ESSENTIAL ACCOUNTANCY TERMS – Quiz Page 2

1. What is equity?

A) Money owed to a business
B) Ownership value in a company
C) Daily business expenses
D) Bank loans

2. What does cash flow refer to?

A) Movement of money in and out of a business
B) Only money coming into a business
C) Only money going out of a business
D) Money in the cash register

3. What is a creditor?

A) Someone who borrows money
B) A bank account holder
C) Someone who is owed money
D) A business owner

4. What are overhead costs?

A) Direct production costs
B) Employee salaries only
C) Marketing expenses only
D) Indirect business expenses

5. What is the purpose of a journal in accounting?

A) To store receipts
B) To record daily transactions
C) To calculate profit
D) To pay bills

6. What is reconciliation in financial terms?

A) Matching financial records
B) Paying bills
C) Filing taxes
D) Writing checks

7. What is variance in financial reporting?

A) Monthly profit
B) Annual revenue
C) Difference between expected and actual figures
D) Tax payments

8. What is accrual in accounting?

A) Immediate payment
B) Cash received
C) Money in the bank
D) Expense recognized before payment

9. What is amortization?

A) One-time payment
B) Spreading cost over time period
C) Immediate expense
D) Cash payment

10. What does liquidity refer to?

A) Ability to convert assets to cash
B) Amount of debt
C) Business profits
D) Company shares

11. What is insolvency?

A) High profits
B) Good cash flow
C) Unable to pay debts when due
D) Business growth

12. What is a subsidiary?

A) Independent company
B) Business partner
C) Supplier
D) Company controlled by another company

13. What is goodwill in business terms?

A) Intangible business asset value
B) Cash in bank
C) Physical assets
D) Customer payments

14. What is a debenture?

A) Short-term loan
B) Long-term debt instrument
C) Bank deposit
D) Share certificate

15. What is materiality in financial reporting?

A) Physical assets
B) Cash value
C) Significance in financial reporting
D) Document size