Accounting Practice Test!!
1. Basic Accounting Equation
If a company's assets are $100,000 and its liabilities are $40,000, what is the equity of the
company?
a) $60,000
b) $40,000
c) $100,000
d) $140,000
2. Financial Statements
Which financial statement shows the financial position of a company at a specific point in
time?
a) Income Statement
b) Statement of Cash Flows
c) Balance Sheet
d) Trial Balance
3. Double-Entry Accounting
If a company purchases inventory on credit, how does this transaction affect the accounting
equation?
a) Assets increase; Liabilities increase
b) Assets decrease; Liabilities decrease
c) Assets increase; Equity increases
d) Assets decrease; Equity decreases
4. Recording Transactions
If a company receives cash for services rendered, which accounts are affected?
a) Cash (debit), Revenue (credit)
b) Accounts Receivable (debit), Cash (credit)
c) Cash (debit), Accounts Payable (credit)
d) Revenue (debit), Cash (credit)
1. Basic Accounting Equation
If a company's assets are $100,000 and its liabilities are $40,000, what is the equity of the
company?
a) $60,000
b) $40,000
c) $100,000
d) $140,000
2. Financial Statements
Which financial statement shows the financial position of a company at a specific point in
time?
a) Income Statement
b) Statement of Cash Flows
c) Balance Sheet
d) Trial Balance
3. Double-Entry Accounting
If a company purchases inventory on credit, how does this transaction affect the accounting
equation?
a) Assets increase; Liabilities increase
b) Assets decrease; Liabilities decrease
c) Assets increase; Equity increases
d) Assets decrease; Equity decreases
4. Recording Transactions
If a company receives cash for services rendered, which accounts are affected?
a) Cash (debit), Revenue (credit)
b) Accounts Receivable (debit), Cash (credit)
c) Cash (debit), Accounts Payable (credit)
d) Revenue (debit), Cash (credit)
