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Financial Accounting Fundamentals Professional Certification

Pass the Financial Accounting exam on your 1st attempt, includes a full practice quiz. The Financial Accounting certification is designed to provide individuals with a foundational understanding of financial services and is generally considered an entry-level certification.

Here are the questions and answers :

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Question: What is the accounting equation?

A) Revenue = Expenses
B) Assets = Liabilities + Equity
C) Income = Expenditure
D) Debits = Credits
Answer: B) Assets = Liabilities + Equity

Question: What does the term “GAAP” stand for?

A) Generally Accepted Accounting Principles
B) Global Accounting and Auditing Practices
C) General Accounting Assessment Process
D) Global Assets and Accounts Policy
Answer: A) Generally Accepted Accounting Principles

Question: In double-entry accounting, which of the following is true?

A) Each transaction has only one effect on the accounting equation.
B) Each transaction affects at least two accounts with equal amounts of debits and credits.
C) Debits always exceed credits.
D) Credits always exceed debits.
Answer: B) Each transaction affects at least two accounts with equal amounts of debits and credits.

Question: What is the purpose of a trial balance?

A) To identify errors in financial statements
B) To determine the net income
C) To record adjusting entries
D) To calculate depreciation
Answer: A) To identify errors in financial statements

Question: Which financial statement represents a company’s financial position at a specific point in time?

A) Income Statement
B) Statement of Cash Flows
C) Balance Sheet
D) Statement of Retained Earnings
Answer: C) Balance Sheet

Question: What is the purpose of the income statement?

A) To show the company’s financial position
B) To provide information about cash flows
C) To report the company’s profitability over a period
D) To disclose changes in equity
Answer: C) To report the company’s profitability over a period

Question: Which of the following is a current asset?

A) Land
B) Equipment
C) Accounts Receivable
D) Buildings
Answer: C) Accounts Receivable

Question: What is the formula for calculating net income?

A) Net Income = Revenues – Expenses
B) Net Income = Assets – Liabilities
C) Net Income = Cash Inflows – Cash Outflows
D) Net Income = Equity / Liabilities
Answer: A) Net Income = Revenues – Expenses

Question: What is depreciation?

A) An increase in the value of an asset
B) A decrease in the value of an asset over time
C) The cost of goods sold
D) The total revenue earned by a company
Answer: B) A decrease in the value of an asset over time

Question: What does the term “accounts payable” represent?

A) Money owed to the company by customers
B) Money owed by the company to suppliers or vendors
C) Money invested by shareholders
D) Money held in a savings account
Answer: B) Money owed by the company to suppliers or vendors

Question: Which financial statement provides information about a company’s cash inflows and outflows?

A) Income Statement
B) Balance Sheet
C) Statement of Cash Flows
D) Statement of Retained Earnings
Answer: C) Statement of Cash Flows

Question: What is the purpose of amortization?

A) Allocating the cost of tangible assets
B) Allocating the cost of intangible assets over their useful life
C) Recording changes in the market value of assets
D) Identifying errors in financial statements
Answer: B) Allocating the cost of intangible assets over their useful life

Question: What is the accounting principle of conservatism?

A) Recognize revenue when it is earned
B) Recognize expenses when they are incurred
C) Choose the method that is least likely to overstate assets or income
D) Match expenses with revenues
Answer: C) Choose the method that is least likely to overstate assets or income

Question: Which of the following is considered a long-term liability?

A) Accounts Payable
B) Short-term loans
C) Salaries payable
D) Long-term debt
Answer: D) Long-term debt

Question: What does the term “liquidity” refer to in accounting?

A) The ability to meet short-term obligations
B) The total assets of a company
C) The profitability of a company
D) The market value of equity
Answer: A) The ability to meet short-term obligations

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