CH16 ACCOUNTING

Financial accounting and managerial accounting are similar in that they both provide information intended primarily for people inside the organization. 

• TRUE

• FALSE

All of the following are important accounting activities, except: 

• A. Recording information about financial transactions.

• B. Summarizing information about financial transactions.

• C. Analyzing financial information.

• D. Setting prices for goods and services sold by the organization.

The specialized accounting book in which information from journals is accumulated into specific categories is called a:

• A. journal.

• B. trial balance.

• C. ledger.

• D. balance sheet.

The purpose of a trial balance is to: 

• A. show whether the figures in the account ledgers are correct and balanced.

• B. prepare a mock balance sheet.

• C. review the income statement accounts.

• D. meet a reporting requirement of the Securities Exchange Commission (SEC).

Brianne is a bookkeeper for Kitty Creations Limited. Part of her job would be to take the firm's transactions and record them in books or computer programs referred to as: 

• A. credit accounts.

• B. asset databases.

• C. journals.

• D. debit programs.

The fundamental accounting equation states that assets equal: 

• A. liabilities minus owners' equity

• B. liabilities plus receivables

• C. payables plus cash equivalents

• D. liabilities plus owners' equity

Many business decisions are made in hopes of improving a firm's "bottom line." Which of the following financial statements will reflect a firm's "bottom line?" 

• A. Income statement

• B. Balance sheet

• C. Cash flow statement

• D. Trial balance

Cindy is concerned because during the past four months her company has experienced cash shortages. She knows if this continues, the firm will have difficulties in accomplishing its goals. Cindy is concerned with: 

• A. asset disbursement.

• B. cash flow.

• C. profit and loss.

• D. inventory valuation.