Accounting Basics Quiz

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SensibleStream4503
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30 Questions

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

The left side

What does the term 'demographics' refer to?

The study of human populations

What is depreciation?

The loss in value of a fixed asset

What is a drawing account?

An account used for recording owner's withdrawals

What does the earnings valuation approach focus on?

Estimating the projected future income of a business

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

The bottom side

What does the term 'demographics' study?

Human populations

What is depreciation a result of?

The loss in value of a fixed asset

What is recorded in a drawing account?

Owner's withdrawals

What does the earnings valuation approach estimate?

Projected future income of a business

Which of the following accurately defines the accounting equation?

Assets = Liabilities + Owner's Equity

What does the term 'accounts payable' refer to?

An unwritten promise to pay creditors for property purchased on credit

What is the purpose of accrual accounting?

To record expenses and income regardless of when they are paid or collected

What is the definition of 'accrued expense'?

An expense incurred in operating a business but not yet paid

What is the definition of 'accrued income'?

Income earned during an accounting period but not yet received

What does the term 'acquisition' refer to?

A company that is inherited or bought

What is the purpose of advertising in business?

To make the public aware of the business's services or commodities for sale

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

The average time required to collect receivables

What does the Age Discrimination in Employment Act require?

Employers to treat applicants and employees equally regardless of age

What does the term 'age of inventory' measure?

The average time required to sell inventory

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

A formal financial statement illustrating the assets, liabilities, and owner’s equity of a business as of a specific date.

Which one of the following is a definition of branding?

A method of applying verbal and/or symbolic means to identify a product and/or service.

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

The point at which total sales revenue equals total operating costs.

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

A financial report showing a firm’s sources of cash as well as its uses of cash.

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

Insurance that protects companies during the period necessary to restore property damaged by an insured peril.

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

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.

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

An accounting practice in which revenue is not recognized in the accounting records until received and in which expenses are not recognized until paid.

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

Insurance that provides monetary benefits to a business that has experienced an unforeseen peril, such as flood, fire, etc.

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

Balance of costly goods paid for in small monthly (fractional) payments over a period of time.

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

A process of measuring organizational and individual performance with predetermined standards or expected results.

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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