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Financial Accounting Practice Quiz & Questions

Take a free practice quiz or point your phone at any Financial Accounting exam question for an instant, explained answer — debits, credits, and the accounting equation, without the guesswork.

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Built for exactly this kind of question.

Financial Accounting questions usually give you a transaction and ask you to classify it correctly — which account it hits, whether it's a debit or credit, which financial statement it flows to — and one flipped sign changes the whole answer. Cambo reads the exact transaction and walks through which accounts move and why, not just the final number.

Test yourself with real practice questions.

A company purchases equipment for $10,000 cash. What is the effect on the accounting equation (Assets = Liabilities + Equity)?

  1. ATotal assets increase by $10,000
  2. BOne asset (equipment) increases and another asset (cash) decreases by the same amount, so total assets are unchanged
  3. CLiabilities increase by $10,000
  4. DEquity decreases by $10,000
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Answer
BOne asset (equipment) increases and another asset (cash) decreases by the same amount, so total assets are unchanged
One asset increases (equipment) while another asset decreases (cash) by the same amount — total assets stay the same, since this is an exchange within the asset side of the equation, not new financing.

Which of the following is the correct rule for a debit entry?

  1. ADebits increase asset and expense accounts, and decrease liability, equity, and revenue accounts
  2. BDebits always increase every account
  3. CDebits increase liability and revenue accounts, and decrease asset accounts
  4. DDebits only apply to cash transactions
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Answer
ADebits increase asset and expense accounts, and decrease liability, equity, and revenue accounts
Debits increase asset and expense accounts while decreasing liability, equity, and revenue accounts — the reverse is true for credits, and every transaction must keep total debits equal to total credits.

A business receives $5,000 cash from a customer for services that will be performed next month. How should this be recorded?

  1. AAs revenue, since cash was received
  2. BAs unearned revenue, a liability, since the service hasn't been performed yet
  3. CAs an expense
  4. DIt should not be recorded until the service is performed
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Answer
BAs unearned revenue, a liability, since the service hasn't been performed yet
As unearned revenue, a liability — the company owes the customer a service, so revenue can't be recognized yet under accrual accounting even though cash has already changed hands.

Which financial statement reports a company's revenues and expenses over a period of time to determine net income?

  1. AThe balance sheet
  2. BThe statement of cash flows
  3. CThe income statement
  4. DThe statement of retained earnings
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Answer
CThe income statement
The income statement — it reports revenues and expenses over a specific period and calculates net income (or net loss) as the difference between them.

A company's total assets are $150,000 and total liabilities are $60,000. What is total equity?

  1. A$90,000
  2. B$150,000
  3. C$210,000
  4. D$60,000
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Answer
A$90,000
$90,000 — using the accounting equation, Assets = Liabilities + Equity, so Equity = Assets − Liabilities = $150,000 − $60,000.

Under accrual accounting, when should revenue be recognized?

  1. AWhen cash is received, regardless of when the goods or services are provided
  2. BWhen the goods or services are provided to the customer, regardless of when cash is received
  3. CAt the end of the fiscal year, regardless of when the transaction occurred
  4. DOnly when the customer's invoice has been fully paid
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Answer
BWhen the goods or services are provided to the customer, regardless of when cash is received
Revenue is recognized when goods or services are actually provided to the customer, not necessarily when cash changes hands — this is the core principle distinguishing accrual accounting from cash-basis accounting.
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Also known as.

Same course, different course code depending on your school.

Questions, answered.

What topics does Financial Accounting usually cover?

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The accounting equation, debits and credits, journal entries and T-accounts, the four main financial statements (income statement, balance sheet, statement of cash flows, statement of retained earnings), accrual vs. cash accounting, and basic ratio analysis.

Do I need a business major to take Financial Accounting?

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No — it's commonly a required foundational course for business, accounting, finance, and economics majors, and is sometimes taken as an elective by others as well.

Is Financial Accounting usually curved?

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It varies by school, but many sections curve exams since the problem-set format (journal entries, T-accounts, statement preparation) can produce a wide spread of raw scores.

Is Cambo affiliated with McGraw Hill, Pearson, Cengage, or any university?

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No. Cambo is an independent study tool and isn't produced, endorsed, or affiliated with any textbook publisher or university.

What's the difference between financial accounting and managerial accounting?

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Financial accounting focuses on producing standardized statements for external users like investors and creditors, following GAAP. Managerial accounting focuses on internal reporting to help managers make decisions, and doesn't have to follow the same standardized rules.

How many credit hours is Financial Accounting usually worth?

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Typically 3 credit hours, most often required in the first or second year of a business or accounting program.

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