Accounting 101 Test Questions
and Answers
The statement that reports net income or loss for a certain period in time is the -
Answer-income statement
The statement that provides the financial position of a company as of a specific date is
the - Answer-balance sheet
Statements that provides a summary of cash receipts and cash payments for a specific
period of time, such as a month or a year? - Answer-Statement of cash flows
How do you get net income? - Answer-Revenues minus expenses equals net income
The ratio of liabilities to owner's equity is a tool used to assess a company's ability to -
Answer-pay its creditors
The numerator in the calculation of the ratio of liabilities to owner's equity is - Answer-
total liabilities
The denominator in the calculation of the ratio of liabilities to owner's equity is - Answer-
total owners equity
The ratio of liabilities to owner's equity is computed by - Answer-dividing total liabilities
by total owner's equity
A _______________ changes basic inputs into products that are sold to customers -
Answer-manufactoring business
internal users of accounting information are - Answer-directly involved in managing and
operating a business. Ex: manager, small business owner, employee
external users of accounting information are - Answer-someone who doesn't manage or
work for a company but uses its financial information. Ex: Investor, creditor, government
The principles and concepts that the management of a company uses to record and
report its financial information are called - Answer-GAAP (generally accepted
accounting principles)
and Answers
The statement that reports net income or loss for a certain period in time is the -
Answer-income statement
The statement that provides the financial position of a company as of a specific date is
the - Answer-balance sheet
Statements that provides a summary of cash receipts and cash payments for a specific
period of time, such as a month or a year? - Answer-Statement of cash flows
How do you get net income? - Answer-Revenues minus expenses equals net income
The ratio of liabilities to owner's equity is a tool used to assess a company's ability to -
Answer-pay its creditors
The numerator in the calculation of the ratio of liabilities to owner's equity is - Answer-
total liabilities
The denominator in the calculation of the ratio of liabilities to owner's equity is - Answer-
total owners equity
The ratio of liabilities to owner's equity is computed by - Answer-dividing total liabilities
by total owner's equity
A _______________ changes basic inputs into products that are sold to customers -
Answer-manufactoring business
internal users of accounting information are - Answer-directly involved in managing and
operating a business. Ex: manager, small business owner, employee
external users of accounting information are - Answer-someone who doesn't manage or
work for a company but uses its financial information. Ex: Investor, creditor, government
The principles and concepts that the management of a company uses to record and
report its financial information are called - Answer-GAAP (generally accepted
accounting principles)
