Accounting Principles and Business Environment Quiz

What is the nature of accounting?

• D. A chaotic process

• C. A one-time process

• B. A random process

• A. A systematic process

What is the basic function of accounting in business?

• D. Interpreting financial information

• C. Measuring and reporting financial information

• B. Reporting only

• A. Recording only

What is the Entity Concept in accounting?

• A. Business enterprise is separate from its owners

• B. Business enterprise is the same as its owners

• C. Business enterprise has no separate identity

• D. Business enterprise is not distinct from its owners

Which accounting principle states that business transactions must be supported by documents?

• C. Accrual Principle

• A. Objectivity Principle

• B. Historical Cost Principle

• D. Adequate Disclosure Principle

What is the Periodicity concept in accounting?

• A. Business operates indefinitely

• D. Business operates based on government regulations

• B. Business operates for a specific period

• C. Business operates based on market trends

Which branch of accounting conducts unbiased examination and evaluation of the financial statements of an organization?

• D. Tax Accounting

• C. Auditing

• A. Financial Accounting

• B. Management Accounting

What is the main advantage of a Corporation as a business organization?

• C. Limited life

• B. Ease of formation

• A. Limited liability

• D. Unlimited liability

What is the main disadvantage of a Sole Proprietorship as a business organization?

• A. Limited liability

• B. Difficulty in raising additional capital

• C. Ease of expansion

• D. More extensive government restrictions

What is the main advantage of a Partnership as a business organization?

• D. Double taxation

• C. Pooling of knowledge and skills

• B. More expensive and complicated to organize

• A. Limited liability

What is the main disadvantage of a Cooperative as a business organization?

• C. Ease of transferring ownership

• B. Limited liability

• A. Limited capital due to underprivileged members

• D. Relatively long life