Financial Accounting Basics: A Comprehensive Guide
1) Introduction to Financial Accounting
Users of Financial Information
a) Which of the following users is more interested in liquidity?
b) Which of the following users is more interested in profitability?
Financial Statements
c) Which is not a financial statement?
d) Which financial statement reports the net result of the period?
a) Which statement provides information about inflows and outflows of cash and cash equivalents?
c) Which statement reports the total changes in internal finance?
d) The statement, which reports the economic and financial situation, is?
Business Activities
c) The activity of raising funds for the company is known as?
a) The activity of purchasing the necessary assets is known as?
2) Accounting Principles and Concepts
Reporting Requirements
c) Apple group, a technological business traded in the NY Exchange market, must report its…
a) Inditex group, a fashion retail business, traded in European exchange markets, must report…
d) Inditex Company, traded in European exchange markets, must report its individual annual…
Application of Accounting Principles
c) A Spanish company has the following data over two consecutive periods: total assets 250000…
b) A service provided by a delivery company in December 2012, but collected in January 2013…
D) Due to the prudence principle, if a company has a plot of land that cost 1000000 and…
a) Company A has a receivable of 10000 with company B and at the same time company A…
d) Recognition of an asset entails simultaneous recognition of a…
c) Recognition of liability entails simultaneous recognition of a…
b) The amount for which an asset can be exchanged, or liability settled, between knowledgeable…
b) An investment in shares of other companies has a price in the Spanish exchange market of 2000 €…
b) An investment in shares of other companies has a price in the Spanish exchange market of 2000 €, the sale commission is worth 50 €. The 1950 € is the…
d) Carrying amount is also known as…
3) Assets, Liabilities, and Equity
Identifying Assets and Liabilities
c) Which of the following items is not an asset?
a) Which of the following items is a property, plant and equipment?
d) Liabilities are…
b) Obligations with others for goods, supplies, and services purchased on open account are…
Equity and Retained Earnings
b) The portion of net income, which is retained by the corporation rather than distributed to…
b) Reserves
Calculating Equity
c) A business has the following items: cash 10000€, vehicles 40000€, banks loan 20000€…
d) A business has the following items: assets 10000€, liabilities 40000€, equity 50000€…
Current and Non-Current Assets and Liabilities
d) A characteristic of current assets is…
C) Which is not a current asset in a supermarket?
c) Which is a non-current asset in a supermarket?
B) Which is a typical current liability in a business?
Profit and Loss
D) The loss of the period
4) Debit and Credit Procedures
Understanding Debits and Credits
a) What do we mean by debiting an account?
b) If an account presents a debit balance, it means…
b) According to the debit and credit procedures for liabilities, increase in…
c) What do liabilities accounts include?
Recording Transactions
b) When a loan is settled, registration must be…
B) Purchasing a car on credit, registration must be…
b) If the stockholders make a contribution of capital, this accounting record…
Closing Accounts
c) What does it mean “to close” an account?
d) If a company pays 15000€ cash to the suppliers, this accounting record…
a) If a loan account presents a credit balance for 20000€, that means…
5) Intangible Assets and Financial Statements
Intangible Assets
b) In which of these items must not be registered as an intangible asset?
c) Which of the following is not a necessary characteristic for an item to be…
Financial Statement Analysis
b) Calculate capital at a period ending 31-Dec-2010…
b) An automobile manufacturer presents the following information…
b) If you want to know the financial resources of a company, you must look in…
a) Which of the following items is a current asset?
b) Select the correct answer using the following items:…
c) Which is an item of the financial result?
a) An exceptional revenue from the sale of property, plant, or equipment…
c) A company has the following inflows and outflows: Money received…
b) Issuing shares in exchange for money is a…
d) Which of the followings must be reported in the notes?
c) The statement of recognized income and expense is part of…
a) Changes arising from transactions with equity holders…
6) The Accounting Cycle
Journal Entries and Posting
c) The journal entry that turns around the closing entry is the…
b) The opening entry in an old company is:
a) The last issue of the accounting cycle is…
b) Posting means…
Trial Balance and Financial Statements
d) Which of the following is a principal statement?
d) The trial balance reports…
d) Which of the following errors may you find using a trial balance?
a) Cash accounts has the following information at the end of the period…
b) Interpret the following accounting entry in the journal…
a) A company has a debit balance in the 129 profit/loss of the period…
a) When closing temporary accounts, the company…
c) The accounting cycle lasts…
d) The accounting cycle is compulsory
7) Inventory and Gross Profit
Calculating Gross Profit
c) Gross profit is calculated by the following formula…
d) In the initial valuation, goods included in inventories should…
b) Select the wrong answer…
a) Account 700 merchandise sold. If the account 610 changes in inventories of merchandise has a debit balance…
c) Obtain the gross profit with the following data: net sales=120,000…
d) Select the correct answer with the following data: beginning inventory…
a) A company has the following information: beginning inventory = 1000 units…
d) Select the correct answer. Following a periodic system…
Inventory Valuation
b) Valuation allowances shall be made when…
b) Let’s assume you are the financial director of a company. You want to…
Inventory: 610/300. Accrual: 572/480 & 480/621. 572/485 & 485/705.