Basic Accounting Quiz
1. Which of the following is NOT considered an asset?
A) Cash
B) Inventory
C) Bank Loan
D) Equipment
2. The accounting equation is:
A) Assets = Liabilities + Owner’s Equity
B) Assets = Revenue + Expenses
C) Liabilities = Assets - Equity
D) Equity = Assets - Liabilities
3. True or False: Expenses increase the owner's equity in a business.
4. Which of the following best defines revenue?
A) Money owed to the company
B) Money received for services
C) The company's debts
D) Money spent on supplies
5. Which statement is correct about liabilities?
A) They are the resources owned by a business
B) They are obligations owed by a business
C) They represent the owner's interest
D) They are future income
6. The primary financial statements include all EXCEPT:
A) Income Statement
B) Balance Sheet
C) Bank Statement
D) Cash Flow Statement
7. True or False: A debit entry decreases an asset account.
8. What is the purpose of an income statement?
A) To show a company’s revenue and expenses over a period
B) To list a company's assets
C) To display the changes in cash flow
D) To outline the business's liabilities
9. True or False: The Balance Sheet reflects the financial position of a company at a specific
date.
10. Which of the following is an example of an intangible asset?
A) Equipment
B) Building
C) Patent
D) Inventory
11. Which accounting principle states that expenses should be recorded in the period they
help to generate revenue?
A) Revenue Recognition
B) Matching
C) Materiality
D) Consistency
12. True or False: Liabilities are recorded on the left side of the balance sheet.
13. What does 'GAAP' stand for?
A) General Applied Accounting Principles
B) Government Audited Accounting Principles
C) Generally Accepted Accounting Principles
D) General Accounting Applied Principles
14. True or False: Accounts Receivable is considered a liability.
15. Which of the following accounts would NOT typically appear on an income statement?
A) Revenue
B) Cost of Goods Sold
C) Accounts Payable
D) Operating Expenses
