Financial Accounting_3

#1. The Balance Sheet is prepared to show:

a) A company’s financial position at a specific point in time

b) The total revenue earned in a year

c) The company’s total profits

d) Future financial projections

#2. Which key function of Financial Accounting helps in preventing fraud?

a) Communicating financial statements

b) Analyzing financial records

c) Systematic record-keeping

d) Conducting HR evaluations

#3. Which of the following statements about accounting is false?

a) It helps in financial decision-making

b) It records only cash transactions

c) It provides financial information to stakeholders

d) It follows certain principles and standards

#4. Why is Financial Accounting important for investors?

a) It provides accurate information on profitability and financial health

b) It helps in setting employee salaries

c) It determines business location decisions

d) It ensures company marketing success

#5. Which financial statement shows assets, liabilities, and capital?

a) Income Statement

b) Cash Flow Statement

c) Balance Sheet

d) Trial Balance

#6. What does the "matching principle" in accounting state?

a) Expenses should be recorded in the period they are paid

b) Revenues should be matched with expenses in the same period

c) All cash transactions must be recorded

d) Profit should be recognized only when cash is received

#7. How does Financial Accounting differ from Managerial Accounting?

a) Financial Accounting focuses on external reporting, while Managerial Accounting is for internal use

b) Managerial Accounting follows GAAP, while Financial Accounting does not

c) Financial Accounting involves budgeting, while Managerial Accounting does not

d) There is no difference between the two

#8. The term “financial transactions” in accounting refers to:

a) Any event that affects a company’s financial statements

b) Day-to-day business meetings

c) Employee salary discussions

d) Company marketing strategies

#9. Which financial statement shows the cash inflows and outflows of a business?

a) Income Statement

b) Balance Sheet

c) Cash Flow Statement

d) Trial Balance

#10. Which type of account represents the owner's equity?

a) Real Account

b) Personal Account

c) Nominal Account

d) Capital Account