Basic Accounting Terminology Multiple Choice Questions:
1. What is the definition of assets in accounting?
- A. Liabilities
- B. Debts
- C. Resources owned by a company
- D. Expenses

Explanation: Assets in accounting refer to resources owned by a company that have economic value and can be used to generate future benefits.
2. Which of the following is an example of a liability?
- A. Equipment
- B. Accounts Receivable
- C. Accounts Payable
- D. Revenue

Explanation: A liability is a company's legal debts or obligations that arise during the course of business operations. Accounts payable is an example of a liability.
3. What is the purpose of the income statement?
- A. To show the financial position of a company at a specific point in time
- B. To report the revenues and expenses of a company over a period of time
- C. To summarize the changes in equity of a company
- D. To provide information about the cash flows of a company

Explanation: The income statement shows the revenues and expenses of a company over a specific period of time, typically a month, quarter, or year. It helps stakeholders understand the profitability of the business.
4. Which financial statement shows 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 Changes in Equity

Explanation: The balance sheet shows a company's financial position at a specific point in time by summarizing its assets, liabilities, and equity.
5. What is the purpose of the statement of cash flows?
- A. To show the financial position of a company at a specific point in time
- B. To report the revenues and expenses of a company over a period of time
- C. To summarize the changes in equity of a company
- D. To provide information about the cash inflows and outflows of a company

Explanation: The statement of cash flows provides information about the cash inflows and outflows of a company during a specific period, helping stakeholders understand how cash is being generated and used.
6. What is the formula for calculating net income?
- A. Revenue - Expenses
- B. Assets - Liabilities
- C. Cash Inflows - Cash Outflows
- D. Equity + Liabilities

Explanation: Net income is calculated by subtracting expenses from revenues. It represents the profitability of a company during a specific period.
7. Which of the following is a type of equity account?
- A. Accounts Payable
- B. Retained Earnings
- C. Accounts Receivable
- D. Prepaid Expenses

Explanation: Retained earnings is an example of an equity account that represents the accumulated profits or losses of a company that have not been distributed to shareholders.
8. What is the purpose of the trial balance?
- A.