Introduction to Accounting Quiz

Which of the following best describes accounting?

• Recording only cash transactions

• Recording, classifying, and summarizing financial information

• Preparation of tax documents

• Recording only personal information

The main purpose of financial accounting is to:

• Keep track of employee performance

• Provide financial information to internal users

• Provide financial information to external users

• Help in inventory control

Which of the following is NOT a characteristic of financial accounting?

• Historical in nature

• Used by management only

• Governed by accounting standards

• Quantitative in nature

The person who uses accounting information to make investment decisions is called a:

• Supplier

• Customer

• Investor

• Manager

Financial statements are usually prepared:

• Monthly

• Weekly

• Quarterly and annually

• Daily

Which of the following is a basic accounting assumption?

• Conservatism

• Going concern

• Cost

• Matching

The principle that states revenues should be recorded when earned is the:

• Matching principle

• Revenue recognition principle

• Historical cost principle

• Consistency principle

The accounting principle that assumes a business will continue to operate indefinitely is:

• Accrual basis

• Going concern

• Conservatism

• Cost

The cost principle requires assets to be recorded at:

• Market value

• Replacement value

• Original cost

• Appraised value

The basic accounting equation is:

• Assets = Liabilities + Income

• Assets = Liabilities – Owner's Equity

• Assets = Liabilities + Owner’s Equity

• Assets = Expenses – Liabilities