Textbook 1-1

What is accounting?

• A method for tracking inventory levels, orders, sales, and deliveries

• The process of planning, recording, analyzing, and interpreting financial information

• A technique for managing a company's human resources

• A system for managing a company's interactions with current and future customers

What is a service business?

• A business that manufactures goods

• A business that sells physical products

• A business that performs an activity for a fee

• A business that invests in stocks and bonds

What is a proprietorship?

• A business owned by shareholders

• A government-owned business

• A business owned by one person

• A business owned by two or more people

What is the accounting equation?

• Assets + Liabilities = Owner’s Equity

• Assets = Liabilities - Owner’s Equity

• Assets - Liabilities = Owner’s Equity

• Assets = Liabilities + Owner’s Equity

What is meant by 'Business Entity'?

• A government-owned corporation

• A partnership between two business entities

• A business's financial information recorded and reported separately from the owner's personal financial information

• A business operating in the manufacturing sector

What are financial statements?

• Documents that summarize the physical inventory of a business

• Reports that summarize the financial condition and operations of a business

• Letters sent to customers to inform them of new products

• Emails sent to shareholders about company meetings

What is an asset?

• Anything of value that is owned

• A document detailing a company's earnings

• A liability owed by the company

• A report on a company's financial health

What is a liability?

• A type of asset

• An amount owed by a business

• The equity of the owner

• A financial statement

What does 'Owner’s Equity' represent?

• The amount remaining after liabilities are subtracted from assets

• The value of the owner's personal assets

• The amount of money borrowed from banks

• The total debts of the business

What is the primary purpose of accounting?

• To track employee attendance

• To provide financial information useful to management

• To manage the company's website

• To advertise the business