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- 1. Multiple ChoiceThe process of keeping the financial records of a business is known asAccountingControllingFinancingBookkeeping
- 2. Multiple ChoiceThe overall purpose of accounting is toMaintain accurate reportsCompile the business’s expensesKeep track of salesControl the finances of the business
- 3. Multiple ChoiceWhy are accurate accounting records important to a business?They prevent any financial lossesThey show the business how it is doing.They increase the return on investmentsThey give the business an image of success
- 4. Multiple ChoiceWhich of the following groups makes regular use of a business’s managerial accounting information:ManagersCustomersCreditorsInvestors
- 5. Multiple ChoiceA creditor is most likely to examine a business’s financial accounting records if the business isApplying for a bank loanSelecting a new marketUsing cash accountingComplying with regulations
- 6. Multiple ChoiceRiley is an employee of the federal government who studies the financial reports of major businesses in a specific industry. The government’s purpose in assigning this task to Riley is toVerify compliance with lawsCalculate the businesses’ income taxesAnalyze employment statisticsIdentify trends in the industry
- 7. Multiple ChoiceFor an accounting system to be useful to the business, the accounting information it contains must beAccurate and up to dateApproved by the chief executive officerPosted by an accountantRecorded using the accrual method
- 8. Multiple ChoiceWhich of the following is a requirement for a good accounting system:It should be updated annuallyIt should provide needed information quicklyIt should eliminate the need for an accountantIt should be replaced every two or three years
- 9. Multiple ChoiceTwo employees used a business’s computerized accounting system to change some records. They were able to steal $50,000 from the business because the accounting system lacked which of the following:Protection from theft and fraudAn affordable priceA manual system as backupPrinted financial statements
- 10. Multiple ChoiceChecks, receipts, invoices, and purchase orders are examples ofFinancial statementsDepartment ledgersSource documentsAccounting standards
- 11. Multiple ChoiceWhat type of accounting method would most likely be used by a small business owner who does not offer credit?Check methodAccrual methodCOD methodCash method
- 12. Multiple ChoiceWhat type of accounting method would most likely be used by a large business that has a large number of outstanding loans and customer charge accounts?Check methodCash methodCOD methodAccrual method
- 13. Multiple ChoiceAccounting records for a business show that the week’s total sales revenues were $125,000. Cash sales accounted for $50,000 and credit sales, $75,000. This is an example ofClassifying financial informationThe cash accounting methodAn income statementThe accrual method of accounting.
- 14. Multiple ChoiceWhich of the following is a true statement:Bookkeeping is the same as accountingBookkeeping does not use computersBookkeeping is limited to information on salesBookkeeping records business transactions
- 15. Multiple ChoiceWhich of the following presents the first three steps in the accounting cycle in the correct order:Post, analyze, and journalizeAnalyze, post, and journalizeAnalyze, journalize, and postPost, journalize, and analyze
- 16. Multiple ChoiceWhich of the following makes comparisons of the financial conditions at multiple organizations possible:BookkeepingSource documentsAccounting standardsTrial balance
- 17. Multiple ChoiceWhich of the following categories of information are found on a balance sheet:Income, expenditures, profitAssets, liabilities, owner’s equityAssets, liabilities, marginRevenues, expenses, profit
- 18. Multiple ChoiceA bank denies a business owner’s application for credit saying, “We feel that you would be unable to make the monthly payments because of your other debts.” What financial report did the bank review?BudgetBalance sheetIncome statementOperating budget
- 19. Multiple ChoiceWhat accounting record would summarize a business’s profit or loss for a previous year?Bank statementInventory recordIncome statementBalance sheet
- 20. Multiple ChoiceWhich of the following financial reports provides estimates of when, where, and how much money will come into and out of a business next year:Balance sheetCash flow statementIncome statementBank statement
- 21. Multiple ChoiceWhat is one of the main reasons why businesses need to keep accurate accounting records?To follow proceduresTo control expensesTo eliminate risksTo regulate taxes
- 22. Multiple ChoiceBusinesses would not be able to determine if they are meeting their financial goals without accurate:Production plansMarketing plansDistribution systemsAccounting systems
- 23. Multiple ChoiceBusinesses use the information collected through the accounting process to prepare accurate:Balance sheetsPurchase ordersInventory formsPromissory notes
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