CS CS Financial & Accounting Basics 1 — Questions and Answers
Question 1: What is the term for money owed TO a business by its customers?
- Accounts payable
- Accounts receivable (Correct answer)
- Petty cash
- Capital expenditure
Correct answer: Accounts receivable
Accounts receivable represents money customers owe the business for goods or services already delivered.
Question 2: Which financial document summarizes a company's assets, liabilities, and equity at a specific point in time?
- Income statement
- Cash flow statement
- Balance sheet (Correct answer)
- Budget report
Correct answer: Balance sheet
The balance sheet provides a snapshot of a company's financial position at a given date.
Question 3: Petty cash funds are used primarily for:
- Paying employee salaries
- Small, routine office expenses (Correct answer)
- Major capital purchases
- Tax payments
Correct answer: Small, routine office expenses
Petty cash covers minor day-to-day expenses such as postage, office supplies, or small refreshments.
Question 4: What does an invoice represent?
- A receipt for payment already made
- A bill sent to a customer requesting payment (Correct answer)
- A bank reconciliation statement
- A payroll record
Correct answer: A bill sent to a customer requesting payment
An invoice is a document sent by a seller to a buyer listing goods or services provided and the amount due.
Question 5: Which of the following is an example of a fixed expense?
- Office supply purchases
- Monthly rent (Correct answer)
- Overtime pay
- Travel reimbursements
Correct answer: Monthly rent
Fixed expenses remain constant each period regardless of business activity, such as monthly rent.
Question 6: Bank reconciliation is performed to:
- Calculate employee bonuses
- Match the company's records with the bank statement (Correct answer)
- Prepare tax returns
- Process vendor payments
Correct answer: Match the company's records with the bank statement
Bank reconciliation ensures the company's internal cash records agree with the bank's records, identifying discrepancies.
CS CS Financial & Accounting Basics 1
What is the term for money owed TO a business by its customers?