Accounting Terms

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Date:

Instructions: Test your knowledge of bookkeeping and accounting jargon used by financial professionals every day.

1.
In accounting, what does the term 'accrual' refer to?
A
Revenue or expenses recorded before cash is exchanged
B
An annual financial review
C
A tax penalty
D
A type of bank account
2.
What is a 'ledger' in accounting?
A
A type of calculator
B
A type of bank loan
C
A tax return form
D
A book or system for recording financial transactions
3.
What does 'GAAP' stand for?
A
Government Approved Accounting Practices
B
Global Association of Accounting Professionals
C
General Accounting and Auditing Principles
D
Generally Accepted Accounting Principles
4.
In accounting, what is 'depreciation'?
A
A decrease in currency value
B
A type of tax deduction for losses
C
The allocation of an asset's cost over its useful life
D
The closing of a business
5.
What is a 'balance sheet'?
A
A document showing only expenses
B
A payroll summary
C
A statement showing assets, liabilities, and equity at a specific date
D
A monthly bank statement
6.
What does the accounting term 'amortization' mean?
A
Transferring funds between accounts
B
Paying off debt in a lump sum
C
Gradually writing off the cost of an intangible asset
D
Increasing an asset's book value
7.
What is 'accounts receivable'?
A
The total payroll of a company
B
Cash held in a savings account
C
Money a company owes to suppliers
D
Money owed to a company by its customers
8.
In double-entry bookkeeping, every transaction affects at least how many accounts?
A
Three
B
Two
C
Four
D
One
9.
What is a 'trial balance' used for?
A
To determine employee bonuses
B
To calculate taxes owed
C
To forecast next year's revenue
D
To verify that total debits equal total credits
10.
What does 'liquidity' refer to in accounting?
A
How quickly an asset can be converted to cash
B
The total value of a company's inventory
C
The amount of water damage to documents
D
The interest rate on a loan
11.
What is 'goodwill' on a balance sheet?
A
An intangible asset representing the premium paid over fair market value in an acquisition
B
Charitable donations made by the company
C
Employee satisfaction scores
D
The company's reputation rating
12.
What does 'fiscal year' mean?
A
A 12-month period used for accounting purposes, which may not align with the calendar year
B
A government-mandated reporting period
C
A calendar year starting January 1
D
The year a company was founded
13.
What is an 'audit' in accounting?
A
A type of tax return
B
A meeting with shareholders
C
An independent examination of financial records for accuracy
D
A quarterly earnings report
14.
What does the term 'overhead' refer to?
A
Ongoing business expenses not directly tied to producing goods or services
B
Profits above expectations
C
The ceiling of an office building
D
Executive salaries only
15.
What is 'equity' in accounting terms?
A
The company's total debt
B
The total revenue of a company
C
The owner's residual interest in assets after deducting liabilities
D
The amount of cash on hand

Answer Key

Question 1

A. Revenue or expenses recorded before cash is exchanged

Question 2

D. A book or system for recording financial transactions

Question 3

D. Generally Accepted Accounting Principles

Question 4

C. The allocation of an asset's cost over its useful life

Question 5

C. A statement showing assets, liabilities, and equity at a specific date

Question 6

C. Gradually writing off the cost of an intangible asset

Question 7

D. Money owed to a company by its customers

Question 8

B. Two

Question 9

D. To verify that total debits equal total credits

Question 10

A. How quickly an asset can be converted to cash

Question 11

A. An intangible asset representing the premium paid over fair market value in an acquisition

Question 12

A. A 12-month period used for accounting purposes, which may not align with the calendar year

Question 13

C. An independent examination of financial records for accuracy

Question 14

A. Ongoing business expenses not directly tied to producing goods or services

Question 15

C. The owner's residual interest in assets after deducting liabilities

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