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WorksheetsPOBF Nature of Accounting 6.01
Total questions: 20
Worksheet time: 20mins
The process of keeping the financial records of a business is known as
accounting
controlling
financing
bookkeeping
The overall purpose of accounting is to
maintain accurate reports
compile the business’s expenses
keep track of sales
control the finances of the business
Why are accurate accounting records important to a business?
They prevent any financial losses
They show the business how it is doing
They increase the return on investments
They give the business an image of success
Which of the following groups makes regular use of a business’s managerial accounting information:
Managers
Customers
Creditors
Investors
A creditor is most likely to examine a business’s financial accounting records if the business is
applying for a bank loan
selecting a new market
using cash accounting
complying with regulations
Riley is an employee of the federal government who studies the financial reports of major businesses in a specific industry. The government’s purpose in assigning this task to Riley is to
verify compliance with laws
calculate the businesses’ income taxes
analyze employment statistics
identify trends in the industry
For an accounting system to be useful to the business, the accounting information it contains must be
accurate and up to date
approved by the chief executive officer
posted by an accountant
recorded using the accrual method
Which of the following is a requirement for a good accounting system:
It should be updated annually
It should provide needed information quickly
It should eliminate the need for an accountant
It should be replaced every two or three years
Two employees used a business’s computerized accounting system to change some records. They were able to steal $50,000 from the business because the accounting system lacked which of the following:
Protection from theft and fraud
An affordable price
A manual system as backup
Printed financial statements
Checks, receipts, invoices, and purchase orders are examples of
financial statements
department ledgers
source documents
accounting standards
What type of accounting method would most likely be used by a small business owner who does not offer credit?
Check method
Accrual method
COD method
Cash method
What type of accounting method would most likely be used by a large business that has a large number of outstanding loans and customer charge accounts?
Check method
Accrual method
COD method
Cash method
Accounting records for a business show that the week’s total sales revenues were $125,000. Cash sales accounted for $50,000 and credit sales, $75,000. This is an example of
classifying financial information
the cash accounting method
an income statement
the accrual method of accounting
Which of the following is a true statement:
Bookkeeping is the same as accounting
Bookkeeping does not use computers
Bookkeeping is limited to information on sales
Bookkeeping records business transactions
Which of the following presents the first three steps in the accounting cycle in the correct order:
Post, analyze, and journalize
Analyze, post, and journalize
Analyze, journalize, and post
Post, journalize, and analyze
Which of the following makes comparisons of the financial conditions at multiple organizations possible:
Bookkeeping
Source documents
Accounting standards
Trial balance
Which of the following categories of information are found on a balance sheet:
Income, expenditures, profit
Assets, liabilities, owner’s equity
Assets, liabilities, margin
Revenues, expenses, profit
A bank denies a business owner’s application for credit saying, “We feel that you would be unable to make the monthly payments because of your other debts.” What financial report did the bank review?
Budget
Balance sheet
Income statement
Operating budget
What accounting record would summarize a business’s profit or loss for a previous year?
Bank statement
Inventory record
Income statement
Balance sheet
Which of the following financial reports provides estimates of when, where, and how much money will come into and out of a business next year:
Balance sheet
Cash flow statement
Income statement
Bank statement
