Accounting UACU

1. What is the primary purpose of financial accounting?

• To calculate taxes

• To provide internal management reports

• To communicate financial information to external stakeholders

• To monitor employee performance

What is the basic accounting equation?

• Assets = Liabilities - Equity

• Assets = Liabilities + Equity

• Assets - Liabilities = Equity

• Assets + Liabilities = Equity

What does the term 'depreciation' refer to in accounting?

• Increase in the value of an asset over time

• Decrease in the value of an asset over time

• Increase in company profits

• Decrease in company expenses

What is the purpose of an income statement?

• To show a company's financial position at a specific point in time

• To provide information about a company's cash flows

• To report a company's revenues and expenses over a period of time

• To list a company's long-term assets

What is the accounting term for money owed by customers?

• Revenue

• Liability

• Accounts Receivable

• Accounts Payable

What is the purpose of a balance sheet?

• To show a company's financial position at a specific point in time

• To provide information about a company's cash flows

• To report a company's revenues and expenses over a period of time

• To list a company's long-term assets

Which accounting principle states that expenses should be recorded in the same accounting period as the revenue to which they relate?

• Matching Principle

• Revenue Recognition Principle

• Accrual Principle

• Consistency Principle

What is the formula for calculating net income?

• Net Income = Revenues - Expenses

• Net Income = Revenues + Expenses

• Net Income = Assets - Liabilities

• Net Income = Liabilities - Assets

Which financial statement provides a snapshot of a company's financial condition at a specific moment in time?

• Income Statement

• Statement of Cash Flows

• Balance Sheet

• Retained Earnings Statement

What is the purpose of a cash flow statement?

• To provide information about a company's cash inflows and outflows

• To report a company's revenues and expenses over a period of time

• To show a company's financial position at a specific point in time

• To list a company's long-term assets