Financial Accounting 101 Quiz – How Much Do You Know?

Financial Accounting 101 is one of the big first-year topics for most accounting courses. Our Financial Accounting 101 Quiz will help you learn a little, refresh your training, or just see if accounting is for you. Our topics cover some of the main financial statements, such as the balance sheet, as well as key concepts around assets and liabilities. Let’s do this!

A balance sheet:

  1. Shows the inflow / outflow of cash from a business by month
  2. Summarizes a business’ assets (stuff they own) and liabilities (what they owe) at a single point in time
  3. Calculates the amount of profit (or loss) earned by a business at a specific point in time

Which of the following are all “assets”:

  1. Cash in the bank, Money owed to you from customers, Buildings & equipment
  2. Money you owe to others, Loans from the Bank, Buildings & equipment
  3. Products in your warehouse, Money owed to you from customers, Staff salaries

Which of the following are all “liabilities”

  1. Money you owe to suppliers, Interest you owe to the bank, Products in your warehouse
  2. Money you owe to suppliers, Money customers owe you for work already done, Bank loans
  3. Interest you owe to the bank, Salaries for your staff, Money you owe to suppliers

Previous 3 answers: 2, 1, 3

Balance sheet learning! You’ll spend a lot of time in Financial Accounting 101 learning about the balance sheet. A balance sheet always shows Assets (A), Liabilities (L), and Stockholder Equity (SE). The equation for a proper balance sheet is A = L + SE. This means that your total assets ALWAYS equals your Liabilities + Stockholder Equity. Never More! Never Less! See our summary of the balance sheet to start learning before your financial accounting 101 course starts!

An Income Statement:

  1. Shows the inflow and outflow of cash for a business by month
  2. Reports the amount of equity owned by the business’ owner
  3. Summarizes a business’ revenues and expenses over a time period (typically one year), to show net profit (or loss)

Which of the following is NOT considered part of a business’ operating revenues:

  1. Sales of products
  2. Fees for services provided
  3. Money paid to employees

Which of the following is considered part of a business’ operating expenses:

  1. Cost of buying the products it then sold to customers (Cost of Goods Sold)
  2. Money made from selling products
  3. Interest it earned from money in the bank

Previous 3 answers: 3, 3, 1

Income Statement Learning! The overall equation for an income statement is Revenue – Expenses. When a business’ total revenues are greater than its expenses, then the income statement will show a “net income”, meaning that the business is profitable. This is a key concept of any financial accounting 101 course.

A Statement of Cash Flow shows the cash earned or consumed by a business during the year. The statement splits the movement of cash into 3 categories, which are:

  1. Operations, Investing, Financing
  2. Operations, Employee Production, Sales
  3. Sales, Financing, Customer Receipts

[Advanced Question for Financial Accounting 101] The result of the statement of cash flow (e.g., the amount of cash produced by the business during a year) ends up on:

  1. The balance sheet, as an asset
  2. The balance sheet, as a liability
  3. The balance sheet, as part of stakeholder equity

 Previous 2 answers: 1, 3

Cash Flow Statement Learning! Cash flow statements are very important to financial accounting 101 courses. They show the sources and uses of cash in three buckets: Operations, Investing, and Financing. Operations is related to cash made from (or used by) selling products to customers. Investing is cash movements from selling or buying assets that you are likely to own for a longtime (e.g., a building). Financing captures any cash movements related to long-term bank loans or money to / from investors. See our summary of the cash flow statement to learn more before your financial accounting 101 course starts.

Did you enjoy this financial accounting 101 quiz? Well then you’ll love accounting! Head on over to our Career Paths section to find the job for you or search for an accounting school in our database to get started.