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Business Accounting - Chapter 2

A classroom setting with students engaging in accounting discussions, showcasing a chalkboard filled with accounting equations and transactions, emphasizing the learning aspect of business accounting.

Understanding Business Accounting

Test your knowledge of basic accounting concepts with this engaging quiz! Designed to challenge your understanding of business transactions, accounting principles, and financial reporting, this quiz offers a comprehensive overview of key topics in accounting.

Key Features:

16 thought-provoking questions
Multiple choice format for easy answering
Instant feedback on your selections

16 Questions4 MinutesCreated by CalculatingEagle27

Name:

A transaction is any event that has a financial impact on the business and that can be measured.

True

False

Business events are recorded even if the financial impact cannot be measured.

True

False

Transactions provide objective information about the financial impact of an exchange on an entity.

True

False

The account is the basic summary device of accounting.

True

False

An account receivable represents the promise of the business to pay a debt.

True

False

Prepaid rent is an expense because the payment provides a future benefit of the company.

True

False

Assets include cash, land, and accounts payable.

True

False

Cost of goods sold is an example of a revenue account.

True

False

An accrued liability is a liability for an expense that has not yet been paid.

True

False

A prepaid expense is an asset.

True

False

Which of the following is NOT a business transaction?

A company buys goods on account

A company sells land for cash

A company fired 10 percent of the employees due to poor sales

A company borrows money from the bank

Which of the following is a business transaction?

A company signs a contract for services to be provided during the first quarter of the next fiscal year

A company pays its employees a year-end bonus

A company hires a new marketing manager.

A company applies for a mortgage that will be used to purchase a new office building.

Which transaction increases stockholders' equity?

Sale of common stock

Dividends that are declared and paid

Expenses greater than revenues for the period

Payment of operating expenses

Which transaction decreases stockholders' equity?

Sale of common stock

Cash purchase of land

Total revenues greater than total expenses for the period

Total expenses greater than total revenues for the period

Which transaction decreases stockholders' equity?

Inventory was purchased on account

Services were performed on account

Services were performed and cash was immediately received from the customers

Employees worked one week and were paid at the end of the week.

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