FABM1 Summative Test 1

Which of the following is NOT a step in the accounting process?

• Identifying
• Interpreting
• Posting
• Summarizing

What does the term "recording" refer to in accounting?

• Analyzing financial statements
• Entering financial data into books
• Interpreting business transactions
• Preparing taxes

Accounting is often referred to as the:

• Language of society
• Science of numbers
• Language of business
• Profession of calculations

What is the final product of the accounting process?

• Financial reports
• Tax returns
• Purchase orders
• Inventory sheets

Which characteristic best describes accounting as a profession?

• It involves selling products
• It requires specific skills and ethical standards
• It is based on opinion
• It is unrelated to law

Why is communication important in accounting?

• It ensures high salaries
• It helps interpret transactions
• It allows stakeholders to make informed decisions
• It reduces expenses

Which of the following activities is part of classifying in accounting?

• Recording sales in journal
• Posting transactions to ledger
• Explaining financial ratios
• Preparing receipts

Interpreting in accounting helps users by:

• Making assumptions
• Adding more expenses
• Explaining financial data
• Avoiding regulations

Analyzing transactions in accounting means:

• Drawing charts
• Identifying accounts and effects
• Making assumptions
• Memorizing numbers

Which statement is prepared to determine a company's financial position?

• Income Statement
• Statement of Cash Flow
• Statement of Financial Position
• Trial Balance