31. What is the primary objective of financial accounting?
A. Employee Training
B. Strategic Planning
C. Providing Information for Decision-Making
D. Market Research
32. What is the accounting equation in financial accounting?
A. Assets = Liabilities – Equity
B. Assets = Equity – Liabilities
C. Assets = Liabilities + Equity
D. Assets – Liabilities = Equity
33. How does the accrual basis of accounting differ from the cash basis?
A. Focuses on Historical Transactions
B. Recognizes Revenues and Expenses When Earned or Incurred, Not When Cash Changes Hands
C. Only Records Cash Transactions
D. Ignores Non-Monetary Transactions
34. What financial statement provides an overview of 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
35. What is the purpose of the income statement in financial accounting?
A. Reporting Changes in Equity
B. Summarizing Cash Transactions
C. Showing the Profitability of a Company Over a Period
D. Detailing Long-Term Investments
36. How is the net income calculated on an income statement?
A. Total Revenue – Total Expenses
B. Gross Profit – Operating Expenses
C. Revenues – Expenses
D. Net Sales – Cost of Goods Sold
37. What is the role of the statement of cash flows in financial reporting?
A. Detailing Long-Term Liabilities
B. Summarizing Cash Transactions into Operating, Investing, and Financing Activities
C. Analyzing Changes in Equity
D. Reporting Changes in Ownership Structure
38. What is the purpose of the statement of retained earnings?
A. Reporting Changes in Assets
B. Explaining Changes in the Accumulated Earnings of a Company
C. Detailing Changes in Cash Position
D. Analyzing Operating Activities
39. How does double-entry accounting ensure accuracy in financial transactions?
A. Records Only Revenue Transactions
B. Ignores Changes in Liabilities
C. Records Equal Debits and Credits for Each Transaction
D. Focuses Only on Cash Transactions
40. What is the accounting cycle, and why is it important in financial accounting?
A. Focusing on Short-Term Liabilities
B. Ignoring Non-Cash Transactions
C. Series of Steps in the Recording, Classifying, and Summarizing of Financial Transactions
D. Analyzing Employee Performance
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