Quiz: Fundamentals of Accounting

It must be audited daily. It includes only transactions approved by the board of directors. It serves both as a book of original entry and a ledger account for cash and bank transactions. It is the only book that records transactions in chronological order.

Recognizing revenues when earned and expenses when incurred, regardless of cash flow. Recording transactions only when cash is exchanged. Ignoring payables and receivables. Focusing solely on cash inflows.

To record all sales and purchases To determine the gross profit or loss To summarize all business transactions To calculate the net profit or loss

Monitoring the company’s main cash flow. Keeping a record of all cash transactions, regardless of size. Recording small, incidental cash transactions. Tracking personal expenses of the business owner.

To account for potential future losses on receivables To increase the value of receivables To increase the net profit To decrease the gross profit

To prepare the balance sheet directly. To verify that the total debits equal the total credits in the ledger accounts. To identify fraudulent transactions. To calculate the net profit of the business.

The financial position of the business at a certain date The sales and purchases of the business The cash flow of the business The profitability of the business over a period

It increases the gross profit It decreases the gross profit It decreases the net profit It has no impact on the gross profit

To calculate profit only. To create financial statements quarterly. To record financial transactions systematically. To advise on investment strategies.

It records transactions involving cash, bank, and discounts in one place. It records three times the amount for every transaction for error checking. It is used exclusively by businesses with three separate cash accounts. It separates cash receipts, cash payments, and bank transactions into three books.