1
The "matching principle" in accounting states that:
A.
B.
C.
D.
Answer & Solution
The matching principle ensures that expenses are recorded in the same period as the revenues they are associated with, providing a more accurate representation of profitability.
2
The "conservatism principle" in accounting requires that:
A.
B.
C.
D.
Answer & Solution
The conservatism principle is a fundamental guideline in accounting that directs accountants to exercise caution and prudence in financial reporting, particularly when faced with uncertainty. Its core tenet is often summarized as: "Anticipate no profits, but provide for all possible losses."
3
The purchase of office furniture for cash will have what effect on the accounting equation?
A.
B.
C.
D.
Answer & Solution
One asset (cash) decreases, while another asset (furniture) increases by the same amount, keeping the equation balanced.
4
A business paid $500 in rent for the month. What is the effect on the accounting equation?
A.
B.
C.
D.
Answer & Solution
Cash (asset) decreases due to payment, and rent is an expense, which reduces equity.
5
If a business borrows money from a bank, which accounts are affected?
A.
B.
C.
D.
Answer & Solution
The company receives cash (asset), but also incurs a loan payable (liability).
6
What happens when a business declares and pays dividends to shareholders?
A.
B.
C.
D.
Answer & Solution
When dividends are paid, cash (asset) decreases, and retained earnings (equity) decrease.
7
A journal is also known as:
A.
B.
C.
D.
Answer & Solution
The journal is a subsidiary book where all business transactions are first recorded before posting to the ledger.
8
Which of the following is the correct journal entry for purchasing goods worth $5,000 on credit?
A.
B.
C.
D.
Answer & Solution
A purchase on credit increases expenses (purchases) and creates a liability (accounts payable).
9
Which of the following is NOT a type of journal entry?
A.
B.
C.
D.
Answer & Solution
There is no specific Journal as "capital entry"; capital transactions are recorded as normal journal entries.
10
A compound journal entry involves:
A.
B.
C.
D.
Answer & Solution
A compound entry includes more than one debit or credit within a single journal entry.
