Accounting Basics Practice Quiz

Test your knowledge with this practice quiz

You get to see the correct answers on submission of the quiz. We can help you master accounting basics concepts and help you build a strong foundation for the future.

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Accounting basics quiz 1

This accounting basics quiz helps us to increase our knowledge and understanding of accounting

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1. When a company performs a service but has not yet received payment, it

debits Accounts Receivable and credits Service Revenue.

debits Service Revenue and credits Accounts Receivable.

makes no entry until cash is received.

debits Service Revenue and credits Accounts Payable.

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2. Which of the following accounts is increased with a debit?

Common Stock

Interest Payable

Land

Service Revenue

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3. Which financial statement reports the revenues and expenses for a period of time such as a year or a month?

Statement of Cashflows

Income Statement

Statement of stockholders Equity

Balance Sheet

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4. The total assets and total liabilities of a firm are reported on which of the following?

Balance Sheet

Income statement

None of the above

Statement of cash flows

Statement of Owner's equity

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5. Which financial statement reports the assets, liabilities, and stockholders’ (owner’s) equity at a specific date?

Income statement

Balance Sheet

Statement of Cash flows

Statement of Stockholder's equity

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6. A debit is NOT the normal balance for which account listed below?

Revenue

Cash

Accounts Receivable

Dividends

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7. Which accounts normally have credit balances?

Revenues, liabilities, and expenses

Revenues, liabilities, and assets

Revenues, liabilities, and dividends

Revenues, liabilities, and retained earnings

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8. Purchasing equipment on account will have what effect on the components of the accounting equation?

Increase in equipment and an increase in equity

Increase in equipment and an increase in liabilities

Increase in equipment and a decrease in equity

Increase in equipment and a decrease in liabilities

None of the above

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9. The investment of cash in the business will result in which of the following?

A increase in cash and a increase in liabilities

An increase in cash and a decrease in equity

An increase in fees earned and an increase in equity

A decrease in cash and an decrease in liabilities

An increase in cash and an increase in equity

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10. Which of the following financial statements is concerned with the financial position of an enterprise at a point in time?

Retained Earnings statement

Income Statement

Balance Sheet

Statement of Cash Flows

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11. Assets total $100,000 and liabilities total $20,000. What is the equity of the business?

$80,000

$120,000

$200,000

$8,000

None of the above

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12. When cash is received from a customer in payment for an account receivable, how are the elements of the accounting equation affected?

None of the above

Decrease assets (cash and increase assets (accounts receivable)

Increase assets (cash) and decrease assets (accounts receivable)

Increase assets and increase equity

Increase assets and increase liabilities

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13. Powers Corporation received a cash advance of $500 from a customer. As a result of this event

equity increased by $500 (Credited).

liabilities decreased by $500 (Debited)

Both assets and equity increased by $500 (Debited and Credited)

assets increased by $500 (Debited).

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14. Withdrawals increase equity

False

True

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15. Which of the following describes the classification and normal balance of the Unearned Rent Revenue account?

Expenses, debit

Revenues, credit

Asset, debit

Liability, credit

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16. Debits

increase assets and decrease liabilities

decrease assets and increase liabilities.

decrease both assets and liabilities.

increase both assets and liabilities.

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17. Which pair of accounts is increased by recording a credit?

Common Stock and Rent Expense

Cash and Accounts Receivable

Notes Payable and Service Revenue

Treasury Stock and Common Stock

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18. Services rendered for which cash has not yet been received will have what effect on the components of the accounting equation?

Increase in fees earned and a decrease in equity

Decrease in accounts receivable and a decrease in equity

Decrease in accounts receivable and an increase in equity

Increase in accounts receivable and a decrease in equity

Increase in accounts receivable and an increase in equity

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19. An account titled Prepaid Rent would be classified as which of the following?

Liability Account

Asset Account

Revenue Account

Expense Account

None of the above

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20. If at the end of the accounting period the liabilities total $18,000, and equity totals $32,000, then what must be the total of the assets?

$18,000

$50,000

$32,000

$14,000

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