Accounting Final Review

Which of the following is the most appropriate definition of accounting?

• The information system that identifies, records, and communicates the economic events of an organization to interested users.

• A means of collecting information.

• The interconnected network of subsystems necessary to operate a business.

• Electronic collection, organization, and communication of vast amounts of information.

Which of the following is the best definition of an internal user of accounting information

• Investors who use accounting information to decide whether to buy or sell stock

• Creditors, such as banks, that use accounting information to evaluate the risk of lending money

• Labor unions who use accounting information to examine the ability of the company to pay increased wages and benefits

• Managers who use accounting information to plan, organize, and run a business

Which of the following is not an advantage of the corporate form of business organization?

• No personal liability

• Easy to transfer ownership

• Favorable tax treatment

• Easy to raise funds

Which of the following is not a principal type of business activity?

• Operating

• Investing

• Financing

• Delivering

Borrowing money is an example of a(n)

• delivering activity.

• financing activity

• operating activity

• investing activity

Which activities involve acquiring the resources to run the business?

• Delivering

• Financing

• Investing

• Operating

To show how successfully your business performed during a period of time, you would report its revenues and expenses in the 

• balance sheet.

• income statement.

• statement of cash flows.

• retained earnings statement

Which of the following financial statements is concerned with the company at a point in time?

• Balance sheet

• Income statement

• Retained earnings statement

• Statement of cash flows

The retained earnings statement shows all of the following except:

• the amounts of changes in retained earnings during the period.

• the causes of changes in retained earnings during the period.

• the time period following the one shown for the income statement.

• beginning retained earnings on the first line of the statement.

The right to receive money in the future is called a(n)

• account payable.

• account receivable.

• liability.

• revenue.