Question 1

What is the purpose of a cash book?

Accepted Answer

To record all cash transactions

Answer

To record credit transactions

Answer

To record only expenses

Answer

To record only sales

Question 2

What is the purpose of a trial balance?

Accepted Answer

To check the arithmetical accuracy of the ledger accounts

Answer

To record only sales

Answer

To record credit transactions

Answer

To record only expenses

Question 3

What is goodwill?

Accepted Answer

Intangible asset representing the premium value of a business over its tangible assets

Answer

The amount of money a company has in its reserves

Answer

The difference between credit and debit balance

Answer

The leftover amount after paying off liabilities

Question 4

What does the accounting equation represent?

Accepted Answer

Assets = Liabilities + Owner's Equity

Answer

Assets - Liabilities = Owner's Equity

Answer

Assets + Liabilities = Owner's Equity

Answer

Assets + Revenue = Expenses

Question 5

What is meant by depreciation?

Accepted Answer

A decrease in the value of an asset over time

Answer

The cost of purchasing an asset

Answer

The increase in value of an asset over time

Answer

The amount of money earned through sales

Question 6

What is meant by a contra account?

Accepted Answer

An account used to offset the balance of a related account

Answer

An account used to record expenses

Answer

An account used to record revenue

Answer

An account used to record sales

Question 7

What is the role of a ledger?

Accepted Answer

To record and classify financial transactions

Answer

To verify the accuracy of transactions

Answer

To summarize financial statements

Answer

To calculate tax

Question 8

What is the purpose of a bank reconciliation statement?

Accepted Answer

To match the balance of cash in the bank account with the balance in the company's own records

Answer

To verify the accuracy of transactions

Answer

To summarize financial statements

Answer

To calculate tax

Question 9

What is meant by accounts payable?

Accepted Answer

Amounts owed by a company to its suppliers or creditors

Answer

Amounts owed by a company to its customers

Answer

Amounts owned by a company to its bank

Answer

Amounts owed by a company to its employees

Question 10

What is meant by accounts receivable?

Accepted Answer

Amounts owed to a company by its customers or debtors

Answer

Amounts owed to a company by its suppliers

Answer

Amounts owed to a company by its employees

Answer

Amounts owned by a company to its bank

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