What is the purpose of financial accounting?
A) Planning and decision-making
B) Reporting financial information to external parties
C) Managing internal controls
D) Budgeting and forecasting
Answer: B) Reporting financial information to external parties
Which financial statement provides information about a company’s financial position at a specific point in time?
A) Income statement
B) Balance sheet
C) Statement of cash flows
D) Statement of retained earnings
Answer: B) Balance sheet
What does the term “double-entry accounting” mean?
A) Recording transactions twice to ensure accuracy
B) Recording transactions in two separate journals
C) Recording equal debits and credits for each transaction
D) Recording transactions in multiple currencies
Answer: C) Recording equal debits and credits for each transaction
Which of the following is an example of an asset account?
A) Accounts payable
B) Accounts receivable
C) Accumulated depreciation
D) Salaries expense
Answer: B) Accounts receivable
What is the purpose of the income statement?
A) To show a company’s financial position at a specific point in time
B) To report changes in a company’s equity during a period
C) To disclose a company’s sources and uses of cash during a period
D) To show a company’s financial performance over a period of time
Answer: D) To show a company’s financial performance over a period of time
Which of the following is an example of an expense account?
A) Accounts receivable
B) Prepaid expenses
C) Cost of goods sold
D) Accumulated depreciation
Answer: C) Cost of goods sold
What does the term “GAAP” stand for in accounting?
A) Generally Acknowledged Accounting Principles
B) Generally Applied Accounting Protocols
C) Generally Accepted Auditing Procedures
D) Generally Accepted Accounting Principles
Answer: D) Generally Accepted Accounting Principles
Which financial statement provides information about a company’s cash inflows and outflows from operating, investing, and financing activities?
A) Income statement
B) Balance sheet
C) Statement of cash flows
D) Statement of retained earnings
Answer: C) Statement of cash flows
What does the term “tax deduction” refer to?
A) A reduction in taxable income
B) A reduction in tax rates
C) A reduction in tax penalties
D) A reduction in tax refunds
Answer: A) A reduction in taxable income
Which of the following is a current liability?
A) Long-term debt
B) Accounts receivable
C) Accounts payable
D) Property, plant, and equipment
Answer: C) Accounts payable
What does the term “tax credit” refer to?
A) A reduction in tax rates
B) A direct reduction in taxes owed
C) A reduction in tax penalties
D) A reduction in tax refunds
Answer: B) A direct reduction in taxes owed
Which of the following financial statements provides information about a company’s sources of equity financing?
A) Income statement
B) Balance sheet
C) Statement of cash flows
D) Statement of retained earnings
Answer: D) Statement of retained earnings
What does the term “tax liability” refer to?
A) The total amount of taxes owed to the government
B) The total amount of tax deductions
C) The total amount of tax credits
D) The total amount of tax refunds
Answer: A) The total amount of taxes owed to the government
Which of the following is an example of a long-term liability?
A) Accounts payable
B) Salaries payable
C) Notes payable
D) Prepaid expenses
Answer: C) Notes payable
What is the purpose of the statement of cash flows?
A) To show a company’s financial position at a specific point in time
B) To report changes in a company’s equity during a period
C) To disclose a company’s sources and uses of cash during a period
D) To show a company’s financial performance over a period of time
Answer: C) To disclose a company’s sources and uses of cash during a period
Which of the following is an example of a contra asset account?
A) Prepaid expenses
B) Accumulated depreciation
C) Accounts receivable
D) Notes payable
Answer: B) Accumulated depreciation
What does the term “tax evasion” refer to?
A) Legal ways to minimize taxes
B) Intentionally avoiding paying taxes
C) Overstating deductions on tax returns
D) Making errors on tax forms
Answer: B) Intentionally avoiding paying taxes
Which financial statement provides information about a company’s revenue and expenses during a period?
A) Income statement
B) Balance sheet
C) Statement of cash flows
D) Statement of retained earnings
Answer: A) Income statement
What does the term “tax exemption” refer to?
A) A reduction in tax rates
B) A reduction in taxable income
C) Excluding certain income from taxation
D) Excluding certain expenses from taxation
Answer: C) Excluding certain income from taxation
Which of the following is an example of an intangible asset?
A) Land
B) Equipment
C) Inventory
D) Goodwill
Answer: D) Goodwill
What does the term “tax audit” refer to?
A) A review of financial statements by tax authorities
B) A review of tax returns by tax authorities
C) A review of accounting records by tax authorities
D) A review of payroll records by tax authorities
Answer: B) A review of tax returns by tax authorities
Which financial statement provides information about changes in a company’s equity during a period?
A) Income statement
B) Balance sheet
C) Statement of cash flows
D) Statement of retained earnings
Answer: D) Statement of retained earnings
What does the term “tax deduction” refer to?
A) A reduction in tax rates
B) A reduction in taxable income
C) A reduction in tax penalties
D) A reduction in tax refunds
Answer: B) A reduction in taxable income
Which of the following financial statements provides information about a company’s cash inflows and outflows from operating, investing, and financing activities?
A) Income statement
B) Balance sheet
C) Statement of cash flows
D) Statement of retained earnings
Answer: C) Statement of cash flows
What does the term “tax credit” refer to?
