Quiz - on Accounting Cycle

What is the first step in the accounting cycle?

• Preparing financial statements

• Making journal entries

• Creating a trial balance

• Closing entries

Which of the following is a purpose of a trial balance?

• To record transactions

• To check the accuracy of journal entries

• To prepare closing entries

• To calculate net income

What is an adjusting entry?

• An entry made to close accounts

• An entry made to correct errors

• An entry made to update account balances before financial statements

• An entry made to record cash transactions

Which financial statement shows a company's financial position at a specific point in time?

• Income statement

• Statement of cash flows

• Balance sheet

• Statement of changes in equity

What is the purpose of closing entries?

• To prepare the accounts for the next period

• To record all transactions

• To create a trial balance

• To adjust account balances

Which account is typically not closed at the end of the accounting period?

• Revenue

• Expenses

• Dividends

• Assets

What is recorded in a journal entry?

• Only cash transactions

• Only credit transactions

• All business transactions

• Only adjusting entries

Which of the following is an example of an adjusting entry?

• Recording a cash sale

• Depreciating equipment

• Paying a supplier

• Issuing shares

What does the income statement show?

• Assets and liabilities

• Cash inflows and outflows

• Revenues and expenses

• Owner's equity

Which of the following is a temporary account?

• Accounts receivable

• Inventory

• Revenue

• Equipment