What is the role of managerial accounting in an organization?

Providing information to management.

Providing information to lenders.

Providing information to investors.

What organization is responsible for establishing financial accounting standards in the United States?

Financial Accounting Standards Board (FASB)

Masters in Business Administration (MBA)

Generally Accepted Accounting Principles (GAAP)

Certified Public Accountants (CPA)

A multinational company must ensure that its financial statements conform to:

The accounting principles in the countries where it is operating

The accounting principles in the country where it is headquartered

What is the primary purpose of GAAP?

Ensuring that financial information is consistently reported.

Maximizing the net income that is reported on income statements. Minimizing the net income that is reported on income statements.

Maximizing the net worth that is reported on balance sheets.

Minimizing the net worth that is reported on balance sheets.

According to the accounting equation, what is the relationship between assets, liabilities, and owners’ equity?

Liabilities + Net Worth = Assets

Liabilities - Net Worth = Assets

Liabilities x Net Worth = Assets

Liabilities / Net Worth = Assets

What is the purpose of double-entry bookkeeping?

To keep the accounting equation in balance

To double check that all entries are correct

To create twice as many accounting jobs

Why do accountants do a trial balance?

To confirm the accuracy of ledger totals.

To make sure that the income tax return is correct.

To give potential investors a preview of the balance sheet.

To give potential lenders a preview of the balance sheet.

To confirm that income and expenses are equal.

What is the primary function of the balance sheet?

Summarizing a firm’s financial position at a specific point in time

Summarizing a company’s business transactions

Providing information on managerial decisions

What is the purpose of depreciation in accounting for fixed assets?

Reflecting the declining value of fixed assets over time

Increasing the value of assets over time

Showing the increase in value of fixed assets

Adjusting the assets for inflation

How does depreciation meet the matching principle of GAAP:

It matches expenses with revenue

It matches assets with liabilities

It matches net worth with owners’ equity

What are current liabilities in accounting?

Liabilities due in the short term

Liabilities due after more than a year

Liabilities with no specific repayment period

Why are assets listed in order of their liquidity on a balance sheet?

To clearly show whether the business is able to meet their upcoming debt obligations

To highlight the least valuable assets

To highlight the biggest debts first

Why are current liabilities listed first on a balance sheet?

To clearly show whether the business is able to meet their upcoming debt obligations

To highlight the least valuable assets

To highlight the biggest debts first

In what order are assets listed on the balance sheet?

By liquidity, from the most liquid to the least liquid

Alphabetically, from first to last

Numerically, from the biggest dollar amount to the smallest

Chronologically, from the oldest assets to the newest assets

By liquidity, from the least liquid to the most liquid

How is the declining value of fixed assets accounted for in the balance sheet?

By allocating depreciation over the years

By increasing their original cost

What is the role of trademarks?

Differentiating goods and services

Increasing production efficiency

Gross profit is a critical number for businesses because it shows the ability of the business _____.

To cover all the firm’s other expenses

To determine operating expenses

To increase returns and allowances

Which of these are operating expenses on the income statement?

Expenses directly related to producing or buying products

Why is net profit or net loss considered one of the most important pieces of information?

It affects the price to earnings ratio

It influences operating expenses

The income statement shows

Estimates of future financial performance

The balance sheet shows

Estimates of future financial performance

How is gross profit calculated on the income statement?

By deducting cost of goods sold from net sales

By subtracting operating expenses from net sales

By adding returns and allowances to gross sales

By multiplying gross sales by cost of goods sold

How do operating expenses differ from the cost of goods sold on the income statement?

Cost of goods sold represents the total expense of buying or producing goods or services

Operating expenses cover costs directly related to production

Cost of goods sold includes marketing expenses

Operating expenses are related to buying products

Why is net profit or loss considered the "bottom line" on the income statement?

It is the final figure on the statement

It influences operating expenses

It calculates the price to earnings ratio

What is the primary difference between desktop accounting and cloud accounting?

Cloud accounting stores data on a cloud server

Desktop accounting has more functionality

Cloud accounting lacks historical reports

Desktop accounting relies on the internet connection

How does cloud accounting enhance accessibility to financial information?

By offering 24/7 access from anywhere with an internet connection

By requiring employees to install a desktop application

By storing data on local hard drives

S24 - Accounting - Take Home Version Quiz

45 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the primary purpose of accounting in a business?

Entertainment

Tracking income, expenses, assets, and liabilities

Social media management

Graphic design

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

How do managers use financial reports using accounting?

To create fictional stories

To track employee attendance

To make informed decisions

To design marketing campaignS

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the significance of understanding basic accounting concepts?

To become a professional athlete

To speak the standard financial language of businesses

To master cooking skills

To excel in computer programming

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

How can individuals benefit from knowing the basics of accounting and financial statements?

To help decide which companies they want to work for

To help decide which companies they want to invest in

To impress people who are interviewing them for a job

All of these

None of these

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following is NOT one of the two main financial statements that we learned about in this unit?

Balance sheet

Income statement

Cash flow statement

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of these is a recent trend in the accounting profession?

FASB

GAAP

Supercomputers

Cloud computing

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The main purpose of _____ financial reports is to provide managers and officers with information that helps them make better decisions.

internal

external

revised

superseded

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S24 - Accounting - Take Home Version

What is the primary purpose of accounting in a business?

How do managers use financial reports using accounting?

What is the significance of understanding basic accounting concepts?

How can individuals benefit from knowing the basics of accounting and financial statements?

Which of the following is NOT one of the two main financial statements that we learned about in this unit?

Which of these is a recent trend in the accounting profession?

The main purpose of _____ financial reports is to provide managers and officers with information that helps them make better decisions.

The main purpose of _____ financial reports is to provide lenders and investors with information that helps them make better decisions.

Most ______ financial statements are audited.

The primary audience for managerial accounting is _____.

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