Question 1

Which financial statement provides information on changes in equity items such as share capital and retained earnings?

Accepted Answer

d) Statement of changes in equity

Question 2

The term depreciation is most closely associated with which type of asset?

Accepted Answer

c) Fixed assets

Question 3

Which of the following is an example of a current liability on a balance sheet?

Accepted Answer

c) Accounts payable

Question 4

Which financial statement provides details about the companys cash inflows and outflows during a specific period?

Accepted Answer

b) Cash flow statement

Question 5

Which accounting principle requires recording revenues when they are earned and expenses when they are incurred, regardless of when cash is exchanged?

Accepted Answer

d) Revenue recognition principle

Question 6

Which of the following financial statements covers a specific period of time?

Accepted Answer

c) Income statement

Question 7

What is the term for the process of reducing the value of an asset due to obsolescence, wear and tear, or other factors?

Accepted Answer

d) Depreciation

Question 8

Which financial statement provides a snapshot of a companys financial position at a specific point in time?

Accepted Answer

c) Balance sheet

Question 9

Which of the following is an example of a non-current liability on a balance sheet?

Accepted Answer

c) Long-term debt

Question 10

The principle of conservatism in accounting suggests that when there are multiple acceptable accounting methods, which one should be chosen?

Accepted Answer

c) The method that is most conservative or cautious

Question 11

Which of the following is an example of an intangible asset?

Accepted Answer

c) Patents

Question 12

Which accounting principle suggests that financial statements should be prepared with the assumption that a business will continue to operate indefinitely?

Accepted Answer

b) Going concern principle

Question 13

In a balance sheet, which of the following is considered a non-current asset?

Accepted Answer

c) Buildings

Question 14

Which accounting standard is commonly followed by companies in the United States?

Accepted Answer

d) US GAAP (Generally Accepted Accounting Principles)

Question 15

What is the primary purpose of the accrual basis of accounting?

Accepted Answer

a) To record transactions as they occur

Question 16

In double-entry bookkeeping, which account represents the owners equity in a company?

Accepted Answer

c) Common stock

Question 17

Which financial statement shows the changes in the equity of a company during a specific period?

Accepted Answer

d) Statement of changes in equity

Question 18

In the balance sheet equation, Assets = Liabilities + Equity, what do assets represent?

Accepted Answer

a) What the company owns

Question 19

Which financial statement provides information on a companys cash inflows and outflows from operating, investing, and financing activities?

Accepted Answer

b) Cash flow statement

Question 20

Which accounting standard is followed in the preparation of financial statements for publicly traded companies in many countries?

Accepted Answer

b) IFRS (International Financial Reporting Standards)

Company accounts — Question Paper

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