DSST Principles of Financial Accounting

Question 1

Which financial statement reports a company's revenues and expenses over a specific period?

Accepted Answer

Income Statement

Answer

Balance Sheet

Answer

Cash Flow Statement

Answer

Statement of Retained Earnings

Question 2

In double-entry bookkeeping, every transaction affects at least how many accounts?

Accepted Answer

Two

Answer

One

Answer

Three

Answer

Four

Question 3

Which accounting principle states that revenue should be recognized when earned, regardless of when cash is received?

Accepted Answer

Revenue Recognition Principle

Answer

Matching Principle

Answer

Cost Principle

Answer

Conservatism Principle

Question 4

What is the accounting equation?

Accepted Answer

Assets = Liabilities + Owner's Equity

Answer

Assets + Liabilities = Owner's Equity

Answer

Revenue − Expenses = Net Income

Answer

Assets − Owner's Equity = Net Income

Question 5

Which inventory valuation method assumes the most recently purchased goods are sold first?

Accepted Answer

LIFO

Answer

FIFO

Answer

Weighted Average

Answer

Specific Identification

Question 6

Accumulated depreciation on the balance sheet is classified as which type of account?

Accepted Answer

Contra-asset

Answer

Liability

Answer

Owner's equity

Answer

Revenue