FAR — Financial Accounting & Reporting — Quiz 54

Questions in this quiz (10)

1. Which accounting principle requires recognizing expenses in the same period as related revenues?

   • Cost principle
   • Matching principle
   • Conservatism principle
   • Materiality principle

2. Which category includes machinery, buildings, and vehicles used in operations?

   • Current assets
   • Property, plant, and equipment
   • Intangible assets
   • Financial assets

3. Which ratio measures how efficiently a company uses assets to generate sales?

   • Current ratio
   • Asset turnover ratio
   • Debt-to-equity ratio
   • Gross margin ratio

4. Why is accounting for long-term assets necessary?

   • To determine payroll costs
   • To allocate asset cost and report value accurately
   • To eliminate liabilities
   • To simplify accounting entries

5. Which best defines a liability?

   • Assets owned by a company
   • Obligations owed to others
   • Revenue generated
   • Expenses incurred

6. Which of the following is considered a current liability?

   • Long-term bonds payable
   • Mortgage payable due in 10 years
   • Salaries payable due next month
   • Equipment purchase

7. Which best describes accounts payable?

   • Money owed by customers
   • Amounts owed to suppliers
   • Revenue received in advance
   • Interest income

8. Which journal entry records a credit purchase of supplies?

   • Debit Cash; Credit Supplies
   • Debit Supplies; Credit Accounts Payable
   • Debit Accounts Payable; Credit Supplies
   • Debit Expense; Credit Cash

9. Which account is debited when accounts payable is paid?

   • Cash
   • Accounts payable
   • Expense
   • Revenue

10. Which account is credited when accounts payable is paid?

    • Accounts payable
    • Cash
    • Expense
    • Inventory