A contra asset account has what type of balance?

a) Debit
b) Credit
c) Contra
d) All the given options

Long term assets without any physical existence but, possessing a

value are called
a) Intangible assets
b) Fixed assets
c) Current assets
d) Investments

Which of the following is correct about double entry system of

accounting?
a) Every business transaction brings at least two financial changes in business
b) Financial changes are recorded as debits or credits in two or more accounts
c) Every debit entry has a corresponding credit entry
d) All of the above

What is the main purpose of financial accounting?*

a) Organize financial information
b) Keep track of company expenses
c) Minimize company taxes
d) Provide useful financial information to outsiders

Inventories, cash and equivalents, and accounts receivables are listed

as
a) Earnings on Income Statement
b) Payments on Income Statement
c) Assets on the Balance Sheet
d) Liabilities on the Balance Sheet

A company had opening inventory of $200,000. Sales and purchases

during the period were of $400,000 and $80,000 respectively. What is
the gross profit for the period if the closing inventory was worth
$100,000?
a) $20,000
b) $120,000
c) $220,000
 d) $320,000
The calculation for gross profit is:

Gross Profit = Sales - Cost of Goods Sold

Cost of Goods Sold = Opening Inventory + Purchases - Closing

Inventory

Cost of Goods Sold = $200,000 + $80,000 - $100,000 = $180,000

Gross Profit = $400,000 - $180,000 = $220,000

Therefore, the answer is (c) $220,000.

Gross profit is ---------------

a) Cost of goods sold + Opening stock
b) Sales – cost of goods sold
c) Sales – Purchases
d) Net profit – expenses

At the balance sheet date, the balance on the Accumulated Provision

for Depreciation Account is
a) Simply deducted from the asset in the Balance Sheet
b) Transferred to Profit and Loss Account
c) Transferred to the Asset Account
d) Transferred to Depreciation Account

A firm buys products but does not pay to suppliers instantly. This is
recorded as
a) Account Receivable
b) Account Payable
c) Accumulated Liabilities
d) Current Liabilities

The accrual basis of accounting records revenues when they are:

a) Collected
b) Earned
 c) Contracted
d) Readily available for use
The overriding purpose of financial accounting is to summarize
financial activity in business in the _____
a) Profit and loss statement
b) Balance sheet
c) Cash flow statement
d) All of the above

Which of these is not included as a separate item in the basic

accounting equation?
a) Assets
b) Revenues
c) Liabilities
d) Stock holder's Equity

Asset accounts have what type of balance?

a) Debit
b) Credit
c) Contra
d) All the given options

Which account increases equity?

a) Expenses
b) Withdrawals
c) Revenues
d) Treasury stock

Which of the following is part of the double entry system in

Accounting?
a) Cash book
b) General journal
c) Sales journal
d) Trial balance

A debit entry usually represents

 a) Assets and Expenses
b) Assets and Income
c) Liabilities and Income
d) Liabilities and Expenses

Goods which originally cost $800 were sold for $1,000. In the
accounting equation Net Assets will?
a) Rise by $1,000
b) Rise by $200
c) Fall by $1,000
d) Fall by $200

In a T-account, the balance is equal to:

a) The total of all debit entries
b) The total of all credit entries
c) The difference between the total of debit entries and the total of credit entries
d) The total of all debit and credit entries

Which account is not a liability account?

a) Accounts payable
b) Accrued expenses
c) Cash
d) Notes payable

Which financial statement uses the expanded accounting equation?

a) Income statement
b) Balance sheet
c) Cash flow statement
d) Statement of stock holder's equity