Quizzes for Chapters 1&2

1. Which one of the following is usually viewed as an equity-oriented stakeholder?

• Banks
• Tax authority
• Investors

2. Which accounting standard is widely used in Europe?

• Local GAAP
• US GAAP
• IFRS

3. "Employees only get salaries, therefore they are not the users of corporate financial statements". Is this true or false?

• True
• False

4. Income statements inform about

• equity
• liabilities
• expenses

5. Statements of changes of equities inform about

• Property, plant, and equipment
• Accounts payable
• Dividends

6. "A debit is an entry made to the right side of an account and always increases an account balance", is it true or false?

• True
• False

7. If a firm purchases inventory on account, it

• Debits cash
• Credits cash
• Debits accounts payable
• Credits accounts payable

8. If a firm sells a product on cash basis, it

• Debits cash
• Credits cash
• Debits cost of goods sold
• Credits cost of goods sold

9. If a firm pays salary to employee on cash, it

• Debits sale revenue
• Credit sales revenue
• Debits salary expenses
• Credit salary expenses

10. A firm prepays the insurance expenses, then

• Assets increase
• Assets decrease
• Assets stay the same