Show Me the Money LAP Test

1. The process of keeping the financial records of a business is known as

• 1. accounting.

• 1. controlling.

• 1. financing.

• 1. bookkeeping.

1. The overall purpose of accounting is to

• 1. keep track of sales.

• 1. control the finances of the business.

• 1. maintain accurate reports.

• 1. compile the business’s expenses.

1. Why are accurate accounting records important to a business?

• 1. They increase the return on investments.

• 1. They give the business an image of success.

• 1. They show how the business is doing.

• 1. They prevent any financial losses.

1. Which of the following groups makes regular use of a business’s managerial accounting information:

• 1. Creditors

• 1. Investors

• 1. Customers

• 1. Supervisors

1. A creditor is most likely to examine a business’s financial accounting records if the business is

• 1. using cash accounting.

• 1. complying with regulations.

• 1. selecting a new market.

• 1. applying for a bank loan.

1. Riley is an employee of the federal government who studies the financial reports of major businesses in a specific industry. The government’s purpose in assigning this task to Riley is to

• 1. determine creditworthiness.

• 1. search for profitable investments.

• 1. identify trends in the industry.

• 1. decide if funds are available for pay raises.

1. For an accounting system to be useful to the business, the accounting information it contains must be

• 1. approved by the chief executive officer.

• 1. accurate and up to date.

• 1. posted by an accountant.

• 1. recorded using the accrual method.

1. Which of the following is a requirement for a good accounting system:

• 1. It should be updated annually.

• 1. It should provide needed information quickly.

• 1. It should eliminate the need for an accountant.

• 1. It should be replaced every two or three years.

1. Two employees used a business’s computerized accounting system to change some records. They were able to steal $50,000 from the business because the accounting system lacked which of the following:

• 1. Protection from theft and fraud

• 1. An affordable price

• 1. A manual system as backup

• 1. Printed financial statements

1. Checks, receipts, invoices, and purchase orders are examples of

• 1. accounting standards.

• 1. source documents.

• 1. financial statements.

• 1. department ledgers.