ACCOUNTING TEST 02 1 / 25 The bank reconciliation process is done to ensure that: The cash balance matches between the bank statement and company records The company’s financial performance is accurate Tax liabilities are calculated correctly The cash flow is balanced 2 / 25 Which of the following is an example of a fixed cost? Raw material cost Rent for office space Sales commissions Utility bills 3 / 25 The cash flow statement primarily deals with: Operating, investing, and financing activities Revenue and expenses Assets and liabilities Income and equity 4 / 25 What is the accounting treatment for bad debts? Expense is recognized when bad debts are written off Expense is recognized at the time of sale Revenue is reduced by bad debts Assets are increased by bad debts 5 / 25 What is depreciation? A decrease in the value of an asset over time due to usage or obsolescence The total amount of cash a company earns The amount spent on repairing assets The allocation of income tax liabilities 6 / 25 The VAT (Value Added Tax) paid on purchases is recorded in which type of account? Expense account Asset account Liability account Income account 7 / 25 A company’s financial performance over a specific period is best represented by: Balance sheet Income statement Cash flow statement Statement of changes in equity 8 / 25 . What is the primary purpose of an audit? To ensure compliance with tax laws To determine the value of assets To examine the accuracy of financial statements To assess the company's profitability 9 / 25 Which of the following is the correct journal entry to record a purchase of office equipment on credit? Debit Office Equipment, Credit Accounts Payable Debit Accounts Payable, Credit Office Equipment Debit Office Equipment, Credit Cash Debit Cash, Credit Accounts Payable 10 / 25 Which of the following is not considered a direct cost? Direct materials Direct labour Rent for office space Rent for office space Factory utilities 11 / 25 The accounting principle that requires revenue to be recognized when it is earned is called: Matching principle Revenue recognition principle Conservatism principle Cost principle 12 / 25 Which of the following is an example of a non-cash transaction? Purchase of goods on credit Depreciation of assets Cash received from customers Cash received from customers 13 / 25 In which financial statement would you find the net profit? Balance sheet income statement Cash flow statement Statement of changes in equity 14 / 25 What is the effect of recording a payment of an account payable? Increase in assets, decrease in liabilities Decrease in assets, decrease in liabilities Increase in assets, increase in liabilities Decrease in assets, increase in liabilities 15 / 25 Which of the following is a current asset? Machinery Inventory Land Goodwill 16 / 25 Minors income is clubbed to Father’s income Mother’s income Father’s income or mother’s income whichever is greater Both mother’s and father’s income 17 / 25 Which of the following is not a part of the accounting equation? Assets Liabilities Revenue Owner’s Equity 18 / 25 What is the purpose of a trial balance? To check if total debits equal total credits To prepare the profit and loss statement To calculate tax liabilities To reconcile cash balances 19 / 25 Which of the following accounts is a liability? Accounts Receivable Accounts Payable Capital Cash 20 / 25 What does the term "double-entry bookkeeping" mean? Every transaction is recorded twice Each transaction affects two accounts Accounts are posted in both debit and credit columns Transactions are recorded in two different ledgers 21 / 25 Which of the following is an example of an intangible asset? Land Patent Machinery Inventory 22 / 25 In a perpetual inventory system, when inventory is sold, which account is updated? Inventory and Accounts Payable Sales Revenue and Cost of Goods Sold Cash and Accounts Payable Accounts Receivable and Inventory 23 / 25 What is the primary purpose of budgeting in accounting? To track actual performance against projected performance To estimate the taxes due for the year To allocate resources to different departments To ensure the accuracy of financial records 24 / 25 What is the main objective of financial accounting? To calculate taxes To record business transactions To prepare financial statements for external stakeholders To prepare budgets 25 / 25 Which of the following is an example of an accrued liability? Wages payable Accounts Receivable Loan receivable Prepaid expenses Your score isThe average score is 24% 0% Restart quiz
