Ellen's Daily Transactions: An Introduction to ABM

Which statement best describes why Ellen’s payment to the jeepney driver is an economic transaction?

• It involves exchanging services for money, creating financial implications.

• It happens only during school hours.

• It requires a bank account.

• It is recorded only for government taxes.

At 10:15 a.m., Ellen bought an adobo bun worth fifteen pesos and paid the exact amount. What document did the cashier give her that served as the official receipt?

• Invoice

• Transaction slip

• Warranty card

• Purchase order

Why did Ellen save the remaining money in a piggy bank at day’s end?

• To avoid paying taxes

• She planned to donate it

• She anticipated future needs like project materials or computer rental

• She had to return change to the canteen

What common goal do business entities like the jeepney driver, canteen, and computer shops share, according to the passage?

• Eliminating cash transactions

• Lowering costs to earn income and achieve net profit

• Providing services for free

• Keeping revenues lower than expenses

When goods or services are exchanged for money and documented between business entities, what accounting purpose does this serve?

• To determine if income exceeds costs and profit is earned

• To replace official receipts

• To avoid budgeting

• To eliminate competition

Which statement aligns with the passage’s definition of net loss for a business?

• Revenues are higher than costs.

• Costs and expenses exceed revenues.

• Income equals expenses.

• No transactions are recorded.

Ellen has no revenue yet but must manage her allowance to cover expenses and still have savings. Which ABM concept best describes her action of planning how to spend her allowance?

• Budgeting

• Auditing

• Tax assessment

• Depreciation

In the scenario, Ellen weighs options to ensure the optimum choices are adopted. What is the main goal of making optimum choices in daily resource management?

• To maximize benefits while staying within constraints

• To spend as much as possible

• To ignore savings and focus on immediate needs

• To eliminate all expenses

According to the material, even people who are not aware of it are engaging in activities involving accounting, business, and management in their daily lives. Which example aligns with this idea?

• Tracking personal spending to avoid overspending

• Ignoring prices when shopping

• Refusing to compare options before buying

• Spending without any plan

Which statement best summarizes the relationship and interconnectivity of ABM as presented?

• Accounting connects business operations and management decisions

• Business operates independently of accounting

• Management decisions do not use accounting information

• Government agencies have no interest in financial reporting