Ryan 1st term exam

The purpose of double-entry accounting is to:

• Track all revenue and expenses

• Ensure the accounting equation is always in balance.

• Prepare financial statements easily

• Simplify the accounting process

The accounting equation is:

• Assets = Liabilities + Equity

• Assets = Revenue + Expenses

• Liabilities = Assets + Equity

• Expenses = Liabilities + Assets

Which of the following is a basic principle of double-entry bookkeeping?

• Every transaction affects only one account

• Every transaction involves at least two accounts

• Only assets and liabilities are affected by transactions

• Revenue is always credited and expenses are debited

What is the primary difference between bookkeeping and accounting?

• Bookkeeping involves the preparation of financial statements, while accounting focuses on recording transactions.

• Bookkeeping records transactions, while accounting involves interpreting, classifying, and summarizing financial data.

• Accounting records daily transactions, while bookkeeping prepares trial balances

• Accounting is only concerned with large businesses, whereas bookkeeping applies to small businesses.

Which of the following is NOT a book of original entry?

• Journal

• Cash Book

• Sales Book

• Trial Balance

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

• Sales

• Accounts payable

• Cash

• Capital

Which of the following is an example of unethical behavior by an accountant?

• A) Following all accounting standards and regulations

• Manipulating financial records to conceal a company’s losses

• Consulting clients about best accounting practices

• Disclosing a financial error to clients when discovered

Which of the following actions is consistent with the ethical principle of objectivity in accounting?

• Biasing financial reports in favor of the company's management

• Preparing financial statements based on personal interests

• offering professional advice based on accurate and impartial data

• Ignoring discrepancies in financial records

What is the primary purpose of accounting ethics?

• To avoid legal actions

• To ensure accuracy in financial reporting

• To enhance the image of the company

• To reduce tax liability

Which of the following is the first step in the accounting cycle?

• Preparing a ledger

• Recording transactions in the journal

• Preparing financial statements

• Posting to the trial balance