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Quizzes > Business & Finance

Accounting Principles Test: Check Your Understanding

Quick, free principles of accounting quiz with instant results.

Editorial: Review CompletedCreated By: Alt RoxtamUpdated Aug 23, 2025
Difficulty: Moderate
2-5mins
Learning OutcomesCheat Sheet
Paper art illustration for accounting basics quiz on a dark blue background

This Principles of Accounting quiz helps you review key topics and spot gaps fast. Practice debits and credits with our debit and credit quiz, build confidence on entries with a journal entry quiz, and round out your base with a fundamentals of accounting quiz - then see instant results here to guide your next study step.

Which accounting equation must always balance?
Assets = Revenue - Expenses
Assets + Equity = Liabilities
Assets = Liabilities + Equity
Assets = Cash + Inventory
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In a double-entry system, how does a debit affect an asset account?
Decreases it
Has no effect
Converts it to equity
Increases it
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Revenue is recognized under accrual accounting when
The customer signs the contract only
Cash is collected
It is earned, regardless of cash receipt
The invoice is printed
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The primary purpose of the trial balance is to
Prove that all transactions are correct
Verify that total debits equal total credits
Prepare the bank reconciliation
Compute net income
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Which of the following is a contra-asset account?
Accumulated Depreciation
Notes Receivable
Accounts Payable
Unearned Revenue
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Which inventory cost flow assumption results in earliest costs to cost of goods sold when prices are rising?
Specific identification
FIFO
LIFO
Weighted-average always before FIFO
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The allowance method for bad debts records bad debt expense
When an account is written off
Only at year-end after all customers pay
Only when cash is not collected
In the same period as related sales are recognized
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Which depreciation method typically yields a constant expense each period?
Straight-line
Units-of-production
Double-declining balance
Sum-of-the-years'-digits
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Sales returns and allowances is normally
A contra-revenue account
A liability account
An asset account
An expense account
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Which item is included in cash equivalents?
Marketable equity securities held long-term
Accounts receivable due in 60 days
Treasury bills with original maturities of three months or less
Inventory on hand
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Bond issued at a discount means
Bond sells at par
Stated rate < market rate at issuance
Stated rate > market rate at issuance
Coupon is zero
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Which of the following is NOT a component of internal control?
Monitoring activities
External benchmarking
Information and communication
Control environment
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A contingent liability should be accrued only when
It is possible and not estimable
It is remote but large
It is probable and reasonably estimable
It is disclosed in management discussion
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Goodwill is recognized on the balance sheet when
Marketing expenses exceed budget
A company builds a strong brand internally
One company acquires another for more than the fair value of net identifiable assets
Customer satisfaction increases
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Which inventory costing method generally yields the highest ending inventory in a period of rising prices?
Specific identification always
Weighted-average
FIFO
LIFO
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Comprehensive income includes all changes in equity except those from owner transactions.
False
True
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A deferred tax liability arises when taxable income is less than pretax financial income due to temporary differences.
True
False
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Under the equity method, the investor recognizes income when cash dividends are received.
True
False
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A lease classified as finance (capital) results in recognizing both a right-of-use asset and a lease liability at commencement.
False
True
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OCI items bypass the income statement permanently and never affect retained earnings.
False
True
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Study Outcomes

  1. Understand core accounting principles -

    Grasp how debits and credits function within double-entry bookkeeping and why they're essential for accurate financial records.

  2. Apply journal entries to transactions -

    Practice recording typical business events in T-accounts and ledgers to reinforce your skills for the principles of accounting test.

  3. Analyze financial statements -

    Break down income statements, balance sheets, and cash flow statements to interpret key metrics and financial health indicators.

  4. Evaluate trial balances and reconciliations -

    Identify and correct discrepancies in trial balances to ensure debits and credits are properly aligned.

  5. Interpret accounting final exam questions and answers -

    Review sample questions and model answers to pinpoint areas for improvement before the accounting final exam.

  6. Prepare confidently for the accountant 1 exam -

    Build exam readiness and boost your confidence by testing your knowledge under timed conditions similar to the principles of accounting 1 final exam.

Cheat Sheet

  1. Double-Entry System & Accounting Equation -

    Every transaction affects at least two accounts, maintaining the equation Assets = Liabilities + Equity. For your principles of accounting 1 final exam, practice by recording sample transactions from a university accounting department's case studies. Remember that mastering this framework is foundational for any principles of accounting test.

  2. Debits vs. Credits Rules (DEAD/LCR) -

    Use the mnemonic "DEAD" for Debits increasing Dividends, Expenses, Assets, and "LCR" for Credits increasing Liabilities, Capital, Revenue. Working through accounting final exam questions and answers from sources like Yale's SOM tutorials helps reinforce which side to post each account. Consistent practice with T-accounts will boost your confidence for the accountant 1 exam.

  3. Preparation of Core Financial Statements -

    Review the structure and linkages among the Income Statement, Statement of Retained Earnings, Balance Sheet, and Cash Flow Statement as outlined by FASB. A common practice question is deriving net income from revenues and expenses, then reconciling it to ending equity for your principles of accounting test. Seeing how line items flow between statements will help you ace the final exam format.

  4. Accrual vs. Cash Basis Accounting -

    Understand that under accrual accounting you recognize revenue when earned and expenses when incurred, as per IFRS and GAAP guidelines. Compare sample journal entries - like unearned revenue or prepaid expense adjustments - to cash basis entries to see timing differences. This clarity will help you tackle tricky accountant 1 exam scenarios about adjusting entries.

  5. Cost Principle & Depreciation Methods -

    Assets must be recorded at cost, and depreciation allocates that cost over useful life; use the straight-line formula: (Cost − Residual Value) ÷ Useful Life. Practice with equipment purchase examples from university repository problems to calculate annual depreciation. Familiarity with both straight-line and accelerated methods is a must for your accounting final exam questions and answers.

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