The purpose of Accounting

Which of the following are common business objectives?

• Income statement

• Book-keeping

• Statement of financial position

• Survival

Which of the following is a possible objective of a business?

• Payment of tax

• Book-keeping

• Financial statement

• Breaking even

Which of the following is not a reason why the measurement of profit is important for a business?

• To calculate tax payable

• To encourage investors into the business

• To obtain credit from suppliers

• To help decide whether to allow credit to customer

Which of the following is not a likely reason why profit is important to the owner of a business?

• To inform competitors

• To keep shareholders happy

• To calculate the right amount of tax to be paid

• So that borrowing is possible

A new small business is operating in a period of economic uncertainty. What is its most likely objective?

• Survival 

• Market share growth

• Profit maximization      

• Market dominance

Which of the following is not normally considered to be part of management accounting?

• Setting targets

• analyzing results

• Producing budgets

• Entering transactions in accounts

Which of the following is not a likely use of profits in a business?

• Payment of dividends

• Expansion of business

• Withdrawals by owner

• Paying customers

Which of the following is the best description of the term profit maximization?

• Earning more profit than all other business

• Earning more than in all previous years

• Earning as much profit as is possible        

• Maximizing spending by the business