Financial Accounting MCQs

inventory refers to goods held for sale or use in production

equity refers to the residual interest in assets after deducting liabilities

ledger is the term that matches the description: the collection of accounts used to classify transactions

double-entry system refers to recording each transaction with equal debit and credit effects

net profit is the term that matches the description: profit remaining after all relevant expenses

liability refers to a present obligation expected to require an outflow of resources

depreciation refers to systematic allocation of a depreciable asset’s cost over useful life

depreciation is the term that matches the description: systematic allocation of a depreciable asset’s cost over useful life

revenue expenditure is the term that matches the description: spending whose benefit is mainly consumed in the current period

contra entry refers to an entry affecting both cash and bank columns in a cash book

journal refers to the book of original entry

accrual refers to recognition of income or expense when earned or incurred rather than only when cash moves