Accounting in Action - Accounting 1

Which of the following is a user of accounting information?

• Managers

• Investors

• Creditors

• All of the above

What is the purpose of a net worth statement?

• To show the financial position of a business at a specific point in time

• To list all the expenses of a business

• To calculate the profit of a business

• To record daily transactions

What must be done with data in accounting?

• It must be ignored.

• It must be recorded and reported in accounting reports.

• It must be deleted.

• It must be hidden.

Who uses the information provided in accounting reports to make business decisions and measure performance?

• Only business owners

• Only managers

• Business owners, managers, investors, and others

• Only investors

What is the process of planning, recording, analyzing, and interpreting financial information called?

• Auditing

• Accounting

• Budgeting

• Financial Planning

What is an accounting system?

• A method to audit financial data

• A planned process designed to compile financial data and summarize the results in accounting records and reports

• A way to budget financial resources

• A system to manage personal finances

What are financial reports that summarize the financial condition and operations of a business called?

• Balance Sheets

• Income Statements

• Financial Statements

• Cash Flow Statements

What does a net worth statement allow a person to do?

• Determine the value of their assets

• See the financial position of a borrower on a specific date and make a lending decision

• Calculate their personal net worth

• Identify their liabilities

What is anything of value that is owned called?

• Liability

• Asset

• Equity

• Net worth

What is an amount owed called?

• Asset

• Liability

• Equity

• Net worth