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Quizzes > Business & Finance

Accounting Quiz: Practice Basic Concepts and Check Your Skills

Quick, free basic accounting quiz with instant results.

Editorial: Review CompletedCreated By: Secretary Phi SigmaUpdated Aug 24, 2025
Difficulty: Moderate
2-5mins
Learning OutcomesCheat Sheet
Paper art illustration for accounting skills quiz on coral background

This accounting quiz helps you practice core concepts and spot gaps before an exam. Work through debits, credits, journal entries, and balance sheets, then see instant results and what to review next. If you want more practice, try our accounting concepts quiz, sharpen the basics with an accounting equation quiz, or build stamina with an accounting practice test.

What is the fundamental accounting equation?
Revenues = Assets + Liabilities
Assets + Expenses = Liabilities
Assets = Liabilities + Owner's Equity
Liabilities = Assets - Owner's Equity
The basic accounting equation states that assets are financed by liabilities and owner's equity, ensuring that the balance sheet remains balanced. Assets represent resources owned, liabilities obligations, and equity the owner's interest. This foundational formula underpins double-entry bookkeeping and financial statement preparation.
An increase in an asset account is recorded as which type of entry?
Adjusting entry
Contra entry
Credit
Debit
In double-entry bookkeeping, asset accounts increase with a debit entry and decrease with a credit entry. Debits and credits must always balance across all transactions. Recognizing this rule helps ensure accurate recording of resource changes.
Credits increase which type of accounts?
Expenses
Assets
Drawings
Liabilities
Credit entries increase liability, equity, and revenue accounts, while decreasing assets and expenses. Liabilities represent obligations to pay, so a credit raises that balance. Mastery of what credits and debits do to each account type is essential.
Which category does inventory belong to on the balance sheet?
Equity
Liability
Expense
Asset
Inventory is considered a current asset because it represents goods held for sale. It appears under assets on the balance sheet and is converted to cash within a normal operating cycle. Correct classification affects liquidity analysis and cost of goods sold calculations.
What is the primary purpose of preparing a trial balance?
To allocate overhead costs
To forecast cash flows
To record closing entries
To ensure debits equal credits
A trial balance lists all ledger account balances to verify that total debits equal total credits. It helps detect arithmetic errors in the double-entry system before preparing financial statements. If discrepancies exist, accounts must be reviewed and adjusted.
Where do expense accounts appear in financial statements?
Statement of Cash Flows
Balance Sheet
Income Statement
Statement of Owner's Equity
Expenses are reported on the income statement, showing how much cost was incurred to generate revenues. They reduce net income for the period. Understanding this placement is vital for accurate profit calculation.
What is the correct adjusting entry for recording depreciation expense?
Debit Depreciation Expense; Credit Equipment
Debit Depreciation Expense; Credit Accumulated Depreciation
Debit Cash; Credit Depreciation Expense
Debit Accumulated Depreciation; Credit Depreciation Expense
Depreciation expense is recognized by debiting the expense and crediting the contra-asset Accumulated Depreciation. The contra account reduces the book value of the asset over time. This entry matches expense recognition with revenue generation.
How would you record the purchase of equipment for cash?
Debit Cash; Credit Equipment
Debit Equipment; Credit Accounts Payable
Debit Expense; Credit Cash
Debit Equipment; Credit Cash
Buying equipment with cash increases the Equipment asset account (debit) and decreases Cash (credit). This entry reflects the exchange of one asset for another. Proper classification ensures accurate fixed asset and cash balances.
Which financial ratio is used to measure a company's liquidity?
Debt-to-Equity Ratio
Inventory Turnover
Current Ratio
Gross Margin Ratio
The current ratio, calculated as current assets divided by current liabilities, assesses a company's ability to meet short-term obligations. A higher ratio indicates better liquidity. It's a key indicator for creditors and investors.
Under accrual accounting, when should revenue be recognized?
When the invoice is mailed
At the end of the fiscal year
When cash is received
When it is earned, regardless of cash receipt
Accrual accounting requires recognizing revenue when performance obligations are satisfied, not necessarily when cash arrives. This matches revenues with related expenses in the same period. It provides a more accurate view of financial performance.
Which of the following is an example of a contra-asset account?
Unearned Revenue
Accumulated Depreciation
Accrued Liabilities
Prepaid Expenses
Accumulated Depreciation offsets the gross balance of fixed assets, reducing their net book value. As a contra-asset, it carries a credit balance. This account reflects the total depreciation recorded over an asset's life.
Unearned revenue is classified as which type of account?
Liability
Equity
Asset
Expense
Unearned revenue represents payments received before delivering goods or services, creating an obligation to perform. It is recorded as a liability until the earnings process is complete. This treatment ensures proper matching of revenues and liabilities.
Under IFRS revaluation model, where is a gain from revaluing property, plant, and equipment recorded?
Accumulated Depreciation
Directly in retained earnings
Revaluation surplus in Other Comprehensive Income
Profit or Loss
IFRS allows revaluation of non-current assets and requires increases to be credited to a revaluation surplus within Other Comprehensive Income. This separates unrealized gains from profit or loss. It ensures transparency in financial statements by distinguishing revaluations from operational results.
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Study Outcomes

