Business Services Business Services Finance and Accounting

Question 1

What does 'accounts payable' refer to in a business context?

Accepted Answer

Money owed by the company to suppliers

Answer

Accounts payable represents short-term liabilities a company owes to its vendors or suppliers for goods and services received.

Question 2

Which financial statement shows a company's revenues and expenses over a period?

Accepted Answer

Income statement

Answer

The income statement (also called profit and loss statement) summarizes revenues, costs, and expenses during a specific period.

Question 3

What is 'depreciation' in accounting?

Accepted Answer

The allocation of an asset's cost over its useful life

Answer

Depreciation systematically reduces the recorded cost of a fixed asset over its estimated useful life to match expense with revenue.

Question 4

Which ratio measures a company's ability to pay short-term obligations?

Accepted Answer

Current ratio

Answer

The current ratio (current assets ÷ current liabilities) measures how well a company can cover its short-term obligations with its short-term assets.

Question 5

What is 'working capital' in business finance?

Accepted Answer

Current assets minus current liabilities

Answer

Working capital is the difference between a company's current assets and current liabilities, representing the funds available for day-to-day operations.

Business Services Practice Test

Business Services Practice Test

Business Services Business Services Finance and Accounting