Accounting Basics Flashcards
7 cards from real Accounting Online Program practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Accounting Basics flashcards as text
Which accounting principle requires expenses to be recorded in the same period as the revenues they helped generate?
Answer: Matching principle
The matching principle ensures expenses are recognized in the same period as the related revenues, providing an accurate picture of profitability.
What is the normal balance of a liability account?
Answer: Credit
Liability accounts carry a normal credit balance because liabilities represent amounts owed that increase with credits.
A company purchases office supplies for $500 cash. Which entry correctly records this transaction?
Answer: Debit Supplies $500, Credit Cash $500
Purchasing supplies increases the Supplies asset (debit) and decreases Cash (credit).
Which financial statement shows a company's revenues and expenses over a period of time?
Answer: Income statement
The income statement reports revenues, expenses, and net income or loss for a specific accounting period.
What does the term 'going concern' assume about a business?
Answer: It will continue operating indefinitely
The going concern assumption presumes a business will continue operating long enough to fulfill its obligations and objectives.
Which account would be credited when a business earns service revenue on account?
Answer: Service Revenue
Earning service revenue on account debits Accounts Receivable and credits Service Revenue.
What is the purpose of a trial balance?
Answer: To verify that total debits equal total credits
A trial balance checks the mathematical accuracy of the ledger by confirming that total debits equal total credits.