Business Degree Accounting Principles 1

Question 1

The fundamental accounting equation states that Assets equal Liabilities plus ___.

Accepted Answer

Owner's Equity

Answer

The accounting equation (Assets = Liabilities + Owner's Equity) reflects that all assets are financed either by debt or by the owner's investment.

Question 2

Which financial statement shows a company's financial position at a specific point in time?

Accepted Answer

Balance Sheet

Answer

The balance sheet is a snapshot of a company's assets, liabilities, and equity at a specific date, unlike other statements which cover a period.

Question 3

Double-entry bookkeeping requires that each financial transaction affects at least how many accounts?

Accepted Answer

Two

Answer

Double-entry bookkeeping records each transaction as both a debit and a credit, always affecting at least two accounts to maintain balance.

Question 4

Which of the following is an example of a current asset?

Accepted Answer

Accounts Receivable

Answer

Accounts receivable is a current asset because it is expected to be converted to cash within one year or the operating cycle.

Question 5

The principle that expenses should be recognized in the same period as the revenues they helped generate is called the:

Accepted Answer

Matching Principle

Answer

The matching principle ensures that expenses are recorded in the same accounting period as the revenues they generated, providing an accurate picture of profitability.

Business Degree Practice Test

Business Degree Practice Test

Business Degree Accounting Principles 1