Topic 1 Accounting for Decision Making

The steps in the process of accounting take place in the following order:

• measuring, identifying, decision making, communicating.

• identifying, measuring, communicating, decision making.

• identifying, measuring, communicating, decision making.

• identifying, decision making, measuring, communicating.

A supplier, when considering offering credit to a new customer, is most interested in the customer’s

• ability to pay off debts as they fall due.

• annual dividends.

• taxable income.

• compliance with accounting standards.

The internal user of accounting information is the:

• customer.

• local council.

• auditor from the Australian Tax Office.

• office manager.

An external user of accounting information is the:

• payroll officer.

• supplier.

• production manager.

• production manager.

1.              Which of the following is NOT a business transaction?

• Purchasing inventory

• Incurring interest on a business loan

• A business owner purchasing a new home

• Receiving cash payment for services provided

Which of the following is NOT an accounting report?

• Statement of employee job satisfaction

• Statement of financial position

• Statement of profit or loss

• Statement of cash flows

Management accounting reports are prepared:

• to provide up-to-date information to managers for decision making.

• to provide information for the shareholders of the business entity.

• based only on historical figures.

• based on GAAP and IASB accounting standards.

Which of the following statements about the sole trader form of business organisation is true?

• It must have at least two owners.

• It consists of one individual who controls and manages the business.

• It consists of one individual who controls and manages the business.

• It is classified as a separate legal entity.

Which of the following would be a disadvantage of a private company going public?

• Potential loss of ownership and control.

• Greater disclosure requirements for financial reports.

• Costs associated with issuing shares.

• All options are disadvantages.

Which of the following is an advantage of a partnership over a sole trader business?

• limited liability.

• greater access to skills and resources.

• not required to prepare financial statements in accordance with accounting standards.

• mutual agency.