Note – Please take our quiz ‘Quiz 2 – Accounting Fundamentals – Beginner’ on this page before going through the below answers. Only the top 3% of our audience score 10/10 in all of them.
- Name – Quiz 2 – Accounting Fundamentals – Beginner
- Topic – Accounting Fundamentals
- Answers with Explanations
Q1. Working Capital = _____ – Current Liabilities
Ans. Working Capital = Current Assets – Current Liabilities. This formula represents the short-term liquid assets remaining after short-term liabilities are paid off.
Q2. _____ A/C is debited in the journal entry for goods given in charity?
Ans. Charity A/C is debited in the journal entry for goods given in charity. Charity is an expense and is shown on the debit side of the income statement. The amount is reduced from purchases.
Q3. IFRS – International Financial _____ Standards
Ans. IFRS -International Financial Reporting Standards. These are common rules (issued by the IASB) so that financial statements can be consistent, transparent, and comparable around the world.
Q4. Copyright is _____ asset.
Ans. Copyright is an intangible asset. Such assets do not have a physical existence therefore they are termed as intangible assets.
Q5. Which one of these is an indirect expense?
Ans. Salary is an indirect expense. Traditionally wages are categorized as direct expense whereas salary is an indirect expense.
Q6. A person who owes an amount to the business for a credit sale is called?
Ans. A person who owes an amount to the business for a credit sale is called a debtor. Goods sold on credit create receivables for the buyer.
Q7. _____ is a part of Accounting.
Ans. Bookkeeping is a part of Accounting. Accounting is the process that starts with bookkeeping and ends with financial reporting.
Q8. Which of these is an external user of financial statements?
Ans. Lenders are external users of financial statements. Financial information is supplied to lenders so they can review the liquidity, cash flow, leverage, and overall solvency.
Q9. What type of expenditure is “Purchase of Furniture”?
Ans. “Purchase of Furniture” is a capital expenditure. Furniture is a fixed asset which means the money spent on it will provide benefit to the entity for more than one accounting year.
Q10. Depreciation A/C is _____ in journal entry for depreciation.
Ans. Depreciation A/C is debited in the journal entry for depreciation. Depreciation is an expense and therefore rule applied is ‘debit the increase in expense’.