FREE AFC Accounting Principles and Concepts Questions and Answers

Question 1

Which financial statement displays the revenues and expenses of a company for a period of time?

Accepted Answer

Income Statement

Answer

Explanation:
The income statement displays all revenues and expenses recorded in a period in a single report.

Question 2

What is the main purpose of financial accounting?

Accepted Answer

Provide useful, financial information to outsiders

Answer

Explanation:
The purpose of financial accounting is to provide useful information for outside investors, creditors, and others.

Question 3

Which of these is not included as a separate item in the basic accounting equation?

Accepted Answer

Revenues

Answer

Explanation:
Revenues are not included in the basic accounting equation:
Assets = Liabilities + Owner’s Equity.

Question 4

The accrual basis of accounting records revenues when they are:

Accepted Answer

Earned

Answer

Explanation:
The accrual basis of accounting recognizes revenues when they are earned, regardless of when the cash is actually received. This means that revenues are recorded at the time the goods are delivered or services are performed, aligning the recognition of revenues with the associated expenses. This method provides a more accurate picture of a company's financial position because it matches revenues generated during a period with the expenses related to generating those revenues, regardless of when cash transactions occur.

Question 5

The account format that displays debits, credits, balances, and headings:

Accepted Answer

T- Account

Answer

Explanation :
A T-account is a way to format accounting transactions that display debits on the left and credits on the right.

AFC - Accounting Fundamentals Certification Practice Test

AFC - Accounting Fundamentals Certification Practice Test

FREE AFC Accounting Principles and Concepts Questions and Answers