Free Accounting Basics Quiz

Enhance your understanding of essential accounting principles by taking our comprehensive Free Accounting Basics Quiz, designed to challenge your knowledge and help you master the fundamentals.

Name

Business

Phone

Which financial statement details the company’s cash inflows and outflows?

Balance Sheet

Statement of Retained Earnings

Statement of Cash Flows

Income Statement

None

Which account is typically credited when recording a sale on credit?

Sales Revenue

Accounts Receivable

Cash

Inventory

None

What does the term "accrual" mean in accounting?

Deferring expenses to a later period.

Capitalizing on large purchases.

Recording revenue when cash is received.

Matching revenue with expenses in the period they are incurred.

None

What is the primary purpose of a balance sheet?

To summarize the company’s cash inflows and outflows.

To show the company’s revenue and expenses over a specific period.

To display the company’s assets, liabilities, and equity at a specific point in time.

To provide a list of all company transactions during a specific period.

None

Which of the following is an example of an intangible asset?

Equipment

Accounts Receivable

Inventory

Trademark

None

What type of account is “prepaid expenses”?

Liability

Equity

Asset

Expense

None

What is a chart of accounts?

A detailed schedule of all invoices.

A statement that tracks company expenses.

A list of all accounts used in a company's accounting system.

A document showing company ownership.

None

What is the matching principle in accounting?

Matching liabilities with assets.

Matching dividends with retained earnings.

Recording expenses when they are paid.

Matching revenue with the expenses incurred to generate that revenue.

None

What does "FIFO" stand for in inventory management?

Funds in Financial Obligations

Fixed Income for Operations

Financial Information Follow-Up

First In, First Out

None

10.

What is depreciation?

The process of writing off bad debts.

The sale of an asset for less than its book value.

The allocation of the cost of a tangible asset over its useful life.

The increase in the value of an asset over time.

None

11.

What is double-entry accounting?

A system where every transaction affects at least two accounts.

An accounting system that records each transaction twice.

An accounting technique used only in large corporations.

A method of budgeting where income and expenses are balanced.

None

12.

What is the purpose of a trial balance?

To calculate net income for the period.

To prepare the company for an audit.

To test the accuracy of the financial statements.

To ensure that total debits equal total credits in the ledger.

None

13.

Which of the following is an example of a current asset?

Long-term Investments

Building

Accounts Receivable

Machinery

None

14.

What is the accounting equation?

Equity = Assets - Liabilities

Revenue = Assets + Liabilities

Profit = Revenue - Expenses

Assets = Liabilities + Equity

None

15.

Which of the following accounts would be found in the equity section of a balance sheet?

Inventory

Cash

Retained Earnings

Accounts Payable

None

16.

Which financial statement shows a company’s profitability over a period of time?

Balance Sheet

Income Statement

Statement of Cash Flows

Statement of Retained Earnings

None

17.

What is the purpose of adjusting entries?

To reconcile the bank statement with the ledger.

To update accounts before preparing the financial statements.

To correct errors found in the trial balance.

To record sales transactions.

None

18.

Which of the following is a liability?

Inventory

Accounts Payable

Owner’s Equity

Retained Earnings

None

19.

What does GAAP stand for?

Global Accounting and Auditing Procedures

Generally Accepted Accounting Principles

Governmental Accounting and Auditing Practices

General Asset and Allocation Protocol

None

20.

What does the term "liquidity" refer to in accounting?

The ability to manage debt levels.

The company's profitability.

The amount of long-term investments a company holds.

The ease with which assets can be converted into cash.

None

1 out of 20

Accountancy & Tax

Continuing Professional Development

Bookkeeping

Free Accounting Basics Quiz