How Much Do You Know About Small Business Accounting?

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Quizzes Created: 810 | Total Attempts: 1,107,120

Questions: 10 | Attempts: 207 | Updated: Jun 17, 2023

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How Much Do You Know About Small Business Accounting? - Quiz

Though small business accounting and business accounting fall under the same field, small business is quite different. It deals with smaller-scale companies and so is not as broad as business accounting. Take this quiz to test your knowledge on the subject

Questions and Answers

1.

What term is used for day-to-day dealings that involve the exchange of goods and services for cash?
- A.
  
  Bookkeeping
- B.
  
  Business Transactions
- C.
  
  Accounting
- D.
  
  Occasion
Correct Answer
B. Business Transactions

Explanation
Business transactions refer to the day-to-day dealings that involve the exchange of goods and services for cash. This term encompasses all the financial activities that occur within a business, such as sales, purchases, payments, and receipts. It is an essential aspect of bookkeeping and accounting, as it helps businesses keep track of their financial transactions and maintain accurate records.

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2.

Which is the most important feature of bookkeeping?
- A.
  
  Finding out the profit
- B.
  
  Recording songs
- C.
  
  Summarising the transactions
- D.
  
  Recording transactions
Correct Answer
D. Recording transactions

Explanation
The most important feature of bookkeeping is recording transactions. This involves keeping a systematic record of all financial activities, such as sales, purchases, and expenses. By recording transactions accurately and in a timely manner, bookkeeping ensures that the financial information is reliable and up-to-date. This information is then used for various purposes such as financial reporting, decision-making, and tax compliance. Without proper recording of transactions, it would be difficult to track and analyze the financial health of a business.

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3.

Remington provided the following information about its balance sheet. Based on the information provided, how much are Remington’s liabilities? Cash = $100 Accounts receivable = $500 Stockholders' equity = $700 Accounts payable = $200 Bank loans = $1000
- A.
  
  $200
- B.
  
  $900
- C.
  
  $1,200
- D.
  
  $1,700
Correct Answer
C. $1,200
4.

Assets minus liabilities equals…
- A.
  
  Owner's equity
- B.
  
  Losses
- C.
  
  Profit
- D.
  
  Capital
Correct Answer
A. Owner's equity

Explanation
Owner's equity is the residual interest in the assets of the entity after deducting liabilities. In other words, it represents the owner's claim on the assets of the business. By subtracting liabilities from assets, we are left with the owner's equity. This equation is known as the accounting equation and is fundamental to understanding the financial position of a business.

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5.

What is referred to as "borrowed for personal use"?
- A.
  
  Assets
- B.
  
  Net Pay
- C.
  
  Profit
- D.
  
  Owner's Equity
Correct Answer
B. Net Pay

Explanation
"Borrowed for personal use" refers to the amount of money that an individual borrows from their employer or a financial institution for their personal expenses. Net pay is the amount of money that an individual receives after deducting taxes, deductions, and other withholdings from their gross pay. Therefore, net pay is the correct answer as it represents the amount of money that an individual receives for personal use after all deductions have been made.

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6.

How is the money that a company earns called?
- A.
  
  Revenue
- B.
  
  Liability
- C.
  
  Payroll
- D.
  
  Profit
Correct Answer
A. Revenue

Explanation
Revenue is the correct answer because it refers to the total amount of money that a company earns from its business activities, such as sales of goods or services. It represents the company's top line income before deducting any expenses or costs. Revenue is an important financial metric that indicates the company's ability to generate income and sustain its operations.

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7.

When expenses are more than income, it's a…
- A.
  
  Profit
- B.
  
  Revenue
- C.
  
  Liability
- D.
  
  Loss
Correct Answer
D. Loss

Explanation
When expenses are more than income, it indicates that the company is incurring a loss. This means that the company is spending more money than it is earning, resulting in a negative financial outcome. A loss can occur due to various reasons such as high operating costs, low sales, or poor financial management. It is important for a company to identify and address the reasons for the loss in order to improve its financial performance.

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8.

The cost of maintaining and operating a business is called?
- A.
  
  Revenue
- B.
  
  Expense
- C.
  
  Risk
- D.
  
  Loss
Correct Answer
B. Expense

Explanation
The cost of maintaining and operating a business is referred to as expenses. Expenses include various costs such as rent, utilities, salaries, supplies, and other expenditures necessary for the day-to-day functioning of the business. These expenses are subtracted from the revenue generated by the business to determine the profit or loss.

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9.

A certified public accountant is called?
- A.
  
  Stockbroker
- B.
  
  CPA
- C.
  
  Bank teller
- D.
  
  Actuary
Correct Answer
B. CPA

Explanation
A certified public accountant (CPA) is a professional designation given to individuals who have passed the Uniform Certified Public Accountant Examination and met other state education and experience requirements. CPAs are qualified to provide a wide range of accounting services including financial statement audits, tax preparation and planning, and consulting services. They are trusted advisors to businesses and individuals in managing their financial affairs and ensuring compliance with relevant laws and regulations. Therefore, the correct answer is CPA.

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10.

When income is greater than expenses, there is…
- A.
  
  Expense
- B.
  
  Revenue
- C.
  
  Profit
- D.
  
  Loss
Correct Answer
C. Profit

Explanation
When income is greater than expenses, it means that the revenue generated is higher than the amount spent on expenses. This results in a surplus, known as profit. Profit is the positive financial gain that a business or individual earns after deducting all expenses from the total revenue. It indicates that the business or individual is making a financial gain and is in a favorable financial position.

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