Introduction to Accounting

What are the basic accounting principles?

• Accuracy, timeliness, objectivity, and completeness.

• Conservatism, materiality, and cost-benefit.

• Consistency, relevance, reliability, comparability, and faithful representation.

• Consistency, relevance, reliability, and transparency.

Define accounting liability.

• Financial assets that a company or individual owns.

• Legal obligations or debts that a company or individual owes to others.

• The amount of money a company or individual has in their bank account.

• The value of a company or individual's assets minus their liabilities.

What are accounting assets?

• Resources owned by a company that have economic value and can be measured and recorded in the company's financial statements.

• The amount of money a company owes to its creditors.

• The total amount of money a company has in its bank accounts.

• Physical items owned by a company that can be sold for a profit.

Explain accounting debt.

• The amount of money a company owes to its shareholders.

• The accumulation of assets that a company has acquired but has not yet paid for.

• The financial gain or profit that a company has made.

• Accumulation of financial obligations or liabilities that a company has incurred but has not yet paid off.

What is accounting credit?

• A transaction that increases the balance of a liability or equity account, or decreases the balance of an asset account.

• A transaction that increases the balance of an asset account, or decreases the balance of a liability or equity account.

• A transaction that has no effect on the balance of any account.

• A transaction that decreases the balance of a liability or equity account, or increases the balance of an asset account.

Which accounting principle states that revenue should be recognized when earned, regardless of when payment is received?

• Matching Principle

• Cash Basis Accounting

• Accrual Basis Accounting

• Revenue Recognition Principle

What is the formula to calculate the current ratio?

• Current Assets / Current Liabilities

• Current Assets + Current Liabilities

• Current Assets - Current Liabilities

• Current Assets * Current Liabilities

What is the difference between accounts payable and accounts receivable?

• Accounts payable is the money a company owes to its customers, while accounts receivable is the money owed to a company by its suppliers.

• Accounts payable and accounts receivable are the same thing.

• Accounts payable is the money a company owes to its suppliers, while accounts receivable is the money owed to a company by its customers.

• Accounts payable is the money a company owes to its employees, while accounts receivable is the money owed to a company by its shareholders.

What is the purpose of a balance sheet in accounting?

• The purpose of a balance sheet in accounting is to provide a snapshot of a company's financial position at a specific point in time.

• The purpose of a balance sheet in accounting is to determine the market value of a company's assets.

• The purpose of a balance sheet in accounting is to calculate the total revenue of a company.

• The purpose of a balance sheet in accounting is to track the daily expenses of a company.

Explain the concept of double-entry bookkeeping.

• A system of recording financial transactions where every transaction has equal and opposite effects in at least three different accounts.

• A system of recording financial transactions where every transaction has equal and opposite effects in the same account.

• A system of recording financial transactions where every transaction has equal and opposite effects in only one account.

• A system of recording financial transactions where every transaction has equal and opposite effects in at least two different accounts.