Signup and view all the answers

<p>This transaction decreases cash (asset) and increases an expense (salaries expense). The business pays employees for their wages during the period.</p> Signup and view all the answers

<p>The investment increases both assets (cash) and owner's equity by $11,000. The accounting equation remains balanced because both sides increase equally.</p> Signup and view all the answers

<p>This transaction decreases cash (asset) by $800 and increases an expense (rent expense) by $800. The accounting equation remains balanced because both sides decrease equally.</p> Signup and view all the answers

<p>This transaction increases an asset (equipment) by $3,000 and increases a liability (accounts payable) by $3,000. The equation remains balanced.</p> Signup and view all the answers

<p>This transaction increases cash (asset) and increases revenue by $1,500. Both sides of the equation increase equally, maintaining balance.</p> Signup and view all the answers

<p>This transaction increases accounts receivable (asset) and increases revenue by $5,000. The equation remains balanced because both sides increase equally.</p> Signup and view all the answers

<p>This transaction decreases cash (asset) by $1,200 and increases an expense (salaries expense) by $1,200. The equation remains balanced.</p> Signup and view all the answers

<p>This transaction increases cash (asset) by $3,000 and decreases accounts receivable by $3,000. The equation remains balanced.</p> Signup and view all the answers

<p>This transaction increases assets (cash and equipment) by a total of L.E. 45,000 and increases Owner's Equity by L.E. 45,000. The equation remains in balance.</p> Signup and view all the answers

<p>This transaction decreases cash (asset) by L.E. 6000 and increases a fixed asset (furniture) by L.E. 6000. The equation remains balanced.</p> Signup and view all the answers

<p>This transaction decreases cash (asset) by L.E. 500 and increases an expense (rent expense) by L.E. 500. The equation remains balanced.</p> Signup and view all the answers

<p>This transaction increases an asset (equipment) by L.E. 2000 and increases a liability (accounts payable) by L.E. 2000. The equation remains balanced.</p> Signup and view all the answers

<p>This transaction increases cash (asset) by L.E. 1500 and increases revenue by L.E. 1500. The equation remains balanced.</p> Signup and view all the answers

<p>This transaction increases Accounts Receivable (asset) by L.E. 3000 and increases revenue by L.E. 3000. The equation remains balanced.</p> Signup and view all the answers

<p>This transaction increases cash (asset) by L.E. 3000 and decreases Accounts Receivable (asset) by L.E. 3000. The equation remains balanced.</p> Signup and view all the answers

<p>This transaction decreases cash (asset) by L.E. 2000 and decreases Owner's Equity by L.E. 2000. The equation remains balanced.</p> Signup and view all the answers

<p>This transaction decreases cash (asset) by L.E. 500 and increases an expense (salaries expense) by L.E. 500. The equation remains balanced.</p> Signup and view all the answers