FPII: 3.01 - 3.03

When Jack examines the balance sheet of a company, he sees a “picture” of the company's:

• accounting method.

• financial situation.

• income statement.

• pre-tax profit.

Which group has the least use for the accounting information of a business?

• creditors

• customers

• investors

• managers

What is a common criticism of annual reports and letters to shareholders?

• They contain too much financial information.

• They are typically vague and full of jargon.

• They are too short.

• They are too long.

The "Management Discussion and Analysis" section of the annual report:

• provides a ten-year summary of financial figures.

• reviews the results of company operations.

• explains what the company sells.

• includes a letter to shareholders.

Which department maintains records of all business expenses?

• accounting

• communication

• marketing

• production

Which is excluded from the expense section of an income statement?

• interest

• revenues

• supplies

• utilities

The primary purpose of the accounting process in business is to track:

• warehousing needs.

• advertising activities.

• financial transactions.

• production equipment.

To balance the balance sheet, assets must equal:

• income

• liabilities

• equity plus income

• liabilities plus equity

A manager is most likely to use financial information when:

• establishing lines of authority within an organization.

• researching the demographics of a new target market.

• determining resources available to fund a new project.

• calculating the number of on-the-job injuries in the past year.

Which is a requirement for a good accounting system?

• It should be updated annually.

• It should provide needed information quickly.

• It should eliminate the need for an accountant.

• It should be replaced every two or three years.