Accounting Basics

Which financial statement displays the revenues and expenses of a company for a period of time?

• Income Statement

• Balance Sheet

• Cashflow statement

Answer explanation

The income statement displays all revenues and expenses recorded in a period in a single report.

What is the main purpose of financial accounting?

• Organise financial information

• Provide useful, financial information to outsiders

• Keep track of company expenses

• Minimise company taxes

Which of these is not included as a separate item in the basic accounting equation?

• Assets

• Liabilities

• Revenue

• Capital (Owner's equity)

Which financial statement uses the expanded accounting equation?

• Income statement (Statement of Profit or loss)

• Balance sheet (Statement of financial Position)

• Statement of Cashflow

• Statement of Changes in equity

The accrual basis of accounting records revenues when they are:

• Collected

• Earned

• Contracted

• Readily available for use.

The account format that displays debits, credits, balances, and headings.

• Journal

• General ledger

• T-account

• Ledger account

Asset accounts have what type of balance?

• Debit

• Credit

• Contra

• All of the above

Which account is not a liability account?

• Accounts payable

• VAT owing to HMRC

• Cash

Which account increases Capital?

• Expenses

• Drawings

• Revenues

A contra asset account has what type of balance?

• Debit

• Credit

• Contra

• All of the above