Accounting Assessment Test

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Accounting Assessment Test

Test your accounting knowledge with our comprehensive Accounting Assessment Test. This quiz consists of 20 multiple-choice questions covering various topics in accounting, including financial statements, cash flows, and depreciation methods.

Whether you're a student, teacher, or finance professional, this quiz is designed to challenge your understanding of key accounting principles.

20 Questions5 MinutesCreated by CalculatingEagle237

The Statement of Profit and Loss is also called the

Balance Sheet

Income Statement

Statement of Cash Flows

Statement of Financial Position

Which of the following is not a type of cash flows shown in the Cash Flow Statement?

Operating cash flow

Investing cash flow

Accounting cash flow

Financing cash flow

Which of the following is not a current asset?

Cash

Accounts receivable

Inventory

Property, plant, and equipment

What are the effects on the balance sheet when a company borrows a two-year bank loan of $1,000?

$1,000 credit in current liabilities; $1,000 debit in current assets

$1,000 credit in current liabilities; $1,000 debit in non-current assets

$1,000 credit in non-current liabilities; $1,000 debit in current assets

$1,000 credit in non-current liabilities; $1,000 debit in non-current assets

What happens to the balance sheet when a company makes sales of $500, of which $300 is paid in cash and $200 is sold on credit

$300 debit in cash; $200 debit in accounts receivable; $500 credit in retained earnings

$300 credit in cash; $200 credit in accounts receivable; $500 debit in retained earnings

$300 debit in cash; $200 debit in accounts payable; $500 credit in retained earnings

$300 credit in cash; $200 credit in accounts payable; $500 debit in retained earnings

What happens to the balance sheet when a company pays salaries of $5,000?

$5,000 credit in cash; $5,000 debit in accounts payable

$5,000 credit in cash; $5,000 debit in retained earnings

$5,000 debit in cash; $5,000 credit in retained earnings

$5,000 credit in cash; $5,000 debit in accounts receivable

Which of the following is the correct formula to calculate operating income?

Operating income = Revenue - Direct operating cost

Operating income = Revenue - Indirect operating cost

Operating income = Gross profit - Direct operating cost

Operating income = Gross profit - Indirect operating cost

Given the following Balance Sheet extract, calculate the net profit on the Income Statement. (Assuming tax rate = 10% of operating profit)

Company A used $3,000 worth of office supplies this year but the costs were not paid for until next year. Which of the following is not a result of this transaction?

An expense of $3,000 is recorded on this year's income statement

There is a $3,000 credit in cash on the balance sheet

An accrued expense of $3,000 is recorded as current liabilities on the balance sheet

There is a $3,000 credit in office supplies on the balance sheet

Company B purchased an equipment for $600. The equipment has a useful life of 4 years and a scrap value of $50 at the end of year 4. What is the depreciation expense for year 1 (using straight line method)?

$137.50

$150.0

$50.0

$122.5

Using the same example from question 10, what is the closing balance of property, plant & equipment (PP&E) in year 3?

$150.0

$325.0

$187.5

$50.0

Which of the following is not an example of financing cash flow?

Issuing $10M worth of shares

Repaying $50,000 of long-term debt

Paying $200,000 of dividends to shareholders

Investing $60,000 in equipment

Which of the following is true about the accrual concept?

It requires companies to recognize revenues and costs as the business receives or pays the actual cash for them

It requires companies to recognize revenues and costs as the business incurs them

The cash flow statement records transactions when the business incurs them

Profits on the income statement equals the closing cash flow on the cash flow statement

Which of the following best describes the Double Declining Balance depreciation method?

An equal amount of depreciation is applied every year for the assets' useful life

The depreciation expense is based on the output that the assets produce

This method is useful when a company wants to match the actual output of the business to the depreciation expense that it incurs

The depreciation expense is greater in the first few years and smaller in the later years

What is the formula to calculate operating cash flows with the indirect method of creating a cash flow statement?

Net income + Depreciation - Changes in working capital

Net income - Depreciation + Changes in working capital

Net income - Depreciation + Cash

Net income + Cash - Changes in working capital

Net capital expenditure (net CapEx) should be recorded in which section of a Cash Flow Statement?

Financing cash flow

Operating cash flow

Depreciation cash flow

Investing cash flow

The ending net book value of Property, Plant & Equipment (PP&E) in year 1 and year 2 are $500,000 and $430,000 respectively on Company A's balance sheet. The company's depreciation expense in year 2 is $90,000. What is Company A's net capital expenditure?

160,000

90,000

20,000

340,000

Which of the following is the correct formula for calculating retained earnings?

Earnings Before Interest & Taxes - Dividends

Earnings Before Taxes - Dividends

Net Income - Dividends

Operating Income - Dividends

In which sections of a Cash Flow Statement should net income and dividends be recorded?

Net Income - Operating Cash Flow; Dividends - Financing Cash Flow

Net Income - Operating Cash Flow; Dividends - Investing Cash Flow

Net Income - Financing Cash Flow; Dividends - Investing Cash Flow

Net Income - Financing Cash Flow; Dividends - Operating Cash Flow

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