Business Services Business Services Finance and Accounting 2

Question 1

What is a 'general ledger' in accounting?

Accepted Answer

The complete record of all financial transactions of a business

Answer

A general ledger is the master set of accounts that records every financial transaction of a company in double-entry format.

Question 2

What does 'gross profit margin' measure?

Accepted Answer

Revenue minus cost of goods sold, divided by revenue

Answer

Gross profit margin shows what percentage of revenue remains after deducting the cost of goods sold, indicating production efficiency.

Question 3

Which method records revenue when it is earned, not when cash is received?

Accepted Answer

Accrual basis accounting

Answer

Accrual accounting records revenues and expenses when they are incurred, regardless of when cash actually changes hands.

Question 4

What is a 'budget variance' in financial management?

Accepted Answer

The difference between budgeted and actual financial results

Answer

Budget variance is the difference between the budgeted amount and the actual amount spent or earned, used to track financial performance.

Question 5

What is the purpose of a 'balance sheet'?

Accepted Answer

To report a company's assets, liabilities, and equity at a point in time

Answer

A balance sheet provides a snapshot of a company's financial position, showing what it owns, what it owes, and the owners' equity at a specific date.

Business Services Practice Test