Accounting is the study and practice of keeping track of and disclosing financial transactions. With this feedback loop in place, managers can see how their firm is performing in relation to what they had hoped. To understand how an accounting system works and how it is used to generate financial reports, the following review of accounting fundamentals is necessary.
System of Record Keeping
A systematic approach to record-keeping is recommended at the outset. Accounts must be set up and financial information must be stored in them. Accounts fall under the following classifications:
- Assets: Assets are purchased things that are not immediately used.
- Liabilities: Liabilities are commitments owed by a company that must be paid in the future.
- Equity: Equity is the difference between the value of a company's entire assets and its total liabilities.
- Revenue: Product or service prices that are passed on to end-users in the form of a bill.
- Expenses: The term "expenses" is used to describe the use of assets throughout the measurement period.
Transactions
As an accountant, you are responsible for a wide range of business transactions that come from different divisions of the company. These transactions result in a change in the balances of the accounts mentioned before. The following are some critical transactions
- The purchase of supplies and services is necessary.
- Product and service offerings should be marketed to potential customers.
- Client money is collected.
- In order to retain workers, you must compensate them
Reporting
Accounting records are compiled and reorganized into three documents known as financial statements by the accountant following the completion of all transactions for a given accounting period. A few examples of this kind follow
- Income Statement
- Statement of Cash Flows
- Balance Sheet
Additional Accounting Topics
The basic accounting data only gives a vague idea of what an accountant's job entails. Besides the topics listed below, there are many more specialized fields of accounting.
- Tax Accounting
- Cost Accounting
- Internal Auditing
Following are some of the multiple choice questions on the Accounting Basics with answers that will help the students in developing their knowledge.
Accounting Basics MCQ
1. Expense is debit or credit ?
2. A bank reconciliation statement is prepared by?
3. The main purpose of preparing a bank reconciliation statement is?
4. What are source documents?
5. Diterima pendapatan jasa bengkel Rp 250.000jurnal nya adalah...
6. The bone building cells.
7. Accounting entries involve a minimum of how many accounts?
8. One of the following is an example of materiality concept:
9. Unearned Revenues is what type of account?
10. The petty cash fund is a liability with a normal debit balance.
11. Uncollected cheques are also known as?
12. The business or economic entity concept is applicable to
13. Unfavourable balance means?
14. Favourable balance means?
15. The accounting equation is
16. Switching accounting principles every year would violate the
17. Assets taken out of a business for the owner's personal use
18. Entries to revenues accounts such as Service Revenues are usually
19. The accrual concept is the accounting rule requiring that whenever possible the amounts used in recording transactions be based on objective evidence rather than on subjective judgements.
20. Entries to expenses such as Rent Expense are usually
21. Anything of value that is owned
22. A decrease in owner's equity resulting from the operation of a business
24. To which account in the Balance Sheet is the net income or net loss transferred to at the end of the accounting period?
25. When cash is received, the account Cash will be
26. Liabilities often have the word __________ in their account title.
27. What will usually cause an asset account to increase?
28. Assets are usually reported on the balance sheet at which amount?
29. A business owned by one person
30. The balance on the debit side of the bank column of cash book indicates?
31. Amount owed by a business
32. Which of the following are Assets?
33. Concept: When a business activity is large enough to impact business decisions, it should be recorded clearly in the financial statements
34. Under the accrual basis of accounting, revenues are reported in the accounting period when the:
35. When a company pays a bill, the account Cash will be
36. What will usually cause the liability account Accounts Payable to increase?
37. Accrual concept is based on :
38. The economic entity assumption states that economic events can be identified with a particular unit or accountability.
39. Things you own are asset or liability
40. A balance sheet reports a business's financial
41. A petty cash fund is always replenished
42. What is the difference between cash and credit transaction?
43. Financial reports that summarize the financial condition and operations of a business
44. The account used to summarize the owner's equity in a business
45. The amount in an account
46. An increase in owner's equity resulting from the operation of a business
47. How would an accountant record an increase in sales?
48. How would an accountant record an increase in cash?
49. Explain a measure to improve collection from debtors
50. If I take home $500 for personal use from my business which transactions will I carry out
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