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Understanding Basic Accounting Concepts

Authored by Subalakshmi BCom A&F and BA

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University

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Understanding Basic Accounting Concepts
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10 questions

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1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is a journal entry and why is it important?

A journal entry is a summary of monthly expenses only.

A journal entry is a record of financial transactions, and it is important for accurate financial tracking and reporting.

A journal entry is a type of personal diary for thoughts.

A journal entry is a legal document for contracts.

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

How do you record a purchase of inventory in the journal?

Debit Inventory, Credit Accounts Payable or Cash

Debit Cash, Credit Inventory

Debit Accounts Receivable, Credit Inventory

Debit Inventory, Credit Sales Revenue

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the purpose of a ledger account?

To manage inventory levels and stock availability.

The purpose of a ledger account is to systematically record and summarize financial transactions for accurate financial reporting.

To track employee performance and productivity.

To store only cash transactions for easy access.

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Explain the process of transferring entries from the journal to the ledger.

The process of recording transactions in the journal is called posting.

The ledger is created before the journal in accounting.

The process of transferring entries from the journal to the ledger is called posting.

Transferring entries from the ledger to the journal is called posting.

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is a trial balance and what does it indicate?

A trial balance is a document that shows the income and expenses for a specific period.

A trial balance is a report that lists only the assets of a company.

A trial balance is a summary of cash flow activities for a business.

A trial balance is a statement that shows the balances of all accounts and indicates whether the total debits equal total credits.

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

How do you prepare a trial balance from ledger accounts?

Only list accounts with a balance

List all ledger accounts, separate into debit and credit columns, total each column, and ensure totals match.

Ignore the totals and focus on individual transactions

Combine all accounts into one column

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What are the key components of final accounts for a sole trading concern?

Inventory Report, Accounts Receivable, Accounts Payable

Income Statement, Cash Flow Statement, Statement of Changes in Equity

Sales Report, Expense Report, Tax Return

Trading Account, Profit and Loss Account, Balance Sheet

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