Chapter 17

Accounting is an easy subject for people to understand because almost everyone is exposed to basic accounting concepts in their everyday life.

• True
• FALSE

Although managers who work for large firms must know something about accounting, people who run small businesses only need to know the basics of bookkeeping.

• True
• FALSE

It is impossible to run a company effectively without the ability to read and understand basic accounting reports and financial statements.

• True
• FALSE

With increased computer technology, the ability to read and understand financial statements is no longer an important skill for managers.

• True
• FALSE

Accounting provides information about the financial condition and operating performance of a firm.

• True
• FALSE

The sole purpose of accounting is to help managers evaluate the financial condition of the firm so that they may make better pricing decisions.

• True
• FALSE

Inputs to the accounting system include sales documents.

• True
• FALSE

Purchasing insurance, paying employees, and using supplies are examples of financial transactions.

• True
• FALSE

Accounting provides financial information that can be useful to owners, creditors, suppliers, employees, and competitors of an organization.

• True
• FALSE

Accountants do the work involved in recording financial events and transactions, but the actual classifying and interpreting of this data is left to financial managers.

• True
• FALSE