Financial Accounting
Practice 2026-VERSION
WITH QUALITY
QUESTIONS AND
VERRIFIED ANSWERS
100% CORRECT.
1. Which financial statement reports a
company’s financial position at a
specific date?
A. Income Statement
B. Statement of Cash Flows
,C. Balance Sheet
D. Statement of Retained Earnings
Answer: C
The balance sheet shows assets,
liabilities, and equity at a specific point in
time.
2. Which of the following is an asset?
A. Accounts Payable
B. Equipment
C. Revenue
D. Expenses
Answer: B
Assets are resources owned; equipment
provides future economic benefits.
,3. The accounting equation is:
A. Assets = Liabilities – Equity
B. Assets = Liabilities + Equity
C. Equity = Assets + Liabilities
D. Liabilities = Assets + Equity
Answer: B
This is the fundamental equation
underlying all accounting systems.
4. Which principle requires revenue to
be recorded when earned?
A. Matching Principle
B. Cost Principle
C. Revenue Recognition Principle
, D. Conservatism Principle
Answer: C
Revenue is recognized when earned, not
necessarily when cash is received.
5. Which account has a normal debit
balance?
A. Revenue
B. Accounts Payable
C. Cash
D. Common Stock
Answer: C
Assets (like cash) increase with debits.
6. Which account is a liability?
Practice 2026-VERSION
WITH QUALITY
QUESTIONS AND
VERRIFIED ANSWERS
100% CORRECT.
1. Which financial statement reports a
company’s financial position at a
specific date?
A. Income Statement
B. Statement of Cash Flows
,C. Balance Sheet
D. Statement of Retained Earnings
Answer: C
The balance sheet shows assets,
liabilities, and equity at a specific point in
time.
2. Which of the following is an asset?
A. Accounts Payable
B. Equipment
C. Revenue
D. Expenses
Answer: B
Assets are resources owned; equipment
provides future economic benefits.
,3. The accounting equation is:
A. Assets = Liabilities – Equity
B. Assets = Liabilities + Equity
C. Equity = Assets + Liabilities
D. Liabilities = Assets + Equity
Answer: B
This is the fundamental equation
underlying all accounting systems.
4. Which principle requires revenue to
be recorded when earned?
A. Matching Principle
B. Cost Principle
C. Revenue Recognition Principle
, D. Conservatism Principle
Answer: C
Revenue is recognized when earned, not
necessarily when cash is received.
5. Which account has a normal debit
balance?
A. Revenue
B. Accounts Payable
C. Cash
D. Common Stock
Answer: C
Assets (like cash) increase with debits.
6. Which account is a liability?
