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Quizzes > Business & Finance > Finance & Economics

Accounting Quiz: Test Your Skills Now!

Ready to ace this ProProfs.com quiz? Show off your accounting know-how!

Difficulty: Moderate
2-5mins
Learning OutcomesCheat Sheet
Paper art illustration of quiz theme accounting skills with ledger charts coins and inventory boxes on coral background

Dreaming of balancing budgets or mastering journal entries? Our is accounting for me quiz lets you discover whether your skills and interests align with the world of accounting. You'll challenge yourself on period costs, inventory management, and basic frameworks, gaining instant feedback and insider tips. Perfect for students exploring majors or professionals eyeing a career pivot, this engaging www.proprofs.com quiz also syncs across devices, so you can track progress in real time through the proprofs.com quiz dashboard. Brush up on core concepts with our Accounting 1 Midterm Quiz and tackle scenario-based problems in the management accounting quiz . Ready to see if numbers are your calling? Start now and ignite your accounting adventure!

Which financial statement shows a company's financial position at a specific point in time?
Balance Sheet
Income Statement
Statement of Cash Flows
Statement of Retained Earnings
The balance sheet reports assets, liabilities, and equity as of a specific date, providing a snapshot of financial position. It differs from the income statement, which covers performance over a period. The statement of cash flows tracks cash movements during a reporting period. Investopedia
Which cost is classified as a period cost rather than a product cost?
Factory machine maintenance
Sales commission
Direct materials
Direct labor
Period costs are expensed in the period incurred and are not tied to production. Sales commissions are selling expenses and are recorded as period costs. Factory costs like maintenance are overhead and become part of product cost. AccountingTools
Under the FIFO inventory method, which layer of costs is allocated to cost of goods sold first?
Most recent purchases
Oldest purchases
Weighted average of all purchases
Specific batches selected by manager
FIFO stands for First-In, First-Out and assigns the oldest costs to goods sold first. This method generally produces lower cost of goods sold in inflationary periods. Ending inventory reflects the most recent costs. Investopedia
Which accounting basis records revenue when earned and expenses when incurred regardless of cash flow?
Cash basis accounting
Accrual basis accounting
Tax basis accounting
Modified cash basis
Accrual accounting recognizes revenues when earned and matches expenses to those revenues, providing a more accurate measure of performance. Cash basis records transactions only when cash changes hands. Most public companies must use accrual basis under GAAP. FASB
What distinguishes a direct cost from an indirect cost?
Direct costs are fixed, indirect costs are variable
Direct costs are traceable to a cost object
Indirect costs are always period costs
Indirect costs are raw materials
Direct costs can be directly traced to a specific product or department (e.g., direct labor). Indirect costs, like utilities, support multiple cost objects. Both direct and indirect costs can be fixed or variable. AccountingTools
Which type of account is increased by a debit entry?
Liabilities
Equity
Assets
Revenues
In double-entry accounting, assets and expenses increase with debits. Liabilities, equity, and revenues increase with credits. Recording a debit to an asset account shows acquisition or increase in value. Investopedia
In a period of rising prices, which inventory method typically results in the highest taxable income?
FIFO
LIFO
Weighted Average
Specific Identification
FIFO assigns older, lower costs to cost of goods sold when prices rise, resulting in lower COGS and higher taxable income. LIFO does the opposite, reducing taxable income. Taxable income is higher under FIFO in inflationary periods. Investopedia
Which three components make up total product cost in a manufacturing firm?
Direct materials, direct labor, administrative expenses
Direct materials, direct labor, manufacturing overhead
Direct labor, selling expenses, manufacturing overhead
Direct materials, selling expenses, administrative expenses
Product costs consist of direct materials, direct labor, and manufacturing overhead. These costs are inventoried until goods are sold. Period costs, like selling and administrative expenses, are expensed immediately. AccountingCoach
What is the fundamental accounting equation?
Assets = Liabilities + Equity
Assets + Equity = Liabilities
Revenues – Expenses = Equity
Assets = Revenues + Expenses
The core accounting equation is Assets = Liabilities + Equity, showing that resources (assets) are financed by debt (liabilities) or owner’s investment (equity). It underpins double-entry bookkeeping. Changes to one side must be matched by the other. AccountingTools
How is the predetermined manufacturing overhead rate calculated?
Estimated overhead ÷ estimated direct labor hours
Actual overhead ÷ actual machine hours
Estimated overhead ÷ actual units produced
Budgeted overhead ÷ budgeted direct materials cost
The predetermined overhead rate is based on estimates made at the start of the period: estimated manufacturing overhead divided by estimated activity (often direct labor hours). It is applied to jobs throughout the period. AccountingTools
Which cost is expensed as part of cost of goods sold when inventory is sold?
Product cost
Period cost
Administrative expense
Advertising expense
Product costs (direct materials, direct labor, and manufacturing overhead) are capitalized as inventory and expensed as COGS when units are sold. Period costs are expensed in the period incurred. AccountingCoach
What journal entry records depreciation expense for the period?
Debit Accumulated Depreciation; Credit Depreciation Expense
Debit Depreciation Expense; Credit Accumulated Depreciation
Debit Equipment; Credit Depreciation Expense
Debit Depreciation Expense; Credit Equipment
Depreciation expense is debited to reflect cost allocation and credited to accumulated depreciation, a contra-asset account. This preserves the original cost of the asset on the balance sheet. Investopedia
Which inventory costing method smooths out cost fluctuations by averaging costs?
