National University

Management Fundamentals
SAMPLE QUIZ #01

Here are 20 multiple-choice questions (MCQs) for Principles and Practices of Banking:
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​ 1. Which of the following is NOT an accounting principle?
​ A) Matching principle
​ B) Revenue recognition principle
​ C) Going concern principle
​ D) Supply and demand principle
​ Answer: D) Supply and demand principle
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​ 2. What does the term "GAAP" stand for in accounting?
​ A) Generally Accepted Accounting Principles
​ B) Generally Applied Accounting Practices
​ C) Generally Approved Accounting Procedures
​ D) Generally Acknowledged Accounting Protocols
​ Answer: A) Generally Accepted Accounting Principles
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​ 3. Which financial statement reports 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
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​ 4. What does the term "depreciation" refer to in accounting?
​ A) Increase in the value of an asset over time
​ B) Decrease in the value of an asset over time
​ C) Increase in the value of liabilities
​ D) Decrease in the value of liabilities
​ Answer: B) Decrease in the value of an asset over time
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​ 5. Which accounting equation represents the fundamental relationship among
assets, liabilities, and equity?
​ A) Assets = Liabilities - Equity
​ B) Assets = Liabilities + Equity
​ C) Assets - Liabilities = Equity
​ D) Assets + Liabilities = Equity
​ Answer: B) Assets = Liabilities + Equity
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​ 6. What is the purpose of double-entry accounting?
​ A) To record only one side of a transaction
​ B) To record both sides of a transaction
​ C) To record transactions twice
​ D) To record transactions in reverse order
​ Answer: B) To record both sides of a transaction
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​ 7. Which financial statement reports a company's revenues and expenses over a
period of time?
​ A) Balance sheet
​ B) Income statement
​ C) Statement of cash flows
​ D) Statement of retained earnings
​ Answer: B) Income statement
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​ 8. What does the term "accrual basis accounting" mean?
​ A) Recording transactions when cash is received or paid
​ B) Recording transactions when they occur, regardless of when cash is
exchanged
​ C) Recording transactions only when cash is exchanged
​ D) Recording transactions at the end of the accounting period
​ Answer: B) Recording transactions when they occur, regardless of when cash
is exchanged
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​ 9. Which of the following is NOT a type of financial statement analysis?
​ A) Vertical analysis
​ B) Horizontal analysis
​ C) Diagonal analysis
​ D) Ratio analysis
​ Answer: C) Diagonal analysis
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​ 10. Which financial statement reports a company's cash inflows and outflows
during a period?
​ A) Income statement
​ B) Balance sheet
​ C) Statement of cash flows
​ D) Statement of retained earnings
​ Answer: C) Statement of cash flows
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​ 11. What does the term "liquidity" refer to in accounting?
​ A) Ability to generate profits
​ B) Ability to meet short-term obligations with current assets
​ C) Ability to pay long-term debts
​ D) Ability to generate cash flow
​ Answer: B) Ability to meet short-term obligations with current assets
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​ 12. Which accounting principle states that expenses should be recognized in
the same period as the revenues they help to generate?
​ A) Matching principle
​ B) Revenue recognition principle
​ C) Conservatism principle
​ D) Materiality principle
​ Answer: A) Matching principle
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​ 13. What does the term "inventory" refer to in accounting?
​ A) Money held by a company
​ B) Fixed assets of a company
​ C) Raw materials, work-in-progress, and finished goods held for sale
​ D) Long-term investments of a company
​ Answer: C) Raw materials, work-in-progress, and finished goods held for sale
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​ 14. Which financial statement shows the changes in a company's retained
earnings over a period?
​ A) Income statement
​ B) Balance sheet
​ C) Statement of cash flows
​ D) Statement of retained earnings
​ Answer: D) Statement of retained earnings
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​ 15. What does the term "journal entry" refer to in accounting?
​ A) A summary of all transactions recorded in a period
​ B) A list of all accounts used by a company
​ C) A record of individual transactions in chronological order
​ D) A statement of financial position at a specific point in time
​ Answer: C) A record of individual transactions in chronological order
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​ 16. Which accounting concept assumes that a business will continue to operate
indefinitely?
​ A) Going concern principle
​ B) Matching principle
​ C) Conservatism principle
​ D) Materiality principle
​ Answer: A) Going concern principle
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​ 17. What is the purpose of the trial balance in accounting?
​ A) To summarize all transactions recorded in a period
​ B) To list all accounts used by a company
​ C) To verify that debits equal credits after posting transactions
​ D) To prepare financial statements
​ Answer: C) To verify that debits equal credits after posting transactions
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​ 18. Which financial statement shows a company's revenues, expenses, and net
income or loss for a period?
​ A) Income statement
​ B) Balance sheet
​ C) Statement of cash flows
​ D) Statement of retained earnings
​ Answer: A) Income statement
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​ 19. What does the term "GAAP" stand for in accounting?
​ A) Generally Acknowledged Accounting Principles
​ B) Generally Accepted Accounting Procedures
​ C) Generally Applied Accounting Practices
​ D) Generally Accepted Accounting Principles
​ Answer: D) Generally Accepted Accounting Principles
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​ 20. Which accounting principle requires that financial statements should be
based on objective evidence and verifiable data?
​ A) Materiality principle
​ B) Consistency principle
​ C) Reliability principle
​ D) Conservatism principle
​ Answer: C) Reliability principle
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