IKM Core Financial Accounting 2

Question 1

Which financial statement reports revenues and expenses over a period?

Accepted Answer

Income Statement

Answer

The Income Statement summarizes revenues, expenses, and profits over a reporting period.

Question 2

What is the accounting equation?

Accepted Answer

Assets = Liabilities + Equity

Answer

Assets equal Liabilities plus Equity, the basis for double-entry bookkeeping.

Question 3

Under accrual accounting, when is revenue recognized?

Accepted Answer

When goods or services are delivered

Answer

Under ASC 606, revenue is recognized when the performance obligation is satisfied.

Question 4

What does GAAP stand for?

Accepted Answer

Generally Accepted Accounting Principles

Answer

GAAP is the set of accounting standards used for U.S. financial reporting.

Question 5

Which depreciation method allocates an equal amount each year?

Accepted Answer

Straight-line

Answer

Straight-line divides the depreciable amount equally across the asset's useful life.

IKM - International Knowledge Measurement Practice Test