Business Essentials 4.01 Show Me The Money

The process of keeping financial records of a business is known as

• Accounting

• Controlling

• Financing

• Bookkeeping

The overall purpose of accounting is to

• Maintain accurate reports

• Compile the business's expenses

• Keep track of sales

• Control the finances of the business

Why are accurate accounting records important to a business?

• They prevent any financial losses

• The show how the business is doing

• They increase the return on investments

• They give the business an image of success

Which of the following groups makes regular use of a business's managerial accounting information:

• Managers

• Customers

• Creditors

• Investors

A creditor is most likely to examine a business's financial accounting records if the business is

• Applying for a bank loan

• Selecting a new market

• Using cash accounting

• Complying with regulations

Riley is an employee of the federal govern who studies the financial reports of major businesses in a specific industry. The government's purpose in assigning this task to Riley is to

• Determine creditworthiness

• Search for profitable investments

• Decide if funds are available for pay raises

• Identify trends in the industry

For an accounting system to be useful to the business, the accounting information it contains must be

• Accurate and up to date

• Approved by the chief executive officer

• Posted by an accountant

• Recorded using the accural method

Two 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 fraud

• An affordable price

• A manual system as backup

• Printed financial statements

Checks, receipts, invoices, and purchase order are examples of

• Financial statements

• Department ledgers

• Source documents

• Accounting standards

What type of accounting method would most likely be used by a small business owner who does not offer credit?

• Check method

• Accrual method

• COD method

• Cash method