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

Income Statement

Statement of Cashflows

Statement of stockholders Equity

Balance Sheet

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

Decrease in accounts receivable and an increase in equity

Increase in accounts receivable and an increase in equity

Increase in accounts receivable and a decrease in equity

Decrease in accounts receivable and a decrease in equity

Increase in fees earned and a decrease in equity

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

None of the above

Income statement

Statement of cash flows

Balance Sheet

Statement of Owner's equity

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4. 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 and increase equity

Increase assets and increase liabilities

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

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

Statement of Stockholder's equity

Income statement

Statement of Cash flows

Balance Sheet

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6. Which accounts normally have credit balances?

Revenues, liabilities, and assets

Revenues, liabilities, and retained earnings

Revenues, liabilities, and expenses

Revenues, liabilities, and dividends

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

Liability, credit

Revenues, credit

Asset, debit

Expenses, debit

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

Interest Payable

Common Stock

Service Revenue

Land

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

Increase in equipment and a decrease in equity

None of the above

Increase in equipment and an increase in equity

Increase in equipment and a decrease in liabilities

Increase in equipment and an increase in liabilities

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

Cash and Accounts Receivable

Notes Payable and Service Revenue

Treasury Stock and Common Stock

Common Stock and Rent Expense

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

Statement of Cash Flows

Balance Sheet

Retained Earnings statement

Income Statement

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

$120,000

$80,000

$8,000

$200,000

None of the above

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13. Debits

decrease both assets and liabilities.

increase assets and decrease liabilities

decrease assets and increase liabilities.

increase both assets and liabilities.

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14. 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?

$50,000

$18,000

$32,000

$14,000

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

An increase in fees earned and an increase in equity

A decrease in cash and an decrease in liabilities

An increase in cash and a decrease in equity

An increase in cash and an increase in equity

A increase in cash and a increase in liabilities

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

Cash

Accounts Receivable

Revenue

Dividends

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

debits Service Revenue and credits Accounts Payable.

debits Service Revenue and credits Accounts Receivable.

debits Accounts Receivable and credits Service Revenue.

makes no entry until cash is received.

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18. Withdrawals increase equity

False

True

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

liabilities decreased by $500 (Debited)

equity increased by $500 (Credited).

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

assets increased by $500 (Debited).

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

Liability Account

None of the above

Revenue Account

Asset Account

Expense Account

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