Unlock the secrets to mastering key accounting concepts with our comprehensive quiz! Dive into essential topics such as depreciation methods, accounting principles, and financial statements with a set of carefully crafted questions. Each question is paired with clear, detailed explanations to enhan...
Circle the letter of the Answer that corresponds to the displayed Question.
1. Contra-Asset
a) A method of accounting under which revenues are recorded when cash is received and expenses are
recorded when cash is paid.
b) Assets of a durable nature that will be used for operations over several years. Examples include
buildings and equipment.
c) A depreciation method in which the depreciable cost is divided by the estimated useful life.
d) An account with a credit balance that is deducted from the related asset account on the balance sheet.
Correct Answer: d) An account with a credit balance that is deducted from the related asset account on
the balance sheet.
Explanation: A contra-asset account has a credit balance and is used to reduce the value of the related
asset account on the balance sheet.
2. Plant Assets
a) A method of accounting under which revenues are recorded when cash is received and expenses are
recorded when cash is paid.
b) Assets of a durable nature that will be used for operations over several years. Examples include
buildings and equipment.
c) The amount an item can be sold for under normal economic conditions.
d) A depreciation method in which the depreciable cost is divided by the estimated useful life.
Correct Answer: b) Assets of a durable nature that will be used for operations over several years.
Examples include buildings and equipment.
Explanation: Plant assets are long-term assets used in the operations of a business, such as buildings
and equipment.
3. Cash Basis of Accounting
a) A principle that requires the matching of revenues earned during an accounting period with the
expenses incurred to produce the revenues.
b) A method of accounting that combines aspects of the cash and accrual methods. It uses the cash basis
for recording revenues and most expenses. Exceptions are made when cash is paid for assets with
useful lives greater than one accounting period.
c) A method of accounting under which revenues are recorded when cash is received and expenses are
recorded when cash is paid.
d) The period of time that an asset is expected to be held to produce revenues.
Correct Answer: c) A method of accounting under which revenues are recorded when cash is received
and expenses are recorded when cash is paid.
Explanation: The cash basis of accounting records revenues and expenses only when cash is actually
received or paid.
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