ABM 1: Users of FI, Forms/Types of Businesses

Which among the following is NOT considered an internal user of accounting information?

• Owners of a business

• Senior partners of an audit firm

• Suppliers

• Field workers

Which of the following is NOT considered an external user of accounting information?

• BIR officials

• Customers

• Production Manager

• A student of accountancy

Low level employees are internal users of a company who would use the company's financial statements to make personal decisions or feel work satisfaction.

• True

• False

Managers use a company's financial statements to find problem areas in the company.

• True

• False

Why are stockholders interested in the financial statements of the company?

• To see if the company is earning an acceptable return.

• To see if the company is achieving objectives.

• To see if the investment should be kept, increased or sold.

• All of the above

A home builder is looking for a supplier of windows and doors and he has found 2 acceptable companies with similar costs.

Company A has a lot of debt in their financial statements and not a lot of cash flow.

Company B is a new company with low sales and a high amount of cash.

What company should the builder choose?

• Company A

• Company B

Which of the following information in a company’s financial statements is a concern for creditors?

• Amount of profit

• Borrowings of a company

• Assets of a company

• All of the above

Why is would the government review a company's financial statements?

• To see how much money they owe to creditors

• To see is they are following accounting rules and paying the right taxes

• To help management in decision making

Juan is a new graduate who has saved P10,000. He would like to start a business designing web sites.

What form of business should he choose to start?

• Sole Proprietorship

• Partnership

• Corporation

• Cooperative

Unlimited liability means that the owner of a business is personally responsible for all the debts of a business. If the business closes and still owes money to creditors, the business owner can lose their personal assets (house, car, cash in savings account).

• True

• False