MGT101 Midterm File by ZB

Q1. Which of the following is the main purpose of financial accounting?

1. To determine future costs
2. To provide financial information to external users
3. To aid in management decision-making
4. To calculate tax liabilities

Answer: B) To provide financial information to external users

Q2. The accounting equation is represented as:

1. Assets = Liabilities - Equity
2. Assets = Liabilities + Equity
3. Liabilities = Assets - Equity
4. Equity = Assets + Liabilities

Answer: B) Assets = Liabilities + Equity

Q3. Which financial statement shows a company’s financial position at a specific point in time?

1. Income Statement
2. Cash Flow Statement
3. Balance Sheet
4. Statement of Retained Earnings

Answer: C) Balance Sheet

Q4. What is the primary objective of an income statement?

1. To show cash inflows and outflows
2. To calculate net income or loss
3. To display the company’s assets
4. To present changes in equity

Answer: B) To calculate net income or loss

Q5. Which principle requires recording expenses in the same period as the related revenues?

1. Revenue Recognition Principle
2. Matching Principle
3. Cost Principle
4. Full Disclosure Principle

Answer: B) Matching Principle

Q6. Which account type increases with a credit?

1. Assets
2. Expenses
3. Liabilities
4. Withdrawals

Answer: C) Liabilities

Q7. The owner's equity section of the balance sheet includes:

1. Notes Payable
2. Retained Earnings
3. Accounts Receivable
4. Prepaid Expenses

Answer: B) Retained Earnings

Q8. Which of the following is considered a current asset?

1. Equipment
2. Accounts Receivable
3. Goodwill
4. Long-term Investments

Answer: B) Accounts Receivable

Q9. A journal entry that involves more than two accounts is called a:

1. Simple Entry
2. Compound Entry
3. Complex Entry
4. Adjusting Entry

Answer: B) Compound Entry

Q10. Revenue is recognized when:

1. Cash is received
2. The service is performed or goods are delivered
3. The customer places an order
4. The invoice is sent

Answer: B) The service is performed or goods are delivered

Q11. The account used to record amounts owed by customers is:

1. Accounts Payable
2. Accounts Receivable
3. Unearned Revenue
4. Retained Earnings

Answer: B) Accounts Receivable

Q12. Which of the following is an example of a liability account?

1. Cash
2. Unearned Revenue
3. Equipment
4. Revenue

Answer: B) Unearned Revenue