Accounting ABC Quiz 1

Accounting as recorded by Pacioli started because

It was a practical way to keep track of assets and wealth

The funding butterfly has two sides

Sources of funds and Uses of funds

Where does value reside in the Balance Sheet

Assets

Name the three elements of the Balance Sheet

Assets, LIbailities and Equity

Only one of these accounting elements can ever be tangible

Assets

Why might a business get a loan?

Buy inventory, pay its taxes, buy a yacht, pay out another loan

Which word best describes Liabilities from the entity's viewpoint

obligations

The word ‘Accounting’ is aligned to ‘accountability’? 

Tru

Assets can be intangible

True

Accounting was created quite recently with the advent of computerized accounting systems

False

A business should never borrow, becuase debt is bad 

false

The entity Theory is similar to the Big Bang theory

False

Why is it important that we ‘name the business’ when reviewing its financial story

so we know from which perspective the financial story is being told

Which finaicial statement represents the Accounting Equation 

The balance sheet 

A business has assets because

They are used to directly or indirectly generate revenue

Balance Sheets balance because

The total value of the assets equals the total value of the consequent obligations of the business against those assets 

A business can have assets other than those recognized on its Balance Sheet

True

For an entity to disclose an asset on its balance Sheet it must meet the following conditions

Recognition Criteria

Liabilities are money

False

Liabilities and Debt are synonyms 

True 

Our bank savings accounts is an Asset to us, but is Equity to the bank

False

When considering debt and equity, from an external perspective these are claims (against the assets), but from an internal perspective these are ‘obligations’

True

It is an insolvency, after the IRS, the owners are paid out first from the remaining assets

false

Equity is an Arabiv word, that means “Equality”

False

Net Assets is another name for Equity

True

In accounting, equity is considered to be very valuable to the business

false

Like assets, equity is tangible becuase evidenced by stock certificates 

False

Accounting these days can only be done using a computerized accounting system

False

Being owned money by your customers creates Liability for the business

False

Double-entry accounting is part of a holistic system documented by Pacioli called ‘the duality’ 

True

Equity and Liabilities are both obligations and so are identical in nature

False

Accounting primarily tracks the assets and the consequent obligations against those assets

True