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 accounts normally have credit balances?

Revenues, liabilities, and expenses

Revenues, liabilities, and retained earnings

Revenues, liabilities, and dividends

Revenues, liabilities, and assets

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

None of the above

Statement of Owner's equity

Statement of cash flows

Balance Sheet

Income statement

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

Notes Payable and Service Revenue

Treasury Stock and Common Stock

Cash and Accounts Receivable

Common Stock and Rent Expense

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

Revenues, credit

Asset, debit

Liability, credit

Expenses, debit

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5. Withdrawals increase equity

True

False

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

Dividends

Accounts Receivable

Cash

Revenue

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

None of the above

$120,000

$200,000

$80,000

$8,000

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

equity increased by $500 (Credited).

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

liabilities decreased by $500 (Debited)

assets increased by $500 (Debited).

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

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

An increase in fees earned 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. When a company performs a service but has not yet received payment, it

debits Accounts Receivable and credits Service Revenue.

makes no entry until cash is received.

debits Service Revenue and credits Accounts Receivable.

debits Service Revenue and credits Accounts Payable.

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

Increase in accounts receivable and a decrease in equity

Increase in accounts receivable and an increase in equity

Decrease in accounts receivable and an increase in equity

Decrease in accounts receivable and a decrease in equity

Increase in fees earned and a decrease in equity

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

Income statement

Statement of Cash flows

Balance Sheet

Statement of Stockholder's equity

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

Asset Account

Liability Account

Revenue Account

Expense Account

None of the above

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16. Debits

increase assets and decrease liabilities

increase both assets and liabilities.

decrease both assets and liabilities.

decrease assets and increase liabilities.

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

Statement of stockholders Equity

Statement of Cashflows

Balance Sheet

Income Statement

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

Land

Service Revenue

Interest Payable

Common Stock

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

None of the above

Increase in equipment and a decrease in liabilities

Increase in equipment and an increase in equity

Increase in equipment and a decrease in equity

Increase in equipment and an increase in liabilities

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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?

$14,000

$32,000

$50,000

$18,000

Your score is

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