Accounting Overview Review

How do managers use account information?

• To measure department performances

• Make investment decisions; calculate taxes

• Create budgets; make business decisions

Accounting is the process of keeping track of a business' __________.

• Employees

• Markets

• Finances

• Inventory

How do business owners use account information?

• Make investment decisions; calculate taxes

• Create overall business budgets; make business decisions

• To measure department performances

Equity is:

• An item of value owned by a company.

• The value of a company to its owners

• An obligation of the company to transfer something of value.

That accounting equation is:

• Equity = Assets + Liabilities

• Assets = Liabilities + Equity

• Assets = Liabilities - Equity

• Liabilities = Assets - Equity

To help organize transactions, a business needs to set up a system of _________.

• Debits and credits

• Transaction records

• Accounts

______ increase the value of asset and expense accounts.

• Debits

• Credits

What information is NOT provided by the accounting process?

• How much money a business is owed by others

• How much employees should be paid

• How much money the business has

• How much money a business owes others

Assets are:

• An obligation of the company to transfer something of value.

• The value of a company to its owners.

• An item of value owned by a company.

______ increase the value of liability, revenue and equity accounts.

• Debits

• Credits