Accounting Quiz

What is the definition of accounting?

• The process of identifying, recording, and communicating economic events

• A system for managing employees

• A method to prevent fraud

• A way to impress creditors

Who are considered internal users of accounting data?

• Governmental agencies

• Customers

• Managers

• Investors

What is a major disadvantage of a sole proprietorship?

• No legal obligations

• Shared profits

• Unlimited liability

• Limited liability

Which of the following is NOT an external user of accounting data?

• Creditors

• Employees (existing)

• Investors

• Governmental agencies

What is the primary purpose of accounting information for managers?

• To analyze business performance

• To impress creditors

• To maintain records of transactions

• To prevent fraud

What type of business organization is owned by one person?

• Partnership

• Company

• Corporation

• Sole proprietorship

Which of the following is a use of accounting data for creditors?

• To assess company’s success

• To determine creditworthiness

• To ensure financial stability

• To analyze profitability

What is the main advantage of a company structure?

• Sole ownership

• Limited liability

• Shared profits

• Unlimited liability

What is the role of governmental agencies in relation to accounting?

• To provide loans

• To manage business operations

• To assess employee performance

• To ensure companies disclose financial affairs

What is the primary function of the accounting process?

• To record only profits

• To impress investors

• To identify, record, and communicate economic events

• To prevent fraud