  1. Understand core accounting concepts evaluated in a basic accounting test -

    Review essentials like debits, credits, and the accounting equation to build a solid foundation.

  2. Apply double-entry bookkeeping principles -

    Practice recording transactions with balanced debit and credit entries to maintain accurate ledgers.

  3. Prepare journal entries and post to ledgers -

    Use quiz prompts to gain hands-on experience creating T-accounts and transferring journal entries.

  4. Analyze balance sheets and financial statements -

    Identify key components such as assets, liabilities, and equity to evaluate a company's financial health.

  5. Interpret instant feedback from the accounting quiz -

    Pinpoint areas for improvement with real-time scoring and detailed explanations.

  6. Navigate accounting test online platforms confidently -

    Familiarize yourself with the format of accounting quizzes to enhance readiness for exams and professional tasks.

Cheat Sheet

  1. Double-Entry Bookkeeping Basics -

    Every transaction affects at least two accounts, keeping total debits equal to total credits. According to FASB guidelines, this dual-sided approach ensures accuracy - think of each debit entry being "mirrored" by a credit. Try the mnemonic "DEALER" (Dividends, Expenses, Assets = Debits; Liabilities, Equity, Revenue = Credits) to ace this accounting test concept.

  2. Classifying Debits and Credits -

    Understanding which side to record an increase or decrease is crucial for your accounting quiz success. Assets and expenses increase with debits, while liabilities, equity, and revenues increase with credits, as taught by university-level accounting courses. Use the acronym "DEAD CLIC" (Debit: Expenses, Assets, Draws; Credit: Liabilities, Income, Capital) to lock in these rules.

  3. Trial Balance Verification -

    A trial balance lists all ledger accounts with their debit or credit balances to verify that total debits equal total credits before preparing statements. Harvard Business School materials emphasize running this check after posting journal entries to catch recording errors early. Practicing mock trials in your basic accounting test online can help you spot transposition errors fast.

  4. Adjusting Entries and the Matching Principle -

    Adjusting entries align revenues and expenses in the correct period, per IFRS recommendations. Common examples include accrued wages (debit Wages Expense, credit Wages Payable) and amortizing prepaid insurance (debit Insurance Expense, credit Prepaid Insurance). Regularly practicing these in a timed accounting quiz format builds accuracy and speed.

  5. Balance Sheet and Accounting Equation -

    The fundamental equation - Assets = Liabilities + Equity - forms the backbone of any balance sheet. Through University of Chicago Booth School's research, you'll find that a balanced sheet confirms your double-entry work is correct. Memorize the formula and sketch a sample layout to solidify your grasp before tackling a basic accounting test.

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