FIFO
LIFO
Weighted average
Specific identification
The weighted average method computes an average cost per unit by dividing total cost by total units available. It smooths cost fluctuations over the period. COGS and ending inventory both use the same average cost. Investopedia
Under a periodic inventory system, when is cost of goods sold determined?
Continuously as each sale occurs
At the end of the accounting period
When purchases are made
When cash is received
A periodic system records inventory changes only at period end by physical count; COGS is calculated then. In contrast, perpetual systems track COGS and inventory continuously. AccountingTools
Under absorption costing, which of the following costs is included in inventory valuation?
Variable manufacturing overhead only
Fixed manufacturing overhead only
Both fixed and variable manufacturing overhead
Selling and administrative costs
Absorption costing includes all manufacturing costs—direct materials, direct labor, variable and fixed manufacturing overhead—in product cost. Selling/administrative costs remain period expenses. AccountingTools
Which selling expense is classified as a period cost?
Factory rent
Sales salaries
Direct labor
Manufacturing overhead
Sales salaries are incurred to sell the product and are recorded as period costs in the selling expense category. Factory rent is part of manufacturing overhead and becomes a product cost. AccountingCoach
What does the matching principle in accounting require?
Expenses be recognized when cash is paid
Revenues be recognized when cash is received
Expenses be recorded in the same period as related revenues
All liabilities be matched to assets
The matching principle dictates that expenses should be recognized in the period in which the related revenues are earned, ensuring accurate measurement of net income. It underpins accrual accounting. Investopedia
A company has beginning inventory of 100 units at $10 and purchases 200 units at $12. If it sells 150 units, what is cost of goods sold using FIFO?
$1,600
$1,700
$1,800
$1,900
Under FIFO, the first 100 units at $10 and next 50 units at $12 are sold: (100×10)+(50×12)=1,000+600=1,600. The remaining 150 units remain at $12. AccountingCoach
A job uses 200 machine hours. If the predetermined overhead rate is $5 per machine hour, what amount of overhead is applied?
$1,000
$500
$200
$2,000
Overhead applied equals machine hours multiplied by the predetermined rate: 200 hours×$5/hour=$1,000. This allocation spreads overhead based on usage. AccountingTools
What is the LIFO reserve?
Difference between FIFO and LIFO inventory costs
Excess of ending inventory over beginning inventory
Accumulated depreciation under LIFO
Deferred tax liability under FIFO
The LIFO reserve is the difference between inventory reported under FIFO and under LIFO. It indicates how much COGS and inventory value differ between the methods. Investopedia
Which concept describes reporting inventory at the lower of cost or net realizable value?
Conservatism
Consistency
Materiality
Full disclosure
The conservatism principle requires that inventory be stated at the lower of cost or net realizable value to avoid overstating assets. This ensures losses are recognized promptly. AccountingTools
In a perpetual inventory system, how is cost of goods sold recorded?
At the end of period based on physical count
Continuously with each sale
When purchases are recorded
Only when cash is received
A perpetual system updates inventory and COGS at each sale by crediting Inventory and debiting COGS. This provides real-time inventory data. AccountingTools
Which ratio measures how many times a company sells and replaces its inventory in a period?
Current ratio
Quick ratio
Inventory turnover ratio
Debt-to-equity ratio
Inventory turnover ratio equals cost of goods sold divided by average inventory. It indicates how efficiently inventory is managed and sold. Higher turnover suggests strong sales or effective inventory control. Investopedia
What major compliance requirement did the Sarbanes-Oxley Act introduce for companies?
Expanded depreciation methods
Stricter internal controls over financial reporting
Mandated LIFO inventory only
Eliminated quarterly reporting
The Sarbanes-Oxley Act of 2002 strengthened requirements for internal control and financial reporting to enhance corporate governance and reduce fraud. Public companies must assess and disclose control effectiveness. SEC
Under variable costing, which cost is treated as a period expense rather than product cost?
Direct labor
Variable manufacturing overhead
Direct materials
Fixed manufacturing overhead
Variable costing includes only variable manufacturing costs in product cost; fixed manufacturing overhead is expensed in the period incurred. This method highlights cost behavior for decision making. AccountingTools
Which inventory valuation rule requires reporting at the lower of cost or net realizable value?
Lower of cost or net realizable value rule
LIFO conformity rule
Gross profit method
Specific identification rule
The lower of cost or net realizable value rule ensures inventory is not overstated by writing it down to its net realizable value if that is lower than cost. It applies under US GAAP for most inventories. Investopedia
What does the LIFO conformity rule mandate?
If LIFO is used for tax purposes, it must also be used for financial reporting
FIFO must be used for inventory costing when prices are stable
Weighted average must match periodic system
Specific identification must be disclosed separately
The LIFO conformity rule in the U.S. requires that if a company uses LIFO for tax purposes, it must also apply LIFO for financial reporting under GAAP. This ensures consistency between tax and financial records. IRS
In reconciling absorption costing net income to variable costing net income, which adjustment is made?
Add fixed manufacturing overhead deferred in inventory
Subtract variable selling expenses
Add period administrative costs
Subtract all manufacturing overhead
Absorption costing capitalizes fixed manufacturing overhead in inventory, whereas variable costing expenses it immediately. To reconcile, you add fixed overhead deferred in (or subtract released from) inventory under absorption costing. AccountingTools
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Study Outcomes

