Unit 4: Financial Accounting MCQs

In double-entry bookkeeping, every transaction affects:

• Only one account

• At least two accounts

• Only expenses and revenues

• Only assets and liabilities

What is the fundamental equation of accounting?

• Assets = Liabilities + Expenses

• Assets = Liabilities + Owner’s Equity

• Liabilities = Assets + Owner’s Equity

• Revenue = Expenses + Liabilities

Which of the following is NOT a rule of double-entry bookkeeping?

• Debit the receiver, credit the giver

• Debit all expenses and losses, credit all incomes and gains

• Debit what goes out, credit what comes in

• Debit what comes in, credit what goes out

Which of the following is an example of a liability?

• Cash

• Accounts Payable

• Machinery

• Revenue

The owner’s capital in a business is classified as:

• Liability

• Asset

• Equity

• Expense

Which of these is considered a real account?

• Sales Revenue

• Cash

• Rent Expense

• Owner’s Capital

Rent Expense Account falls under which category?

• Personal Account

• Real Account

• Nominal Account

• Asset Account

Which of these is a personal account?

• Bank Account

• Salaries Expense

• Inventory

• Equipment

The "Sales" account is classified as:

• Real Account

• Personal Account

• Nominal Account

• Asset Account

The first step in the accounting cycle is:

• Preparation of Financial Statements

• Recording Transactions in Journal

• Posting Entries in Ledger

• Preparing the Trial Balance