FABM1 ETA Review Concept

What is the main purpose of accounting?

• To keep a systematic record of financial transactions and provide useful financial information.

• To monitor the number of employees in a business.

• To help businesses create marketing strategies.

• To produce goods and services for customers.

Which statement best describes the nature of accounting?

• Accounting only deals with recording business transactions.

• Accounting is a process that involves recording, summarizing, and interpreting financial information.

• Accounting is only used by large businesses and corporations.

• Accounting focuses only on computing business profits.

Who is known as the "Father of Accounting" for developing the double-entry bookkeeping system?

• Albert Einstein

• Luca Pacioli

• Isaac Newton

• Adam Smith

Which of the following branches of accounting focuses on recording and summarizing financial transactions for external users like investors and creditors?

• Cost Accounting

• Financial Accounting

• Managerial Accounting

• Tax Accounting

How does managerial accounting differ from financial accounting?

• Managerial accounting focuses on providing information to external users, while financial accounting is for internal decision-making.

• Financial accounting follows strict rules like GAAP, while managerial accounting is more flexible and used for internal decision-making.

• Managerial accounting deals only with tax reports, while financial accounting prepares budgets.

• Financial accounting is mainly used by company managers, while managerial accounting is for investors and government agencies.

Who are considered external users of accounting information?

• 
  Company managers and employees

• Investors, creditors, and government agencies

• Department heads and business owners

• Internal auditors and accountants

Which of the following best explains why external users need accounting information?

• Investors use it to assess a company's financial health, while creditors evaluate its ability to repay debts.

• Employees rely on it to make business decisions and manage operations.

• It helps internal managers create strategies for daily operations.

• Business owners use it to train employees and handle company policies.

Who are considered internal users of accounting information?

• Investors and suppliers

• Government agencies and creditors

• Managers, owners, and employees

• Customers and external auditors

How do internal users benefit from accounting information?

• Managers use it to make business decisions, while employees analyze it for investment opportunities.

• Business owners and managers use it to plan, control, and evaluate company operations.

• Customers and suppliers use it to determine product pricing and payment terms.

• Government agencies use it to regulate and tax businesses.

Which form of business organization is owned by a single person who has full control and responsibility?

• Partnership

• Corporation

• Sole Proprietorship

• Cooperative