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
What is the accounting equation?
Answer: Assets = Liabilities + Owner's Equity
The fundamental accounting equation states that Assets = Liabilities + Owner's Equity, which must always remain in balance.
Which of the following best describes 'accounts payable'?
Answer: Money the business owes to suppliers
Accounts Payable represents short-term obligations owed to suppliers or vendors for goods and services purchased on credit.
When a business records depreciation, which account is debited?
Answer: Depreciation Expense
Depreciation Expense is debited to recognize the cost allocation, and Accumulated Depreciation is credited.
Which inventory costing method assigns the cost of the most recently purchased goods to cost of goods sold?
Answer: LIFO
LIFO (Last-In, First-Out) assumes the most recently purchased inventory is sold first, affecting COGS and ending inventory values.
A bank reconciliation is used to:
Answer: Reconcile differences between the cash ledger balance and the bank statement balance
A bank reconciliation identifies and explains differences between the company's cash records and the bank's records.
Which of the following is a real (permanent) account?
Answer: Accounts Receivable
Accounts Receivable is a balance sheet account that carries its balance forward each period; revenue and expense accounts are temporary.
What is net income?
Answer: Total revenues minus total expenses
Net income equals total revenues minus total expenses for a given accounting period.