1. Introduction to Accounting

Accounting Terminology — Quiz

Test your understanding of accounting terminology with 5 practice questions.

Practice Questions

Question 1

A business provides services to a client on credit for $$ \$1,500 $. Which of the following accounting terms best describes the $ \$1,500 $$ at the time the service is provided?

Question 2

A business owner invests a personal vehicle valued at $$ \$15,000 $$ into their sole proprietorship. How does this transaction affect the business's financial statements?

Question 3

A company pays its annual insurance premium of $$ \$2,400 $$ on January 1st for the next 12 months. By June 30th of the same year, how much of this insurance would be considered a prepayment and how much an expense?

Question 4

A business has used electricity for the current month, but the bill of $$ \$400 $$ has not yet been received or paid. This situation requires the recognition of which accounting term?

Question 5

A company anticipates a future legal settlement payment of $$ \$20,000 $$, but the exact amount and timing are uncertain, although it is probable. This situation requires the creation of a(n):