What should you do when the previous balance is in the Credit column and the entry is a Debit? Add the debit amount to the balance Subtract the debit amount from the balance Enter the debit amount in the Credit column Ignore the debit entry

Subtract the debit amount from the balance

How should you handle a calculation that results in a negative number in the ledgers? Record the negative number as is Convert the number to its absolute value Enter the balance in the opposite balance column Round the number to zero

Enter the balance in the opposite balance column

After posting a transaction to the ledger, what should you do in the journal? Rewrite the transaction with a different amount Enter an 'x' or checkmark in the PR column Add a new transaction Calculate a new balance

Enter an 'x' or checkmark in the PR column

What is the purpose of closing entries in accounting? To prepare financial statements To ensure balances carry over to the next cycle To reset income statement account balances to zero To record transactions for the next month

To reset income statement account balances to zero

What does the retained earnings balance represent? Total expenses incurred during a period Accumulated profit since the business began Total revenue generated in a month Net losses over the months

Accumulated profit since the business began

What happens to the Retained Earnings balance after the first month? It remains zero It equals the net income for the first month It is divided by expenses It decreases to zero

It equals the net income for the first month

What equation represents net income in accounting? Revenue + Expenses = Net Income Revenue - Expenses = Net Income Assets = Liabilities + Equity Revenue = Expenses

Revenue - Expenses = Net Income

What is the primary purpose of a balance sheet? To show a company's financial position at a specific point in time To track cash inflows and outflows over time To summarize revenue and expenses over a period To predict future financial performance

To show a company's financial position at a specific point in time

What does the cash flow statement primarily report? The cash generated and used in operating, investing, and financing activities The profitability of a company over a period The financial position of a company at a specific date The total assets and liabilities

The cash generated and used in operating, investing, and financing activities

How are the balance sheet and income statement related? Net income from the income statement affects the equity section of the balance sheet Assets from the balance sheet appear on the income statement Cash balances are reported on both statements Liabilities determine revenue recognition

Net income from the income statement affects the equity section of the balance sheet

What is the significance of the net income figure on the income statement? It indicates the profitability of a company It shows the total cash flow It lists all liabilities It measures asset growth

It indicates the profitability of a company

What does 'equity' represent on a balance sheet? The owner's residual interest in the assets after liabilities The total revenue generated in a period The cash available for investment The company's liabilities

The owner's residual interest in the assets after liabilities

How do cash flow statements and income statements differ? Cash flow statements focus on cash movements, while income statements track profitability Income statements show financial position, cash flow statements show profitability Both focus solely on cash movements Income statements are for tax purposes, cash flow statements for investors

Cash flow statements focus on cash movements, while income statements track profitability

What is the main purpose of the balance sheet? To report a company's financial position at a specific point in time To show the company's revenues and expenses over a period To track the cash inflows and outflows during a period To provide information about the company's tax obligations

To report a company's financial position at a specific point in time

The cash flow statement is divided into which of the following sections? Operating, Investing, and Financing activities Assets, Liabilities, and Equity Revenues, Expenses, and Profits Current, Non-current, and Contingent

Operating, Investing, and Financing activities

What does the balance sheet equation \[ (Assets = Liabilities + Equity) \] represent? The company's profitability The company's liquidity The company's capital structure The company's cash flow

The company's capital structure

What is the purpose of the cash flow statement? To report a company's financial position at a specific point in time To provide detailed insights into cash inflows and outflows To summarize a company's revenues and expenses To outline the company's equity and liabilities

To provide detailed insights into cash inflows and outflows

How are non-cash expenses like depreciation shown in financial statements? As an operating activity in the cash flow statement As a liability in the balance sheet As an expense in the income statement As an asset in the balance sheet

As an expense in the income statement

What is the primary purpose of the cash flow statement? To measure profitability To track changes in equity To report cash inflows and outflows To list assets and liabilities

To report cash inflows and outflows

How are dividends paid reflected in financial statements? Increase in liabilities on the balance sheet Decrease in cash flow from operating activities Decrease in cash flow from financing activities Decrease in equity on the income statement

Decrease in cash flow from financing activities

Which of the following is a primary purpose of financial accounting? To provide financial information for short-term planning To document internal operational efficiencies To record all personal financial transactions To generate reports for external stakeholders

To generate reports for external stakeholders

What role does financial accounting play in investor decision-making? It assists in determining tax obligations It helps assess the feasibility of business strategies It provides historical performance data for valuation It advises on personal financial planning

It provides historical performance data for valuation

Financial accounting standards, such as GAAP or IFRS, primarily ensure: Reduction in tax liabilities Consistency and comparability of financial statements Increase in company profitability Internal audit effectiveness

Consistency and comparability of financial statements

How does financial accounting contribute to business transparency? By concealing financial discrepancies By providing timely and accurate reporting to stakeholders By focusing solely on cash flow management By eliminating the need for financial audits

By providing timely and accurate reporting to stakeholders

Which stakeholders are primarily interested in financial accounting reports? Internal management and board members only Creditors, investors, government, and employees Only shareholders and market analysts Competitors and regulatory agencies only

Creditors, investors, government, and employees

What impact does financial accounting have on business operations? It guides strategic decisions through operational metrics exclusively It informs resource allocation and investment decisions It solely tracks personal expenditures of executives It minimizes operational transparency

It informs resource allocation and investment decisions

Which of the following best represents the role of financial accounting in corporate governance? To primarily enhance employee performance To ensure accountability and regulatory compliance To facilitate only short-term financial gains To focus on marketing strategies effectiveness

To ensure accountability and regulatory compliance

Why is financial accounting critical for maintaining accountability? It allows for creative financial reporting It provides a factual financial position of the business It reduces the need for financial disclosures It simplifies complex financial transactions

It provides a factual financial position of the business

Through what mechanism does financial accounting influence capital markets? By manipulating stock prices By providing accurate financial information to investors By eliminating all risks associated with investment By setting interest rates

By providing accurate financial information to investors

What is the primary purpose of financial accounting? To provide financial information to stakeholders To manage company operations To develop marketing strategies To plan human resource needs

To provide financial information to stakeholders

Financial Accounting

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Title: Accounting Ledger Flashcards: Debit, Credit, and Balance Entry Rules

june2testccxi

MCQ 4 Cards

Financial Accounting

Financial Accounting Key Concepts Revenue and Earnings

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Financial Accounting

Title: Accounting Ledger Flashcards: Debit, Credit, and Balance Entry Rules

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Key Financial Statements Overview

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Understanding Key Financial Statements

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Financial Accounting

Flashcards on Purpose and Role of Financial Accounting (hard)

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Financial Accounting

Purpose and Role of Financial Accounting

user_mhaya

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Financial Accounting

Purpose and Role of Financial Accounting

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The accent (é), which changes the letter 'e' pronunciation to 'ay' and points to the right and upward.

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Term / Definition 7 Cards