  1. Understand Fundamental Accounting Concepts -

    After taking the is accounting for me quiz on ProProfs, learners will be able to clearly define key terms such as period costs, direct labor, and inventory management.

  2. Analyze Cost Classification -

    Participants will be able to distinguish between period and product costs and categorize expenses accurately for financial reporting.

  3. Evaluate Inventory Management Techniques -

    Users will gain the ability to assess inventory valuation methods like FIFO and LIFO and understand their impact on financial statements.

  4. Apply Direct Labor Calculations -

    After engaging with the ProProfs.com quiz, learners can compute direct labor costs per unit and incorporate them into costing models.

  5. Assess Personal Accounting Aptitude -

    By completing the www.proprofs.com quiz, users will identify their strengths and areas for growth, helping them decide if accounting aligns with their career goals.

Cheat Sheet

  1. Understanding Period Costs vs Product Costs -

    Period costs, such as administrative and selling expenses, are expensed immediately, while product costs (direct materials, direct labor, and manufacturing overhead) are inventoried until sold (FASB ASC 330). Use the mnemonic "SAY goodbye to period costs" to remember they go straight to the income statement. Mastering this distinction will boost your score on the is accounting for me quiz.

  2. Direct Labor and Overhead Allocation Basics -

    Direct labor cost equals hours worked multiplied by the hourly wage rate, and factories allocate overhead using a predetermined rate: estimated overhead ÷ estimated activity (e.g., machine hours) (Institute of Management Accountants). Remember "Hourly rate × Time" for direct labor. Knowing this formula is key to answering allocation questions on www.proprofs.com quiz.

  3. Inventory Valuation Methods -

    Learn FIFO, LIFO, and Weighted Average to value ending inventory: FIFO assumes oldest costs sold first, LIFO the newest, and average takes a weighted mean (IFRS IAS 2). For example, FIFO gives higher ending inventory in rising-price environments. Practicing numerical examples helps you ace inventory questions on the www proprofs com quiz.

  4. Cost Behavior: Fixed vs Variable Costs -

    Fixed costs remain constant in total (e.g., rent), while variable costs change with activity (e.g., materials) (Harvard Business School course notes). Use the break-even formula Units = Fixed Costs ÷ (Price - Variable Cost) to find profitability thresholds. Solid grasp of cost behavior will give you confidence on proprofs.com quiz scenarios.

  5. Matching Principle and Accrual Accounting -

    The matching principle requires expenses to be recognized in the same period as the related revenues (IFRS Conceptual Framework). For example, record warranty expense in the period of sale, not when claims occur. Applying accrual concepts ensures you'll handle tricky questions on the is accounting for me quiz with ease.

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