Understanding Accounting
Test Your Knowledge

Want to check your knowledge? See if you know the answers to these questions.

Accounting is an activity that assists an entity in making...
Decisions about product marketing
Decisions about human resourcees
Decisions about purchases
Decisions about expansion
All of the above
None of the above


All information related to the activity of accounting are called...
Personal assets
Accounting records
Accounting books
Financial statements


CPA stands for...
Candid Political Accountant
Certified Public Advocate
Certified Public Accountant
Certified Private Accountant
Crazy Public Accountant


The process of accounting is governed by...
The Internal Revenue Service
Securities and Exchange Commission
Principles and Concepts
American Accounting Assocation
All of the above
None of the above


If you begin operations of a business, do you keep financial records with expectations of selling the business within a few years time?
Yes
No


If you are the sole owner of a proprietorship and one of your clients or customers seeks restitution for damages and your business can't pay the amount, can your personal assets be used to meet this obligation?
Yes
No


If your business trades a typewriter for a fax machine, is that a legal business transaction that must be recorded in the books of accounting?
Yes
No


If you purchase for your business a van for $2,000 that has a market value of $2,500, which amount do you record in the books of accounting?
$2,000
$2,500


If an annual accounting period ends on December 31, can you include an expense made on January 1?
Yes
No


What is a simple form of journal?
A diary
A checkbook register
A card file
An address book


The purpose of the ledger is to...
Record transactions
Confuse the bookkeeper
Group and total similar transactions under one heading


The accounting equation is...
Capital - Assets = Liabilities
Assets = Liabilities + Capital
Assets - Liabilities = Capital
All of the above
None of the above


If your business purchases lands and buildings, do you depreciate the cost of the land?
Yes
No


To debit an account means to...
Subtract the amount
Enter the amount on the left side of the account
Add the amount
Enter the amount on the right side of the account


If you spent $500 for office supplies, you would record the transaction as...
A credit to cash and a credit to capital
A debit to cash and a debit to office supplies
A credit to cash and a debit to office supplies
A credit to capital and a debit to office supplies


A liability account normally has what type of balance?
Debit
Credit

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Copyright © 1997-2007 Kathleen A. O'Connell, ALL RIGHTS RESERVED.
Kat