Understanding Business Finance Concepts

Which of the following best describes the primary purpose of financial accounting?

• To provide information for internal management decision-making

• To report financial information to external stakeholders

• To calculate product costs

• To manage cash flow

In business finance, which term refers to the money owed by a company to its suppliers?

• Debtors

• Creditors

• Assets

• Equity

Which statement is used to calculate a company's profit for a given period?

• Balance Sheet

• Cash Flow Statement

• Income Statement

• Statement of Changes in Equity

Which of the following is NOT typically considered an indirect cost in absorption costing?

• Factory rent

• Supervisor's salary

• Raw materials

• Depreciation of machinery

What is the main focus of management accounting?

• Preparing tax returns

• Providing information for internal decision-making

• Reporting to shareholders

• Auditing financial statements

Which equation correctly represents profit calculation in an income statement?

Which of the following is a direct cost in absorption costing?

• Factory electricity

• Direct labour

• Office supplies

• Factory manager's salary

Why is cost information important for businesses?

• It helps in setting prices and controlling expenses

• It is only used for tax purposes

• It is not relevant for decision-making

• It is only required by law

Which of the following best describes a debtor?

• A person or entity to whom the business owes money

• A person or entity who owes money to the business

• A shareholder

• An employee

Which financial statement shows a company's assets, liabilities, and equity at a specific point in time?

• Income Statement

• Balance Sheet

• Cash Flow Statement

• Statement of Retained Earnings