Accounting Terms

What is the primary purpose of accounting in a business?

• To track financial transactions

• To manage employees

• To increase sales

• To design products

Which accounting term refers to the financial statement that shows a company's assets, liabilities, and equity?

• Income Statement

• Balance Sheet

• Cash Flow Statement

• Statement of Retained Earnings

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

• The ability to pay short-term obligations

• The profitability of a company

• The total assets of a company

• The market value of a company

Which of the following is considered a current asset in accounting?

• Land

• Inventory

• Buildings

• Equipment

What is the accounting term for the systematic allocation of the cost of a tangible asset over its useful life?

• Depreciation

• Amortization

• Depletion

• Accrual

In accounting, what does 'GAAP' stand for?

• Generally Accepted Accounting Principles

• General Accounting and Auditing Practices

• Global Accounting and Auditing Procedures

• Governmental Accounting and Auditing Policies

Which accounting term describes the reduction in value of an intangible asset over time?

• Depreciation

• Amortization

• Depletion

• Accrual

What is the term for the difference between total revenue and total expenses in accounting?

• Net Income

• Gross Profit

• Operating Income

• Net Loss

Which accounting term refers to the obligation to pay a debt?

• Asset

• Liability

• Equity

• Revenue

What is the accounting term for the owner's claim on the assets of a business?

• Liability

• Equity

• Revenue

• Expense