ITA - Accounting Basics

Accounting is ________

• counting and recording money.

• systematically recording and analysing financial information.

• analysing and interpreting financial information.

• systematically recording, analysing and interpreting financial information.

Accounting is done ______

• to give smart people work to do.

• to know how much money the business owner has.

• to allow users to make informed financial decisions.

• to ascertain the amount of money a business has at the bank.

Accounting is used for all of the following EXCEPT for _________

• going on vacation.

• measuring wealth.

• assisting in decision making.

• investing in startup and expansion of a business.

All of the following are internal users of accounting information EXCEPT ________

• trade unions

• accountant

• managers

• employees

Government would use accounting information from a business to ______

• determine if the business is profitable.

• negotiate salary increase for employees.

• determine the amount of tax needed to be paid.

• determine if a loan should be given to the business.

Trade unions uses accounting information to ______

• negotiate working conditions for employees.

• assess the viability of an investment.

• determine how much tax needs to be paid.

• budget for the year.

What are financial statements?

• Statements given by the bank with details of the business' account.

• Documents prepared by a business detailing the financial affairs.

• Statements sent to government with details of employees' pay.

• Documents received from customers about their finances.

Which one of the following is NOT considered a financial statement?

• Income Statement

• Balance Sheet

• Cash Flow Statement

• Tax Return

Which of the following statements is INCORRECT?

• A Balance Sheet shows the financial position of a business.

• An Income Statement shows how much profit or loss is made in a business.

• A Cash Flow Statement shows how much cash comes in and goes out of a business.

• A Tax Return shows how much tax customers owe the business.

Which of the following is NOT a benefit of using technology in the accounting process?

• It allows accounting work to be done quickly and accurately.

• Documents can be generated automatically.

• Cost of installation is very high.

• There is quick updating of information.