Accounting and Finance MCQs

Asset accounts such as cash normally carry debit balances.
Debits increase assets, while credits decrease them.

Depreciation systematically allocates depreciable cost to periods benefiting from the asset.
It is not intended to measure market value.

Balance-sheet accounts carry their balances into the next period.
Temporary performance accounts are closed.

Liability accounts normally have credit balances.
Credits increase liabilities, while debits decrease them.

Straight-line depreciation allocates equal expense each year.
Depreciable amount equals cost less expected residual value.

Retained earnings represent profits kept in the business over time.
They change with net income, losses, and dividends.

Double entry preserves the accounting equation.
Total debits must equal total credits for each journal entry.

Accumulated depreciation reduces the asset's carrying amount.
It increases with each period's depreciation expense.

Current assets support short-term operations and liquidity.
Examples include cash, receivables, and inventory.

Transactions are first recorded in a journal with dates, accounts, and amounts.
Journal entries are later posted to the ledger.

Carrying amount is the net amount reported in the statement of financial position.
It is not necessarily equal to fair value.

Current liabilities require near-term settlement.
Examples include accounts payable and accrued expenses.