Let's Play!

Let’s Play - Bookkeeping Knowledge Quiz

Let' s Play!

1. What is the primary purpose of bookkeeping?

• A) To create financial reports for investors

• B) To track and record financial transactions

• C) To prepare tax returns

• D) To calculate payroll

2. Which of the following accounts is considered a liability?

• A) Cash

• B) Accounts Payable

• C) Equipment

• D) Owner’s Equity

3. What is the accounting equation?

• A) Assets = Liabilities + Owner's Equity

• B) Assets = Revenue - Expenses

• C) Assets + Liabilities = Owner's Equity

• D) Liabilities = Assets + Expenses

4. In the double-entry bookkeeping system, what happens for every debit entry?

• A) A corresponding credit entry is recorded

• B) A transaction is voided

• C) A new account is created

• D) An invoice is generated

5. Which of the following financial statements is prepared using the information from the general ledger?

• A) Income Statement

• B) Statement of Cash Flows

• C) Balance Sheet

• D) All of the above

6. What is a journal entry?

• A) A record of daily cash transactions

• B) A summary of the financial position of a business

• C) A record of business transactions in the general ledger

• D) A detailed inventory report

7. What does the term “accrual basis of accounting” mean?

• A) Revenue is recorded when received, and expenses when paid

• B) Revenues and expenses are recorded when earned or incurred, regardless of cash flow

• C) Only cash transactions are recorded

• D) Revenue is recorded at the end of the year

8. Which of the following would be classified as an operating expense on the income statement?

• A) Rent

• B) Equipment purchase

• C) Loan repayment

• D) Owner’s withdrawal

9. What does "reconciliation" mean in bookkeeping?

• A) The process of making financial entries in a journal

• B) The process of adjusting accounts to ensure that the general ledger matches the actual bank statement

• C) The process of creating an invoice for a sale

• D) The calculation of taxes owed by the business

10. What is a "trial balance"?

• A) A report showing the company's profits and losses

• B) A list of all accounts and their balances to check for errors before preparing financial statements

• C) A list of all customer transactions for a month

• D) A detailed ledger showing income and expenses

How did you do? Here's the answers.....

Answer Key:

1. B - To track and record financial transactions.

2. B - Accounts Payable.

3. A - Assets = Liabilities + Owner's Equity.

4. A - A corresponding credit entry is recorded.

5. D - All of the above.

6. C - A record of business transactions in the general ledger.

7. B - Revenues and expenses are recorded when earned or incurred, regardless of cash flow.

8. A - Rent.

9. B - The process of adjusting accounts to ensure that the general ledger matches the actual bank statement.

10. B - A list of all accounts and their balances to check for errors before preparing financial statements.