If you’re looking to test your knowledge and understanding of financial accounting principles and concepts, you’ve come to the right place. Our MCQs cover a wide range of topics, including recording financial transactions, preparing financial statements, analyzing financial data, and more. Whether you’re a student studying accounting, a professional looking to refresh your knowledge, or just someone interested in learning more about financial accounting, our MCQs are a great way to assess your skills and improve your understanding. So, let’s get started and see how well you know financial accounting!
Financial Accounting MCQs
Q1. Which of the following is an example of a current asset?
A) Land
B) Buildings
C) Accounts receivable
D) Patents
Q2.Which of the following is an example of a contra account?
A) Accumulated depreciation
B) Accounts receivable
C) Common stock
D) Retained earnings
Q3. Which of the following is a liability?
A) Inventory
B) Prepaid expenses
C) Notes payable
D) Retained earnings
Q4. Which of the following is an example of an asset?
A) Accounts payable
B) Buildings
C) Salaries expense
D) Dividends paid
Q5. Which of the following is not a financial statement?
A) Income statement
B) Balance sheet
C) Cash flow statement
D) Journal
Q6. Which financial statement shows a company’s revenues and expenses over a period of time?
A) Income statement
B) Balance sheet
C) Cash flow statement
D) Statement of changes in equity
Q7. Which financial statement shows a company’s assets, liabilities, and equity at a specific point in time?
A) Income statement
B) Balance sheet
C) Cash flow statement
D) Statement of changes in equity
Q8. Which of the following is not an asset?
A) Accounts payable
B) Inventory
C) Buildings
D) Cash
Q9. Which of the following is not a liability?
A) Accounts payable
B) Notes payable
C) Salaries expense
D) Taxes payable
Q10. Which accounting principle requires that a company record its expenses when they are incurred, regardless of when the payment is made?
A) Matching principle
B) Revenue recognition principle
C) Going concern principle
D) Time period principle
Q11. Which accounting principle requires that a company record revenue when it is earned, regardless of when the payment is received?
A) Matching principle
B) Revenue recognition principle
C) Going concern principle
D) Time period principle
Q12. Which financial statement shows a company’s cash inflows and outflows over a period of time?
A) Income statement
B) Balance sheet
C) Cash flow statement
D) Statement of changes in equity
Q13. Which of the following is not a type of account?
A) Asset
B) Liability
C) Equity
D) Customer service
Q14. What is the accounting equation?
A) Assets = Liabilities – Equity
B) Assets + Liabilities = Equity
C) Assets – Liabilities = Equity
D) Assets = Liabilities + Equity
Q15. Which accounting principle requires that a company use the same accounting methods and procedures from period to period?
A) Consistency principle
B) Materiality principle
C) Conservatism principle
D) Economic entity principle
Q16. Which of the following is not an expense?
A) Rent expense
B) Utilities expense
C) Accounts receivable
D) Wages expense
Q17. Which financial statement shows the details of a company’s revenues and expenses over a period of time?
A) Income statement
B) Balance sheet
C) Cash flow statement
D) Statement of changes in equity
Q18. Which accounting principle requires that a company record the full amount of an expense in the period in which it is incurred, even if payment is not made until a later period?
A) Matching principle
B) Revenue recognition principle
C) Time period principle
D) Accruals principle
Q19. Which of the following is an example of a long-term liability?
A) Accounts payable
B) Notes payable due within one year
C) Short-term loans
D) Bonds payable due in 10 years
Q20. Which accounting principle requires that a company disclose all relevant information in the financial statements?
A) Materiality principle
B) Conservatism principle
C) Full disclosure principle
D) Economic entity principle
Q21. Which of the following is an example of a contra-asset account?
A) Accumulated depreciation
B) Accounts receivable
C) Prepaid expenses
D) Inventory
22.Which financial statement shows the net changes in a company’s cash and cash equivalents over a period of time?
A) Income statement
B) Balance sheet
C) Cash flow statement
D) Statement of changes in equity
Q23. Which accounting principle requires that a company record expenses and liabilities as soon as they are known, even if the amount is uncertain?
A) Materiality principle
B) Conservatism principle
C) Full disclosure principle
D) Matching principle
Q24. Which of the following is an example of a deferred revenue account?
A) Accounts payable
B) Wages payable
C) Unearned revenue
D) Interest payable
Q25. Which accounting principle requires that a company record revenues when they are earned, even if the payment has not been received?
A) Accruals principle
B) Revenue recognition principle
C) Matching principle
D) Time period principle
Q26. Which financial statement shows the changes in a company’s long-term debt over a period of time?
A) Income statement
B) Balance sheet
C) Cash flow statement
D) Statement of changes in equity
Q27. If liabilities decrease, what happens to equity assuming assets stay the same?
A) Equity increases
B) Equity decreases
C) Equity stays the same
D) Cannot be determined
Q28. Which of the following is an example of an intangible asset?
A) Land
B) Building
C) Inventory
D) Patent
Q29. If assets increase, what happens to equity assuming liabilities stay the same?
A) Equity increases
B) Equity decreases
C) Equity stays the same
D) Cannot be determined
Q30.Which of the following is an example of a prepaid expense?
a) Rent expense
b) Advertising expense
c) Interest expense
d) Insurance expense
Q31. Which of the following is an example of an intangible asset?
a) Land
b) Buildings
c) Equipment
d) Patents
Q32. Which of the following is an example of a long-term liability?
a) Accounts payable
b) Salaries payable
c) Bank loan
d) Rent expense