A) A reduction in tax rates
B) A direct reduction in taxes owed
C) A reduction in tax penalties
D) A reduction in tax refunds
Answer: B) A direct reduction in taxes owed
Which of the following financial statements provides information about a company’s revenue and expenses during a period?
A) Income statement
B) Balance sheet
C) Statement of cash flows
D) Statement of retained earnings
Answer: A) Income statement
What does the term “tax evasion” refer to?
A) Legal ways to minimize taxes
B) Intentionally avoiding paying taxes
C) Overstating deductions on tax returns
D) Making errors on tax forms
Answer: B) Intentionally avoiding paying taxes
Which of the following financial statements provides information about a company’s financial position at a specific point in time?
A) Income statement
B) Balance sheet
C) Statement of cash flows
D) Statement of retained earnings
Answer: B) Balance sheet
What does the term “tax exemption” refer to?
A) A reduction in tax rates
B) A reduction in taxable income
C) Excluding certain income from taxation
D) Excluding certain expenses from taxation
Answer: C) Excluding certain income from taxationWhich of the following is an example of an intangible asset?
A) Land
B) Equipment
C) Inventory
D) Goodwill
Answer: D) Goodwill
What does the term “tax audit” refer to?
A) A review of financial statements by tax authorities
B) A review of tax returns by tax authorities
C) A review of accounting records by tax authorities
D) A review of payroll records by tax authorities
Answer: B) A review of tax returns by tax authorities
Which of the following financial statements provides information about changes in a company’s equity during a period?
A) Income statement
B) Balance sheet
C) Statement of cash flows
D) Statement of retained earnings
Answer: D) Statement of retained earnings
What does the term “tax deduction” refer to?
A) A reduction in tax rates
B) A reduction in taxable income
C) A reduction in tax penalties
D) A reduction in tax refunds
Answer: B) A reduction in taxable income
Which of the following financial statements provides information about a company’s cash inflows and outflows from operating, investing, and financing activities?
A) Income statement
B) Balance sheet
C) Statement of cash flows
D) Statement of retained earnings
Answer: C) Statement of cash flows
What does the term “tax credit” refer to?
A) A reduction in tax rates
B) A direct reduction in taxes owed
C) A reduction in tax penalties
D) A reduction in tax refunds
Answer: B) A direct reduction in taxes owed
Which of the following financial statements provides information about a company’s revenue and expenses during a period?
A) Income statement
B) Balance sheet
C) Statement of cash flows
D) Statement of retained earnings
Answer: A) Income statement
What does the term “tax evasion” refer to?
A) Legal ways to minimize taxes
B) Intentionally avoiding paying taxes
C) Overstating deductions on tax returns
D) Making errors on tax forms
Answer: B) Intentionally avoiding paying taxes
Which of the following financial statements provides information about a company’s financial position at a specific point in time?
A) Income statement
B) Balance sheet
C) Statement of cash flows
D) Statement of retained earnings
Answer: B) Balance sheet
What does the term “tax exemption” refer to?
A) A reduction in tax rates
B) A reduction in taxable income
C) Excluding certain income from taxation
D) Excluding certain expenses from taxation
Answer: C) Excluding certain income from taxation
Which of the following is an example of an intangible asset?
A) Land
B) Equipment
C) Inventory
D) Goodwill
Answer: D) Goodwill
What does the term “tax audit” refer to?
A) A review of financial statements by tax authorities
B) A review of tax returns by tax authorities
C) A review of accounting records by tax authorities
D) A review of payroll records by tax authorities
Answer: B) A review of tax returns by tax authorities
Which of the following financial statements provides information about changes in a company’s equity during a period?
A) Income statement
B) Balance sheet
C) Statement of cash flows
D) Statement of retained earnings
Answer: D) Statement of retained earnings
What does the term “tax deduction” refer to?
A) A reduction in tax rates
B) A reduction in taxable income
C) A reduction in tax penalties
D) A reduction in tax refunds
Answer: B) A reduction in taxable income
Which of the following financial statements provides information about a company’s cash inflows and outflows from operating, investing, and financing activities?
A) Income statement
B) Balance sheet
C) Statement of cash flows
D) Statement of retained earnings
Answer: C) Statement of cash flows
What does the term “tax credit” refer to?
A) A reduction in tax rates
B) A direct reduction in taxes owed
C) A reduction in tax penalties
D) A reduction in tax refunds
Answer: B) A direct reduction in taxes owed
Which of the following financial statements provides information about a company’s revenue and expenses during a period?
A) Income statement
B) Balance sheet
C) Statement of cash flows
D) Statement of retained earnings
Answer: A) Income statement
What does the term “tax evasion” refer to?
A) Legal ways to minimize taxes
B) Intentionally avoiding paying taxes
C) Overstating deductions on tax returns
D) Making errors on tax forms
Answer: B) Intentionally avoiding paying taxes
Which of the following financial statements provides information about a company’s financial position at a specific point in time?
A) Income statement
B) Balance sheet
C) Statement of cash flows
D) Statement of retained earnings
Answer: B) Balance sheet
What does the term “tax exemption” refer to?
A) A reduction in tax rates
B) A reduction in taxable income
C) Excluding certain income from taxation
D) Excluding certain expenses from taxation
Answer: C) Excluding certain income from taxation
Which of the following is an example of an intangible asset?
A) Land
B) Equipment
C) Inventory
D) Goodwill
Answer: D) Goodwill