Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Managerial Accounting > 00- Financial Accounting Quiz > Flashcards

00- Financial Accounting Quiz Flashcards

1
Q

What is the primary purpose of financial accounting?

A

To provide financial information about a business to external users.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

True or False: Financial accounting is primarily concerned with internal management decisions.

A

False

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What are the three main financial statements?

A

The balance sheet, income statement, and cash flow statement.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Fill in the blank: The __________ shows a company’s assets, liabilities, and equity at a specific point in time.

A

balance sheet

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What does GAAP stand for?

A

Generally Accepted Accounting Principles.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Multiple Choice: Which of the following is NOT a component of equity? A) Common Stock B) Retained Earnings C) Accounts Payable D) Additional Paid-In Capital

A

C) Accounts Payable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is the accounting equation?

A

Assets = Liabilities + Equity.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

True or False: Revenue is recognized when cash is received.

A

False

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is the purpose of the income statement?

A

To report a company’s financial performance over a specific period.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Fill in the blank: The __________ method of accounting recognizes revenue when it is earned, regardless of when cash is received.

A

accrual

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is depreciation?

A

The allocation of the cost of a tangible asset over its useful life.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Multiple Choice: Which of the following is an example of a current asset? A) Land B) Inventory C) Equipment D) Patent

A

B) Inventory

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is the purpose of the cash flow statement?

A

To provide information about a company’s cash inflows and outflows during a period.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

True or False: Liabilities are obligations that a company owes to external parties.

A

True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is a ledger?

A

A collection of accounts that records all transactions for a business.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Fill in the blank: __________ accounting focuses on the preparation of financial statements for external users.

A

Financial

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is the role of an auditor in financial accounting?

A

To examine financial statements and ensure they are accurate and comply with regulations.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Multiple Choice: Which financial statement provides information about a company’s profitability? A) Balance Sheet B) Income Statement C) Cash Flow Statement D) Statement of Changes in Equity

A

B) Income Statement

19
Q

What is a trial balance?

A

A summary of all the debit and credit balances in the ledger accounts.

20
Q

True or False: The matching principle states that expenses should be recognized in the same period as the revenues they help to generate.

A

True

21
Q

What are accounts receivable?

A

Amounts owed to a company by customers for goods or services provided on credit.

22
Q

Fill in the blank: __________ is the process of recording financial transactions.

A

Bookkeeping

23
Q

What is the difference between gross profit and net profit?

A

Gross profit is revenue minus cost of goods sold; net profit is gross profit minus all other expenses.

24
Q

Multiple Choice: Which of the following is considered a long-term liability? A) Accounts Payable B) Notes Payable C) Mortgage Payable D) Accrued Expenses

A

C) Mortgage Payable

25
Q

What is an income statement also known as?

A

Profit and loss statement.

26
Q

True or False: The cash flow statement is divided into operating, investing, and financing activities.

A

True

27
Q

What is a balance sheet date?

A

The specific date at which a company’s financial position is reported.

28
Q

Fill in the blank: __________ is the systematic allocation of the cost of an intangible asset over its useful life.

A

Amortization

29
Q

What is the purpose of the statement of changes in equity?

A

To show the movement in equity accounts over a period.

30
Q

Multiple Choice: Which of the following is a non-current asset? A) Cash B) Accounts Receivable C) Equipment D) Inventory

A

C) Equipment

31
Q

What does the term ‘liquidity’ refer to?

A

A company’s ability to meet its short-term obligations.

32
Q

True or False: Retained earnings represent the cumulative profits of a company that have not been distributed to shareholders.

A

True

33
Q

What is a fiscal year?

A

A one-year period that companies use for financial reporting and budgeting.

34
Q

Fill in the blank: __________ is an accounting principle that requires expenses to be matched with revenues.

A

Matching principle

35
Q

What is the difference between cash basis and accrual basis accounting?

A

Cash basis recognizes revenues and expenses when cash is received or paid; accrual basis recognizes them when earned or incurred.

36
Q

Multiple Choice: Which of the following accounts would be considered an expense? A) Rent Expense B) Accounts Payable C) Cash D) Inventory

A

A) Rent Expense

37
Q

What is the significance of the notes to the financial statements?

A

They provide additional information and context about the financial statements.

38
Q

True or False: A company can have a positive cash flow but still report a net loss.

A

True

39
Q

What is a financial ratio?

A

A quantitative relationship between two financial statement items used for analysis.

40
Q

Fill in the blank: __________ is the difference between total assets and total liabilities.

A

Equity

41
Q

What is the purpose of financial accounting standards?

A

To ensure consistency and transparency in financial reporting.

42
Q

Multiple Choice: Which of the following is an example of an investing activity? A) Issuing stock B) Purchasing equipment C) Paying dividends D) Borrowing money

A

B) Purchasing equipment

43
Q

What is the role of the Financial Accounting Standards Board (FASB)?

A

To establish and improve financial accounting standards in the U.S.

Managerial Accounting (3 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions