Understanding Accounting

Want to check your knowledge? See if you know the answers to these questions.

Accounting is an activity that assists an entity in making... Decisions about product marketing Decisions about human resourcees Decisions about purchases Decisions about expansion All of the above None of the above
All information related to the activity of accounting is called...
Personal assets Accounting records Accounting books Financial statements All of the above None of the above
CPA stands for...
Candid Political Accountant Certified Public Advocate Certified Public Accountant Certified Private Accountant Certificate of Public Accountancy Certanty of Public Account
The process of accounting is governed by...
The Internal Revenue Service Securities and Exchange Commission Principles and Concepts American Accounting Assocation All of the above None of the above
If you begin operations of a business, do you keep financial records with expectations of selling the business within a few years time?
Yes No
If you are the sole owner of a proprietorship and one of your clients or customers seeks restitution for damages and your business can't pay the amount, can your personal assets be used to meet this obligation?
Yes No
If your business trades a typewriter for a fax machine, is that a legal business transaction that must be recorded in the books of accounting?
Yes
No

If you purchase for your business a van for $2,000 that has a market value of $2,500, which amount do you record in the books of accounting?
$2,000 $2,500
If an annual accounting period ends on December 31, 2024 can you include an expense made on January 1, 2025?
Yes
No

What is a simple form of a journal?
A diary A checkbook register A card file An address book All of the above None of the above
The purpose of the ledger is to...
Record transactions Create financial statements Group and total similar transactions under one heading
The accounting equation is...
Capital - Assets = Liabilities Assets = Liabilities + Capital Assets - Liabilities = Capital All of the above None of the above
If your business purchases lands and buildings, do you depreciate the cost of the land?
Yes No
To debit an account means to...
Subtract the amount Enter the amount on the left side of the account Add the amount Enter the amount on the right side of the account
If you spent $500 for office supplies, you would record the transaction as...
A credit to cash and a credit to capital A debit to cash and a debit to office supplies A credit to cash and a debit to office supplies A credit to capital and a debit to office supplies
A liability account normally has what type of balance?
Debit Credit

You scored: __