Accounting Concepts Quiz

What is the definition of profit in accounting?

• The excess of total income over total expenses

• The loss incurred by the enterprise

• The amount of money that the owner deposits in the enterprise's bank account

• The money taken by the owner for personal use

Which of the following is considered a current asset?

• Vehicles

• Land and Buildings

• Trading Inventory

• Equipment and Furniture

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

• Assets deposited by the owner

• Money taken by the owner for personal use

• Loss incurred by the enterprise

• Excess of income over expenses

What is the formula for calculating owner's equity?

• Income - Expenses

• Drawings - Capital

• Assets - Liabilities

• Profit - Loss

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

• Bank

• Debtors

• Trading Inventory

• Vehicles

What is the purpose of a savings account in accounting?

• To earn interest on surplus funds

• To pay off long-term debts

• To keep money in cash register

• To record income and expenses

What is the definition of goodwill in accounting?

• Money owed to creditors

• Reputation and following of regular customers

• Interest paid on loans

• Value of goods bought for resale

What are direct debits used for in accounting?

• To pay off current liabilities

• To deposit money in savings account

• To make electronic payments

• To withdraw money from bank account

What is the purpose of a cash float in accounting?

• To keep money in cash register

• To earn interest on surplus funds

• To pay off long-term debts

• To give change to customers

What is the difference between current assets and fixed assets?

• Fixed assets consist of trading inventory, while current assets include vehicles and equipment

• Current assets are items needed to run the business, while fixed assets are bought for resale

• Fixed assets are debts that will be paid off within a year, while current assets are long-term liabilities

• Current assets can be converted into cash within a year, while fixed assets have a long life