How Well Do You Know the Basics of Accounting?
Anonymous User
Created 6/10/2024
Test your knowledge of accounting with this quiz and see how you stack up! Answer 10 questions and find out how many you get correct.
1. What is the meaning of 'window dressing' in accounting?
Concealing vital facts to show a better financial position
Decorating shop windows
Enhancing the look of financial statements for aesthetic purposes
Revising the accounting standards
2. Which of the following is one of the major limitations of using historical costs in accounting?
It considers inflation
It does not consider price changes
It is easier to calculate
It is less accurate
3. What is one reason why accounting is not fully exact?
All transactions are recorded based on evidence
Depreciation is calculated based on estimated useful life
Cash transactions are always accurate
There are no estimates involved
4. The process of accounting should operate in conformity with what?
Generally accepted accounting principles (GAAP)
Personal preferences
Market trends
Random calculations
5. What does the Going Concern Concept assume about a business entity?
It will liquidate soon
It will continue to operate for an indefinite amount of time
It will change its business model every year
It will operate without any assets
6. According to the Historical Cost Concept, how is an asset recorded?
At its current market value
At the price paid to acquire it
At its future value
At an estimated value
7. Financial accounting primarily assists in what?
Maximizing profits
Keeping a systematic record of financial transactions
Predicting stock market trends
Analyzing customer behavior
8. Which of the following statements is true about cost accounting?
It is used to record revenue
It helps in controlling costs and decision-making
It has no use in service industries
It is only used for income tax calculations
9. What is the primary objective of accounting?
To design marketing strategies
To communicate accounting information to various interested parties
To develop new business models
To replace the need for bookkeeping
10. What is the first step in the accounting cycle?
Preparing financial statements
Recording transactions in the journal
Posting to the general ledger
Calculating trial balance
