Accounting Online Program Accounting Basics 4

Question 1

What is the accounting equation?

Accepted Answer

Assets = Liabilities + Owner's Equity

Answer

The fundamental accounting equation states that Assets = Liabilities + Owner's Equity, which must always remain in balance.

Question 2

Which of the following best describes 'accounts payable'?

Accepted Answer

Money the business owes to suppliers

Answer

Accounts Payable represents short-term obligations owed to suppliers or vendors for goods and services purchased on credit.

Question 3

When a business records depreciation, which account is debited?

Accepted Answer

Depreciation Expense

Answer

Depreciation Expense is debited to recognize the cost allocation, and Accumulated Depreciation is credited.

Question 4

Which inventory costing method assigns the cost of the most recently purchased goods to cost of goods sold?

Accepted Answer

LIFO

Answer

LIFO (Last-In, First-Out) assumes the most recently purchased inventory is sold first, affecting COGS and ending inventory values.

Question 5

A bank reconciliation is used to:

Accepted Answer

Reconcile differences between the cash ledger balance and the bank statement balance

Answer

A bank reconciliation identifies and explains differences between the company's cash records and the bank's records.

Accounting Online Program Practice Test