accounting Quiz

Test yourself on accounting with AI-generated multiple-choice questions, answers, and explanations.

Q1. Is Revenue a component of the basic accounting equation?

Q2. In accounting, what does the term 'amortization' refer to?

Answers

A1. No

Revenue increases assets and equity but is not directly listed as a component in the fundamental accounting equation; instead, it affects the equation indirectly through retained earnings at the end of an accounting period.

A2. Spreading the cost of an intangible asset over its useful life

Amortization typically applies to intangible assets like patents, trademarks, and copyrights, which do not have physical substance but still decline in value over time. The method often used for amortizing these assets is straight-line amortization, which spreads the cost evenly across the asset’s useful life.