S24TH2ndHALF - FINAL - BUSINESS MANAGEMENT

Why should everyone understand basic accounting concepts?

• To become an accountant
• To speak the standard financial language of businesses
• To become a book keeper

The main purpose of _____ financial reports is to provide managers and officers with information that helps them make better decisions.

• internal
• external

The main purpose of _____ financial reports is to provide lenders and investors with information that helps them make better decisions.

• internal
• external

What is the primary purpose of GAAP?

• Maximizing the net income that is reported on income statements.
• Maximizing the net worth that is reported on balance sheets.
• Ensuring that financial information is consistently reported.

According to the accounting equation, what is the relationship between assets, liabilities, and owners’ equity?

• Liabilities + Net Worth = Assets
• Liabilities - Net Worth = Assets
• Liabilities X Net Worth = Assets
• Liabilities / Net Worth = Assets

Who defined the three main accounting elements as assets, liabilities, and owners’ equity in the late 15th century?

• Leonardo da Vinci
• Luca Pacioli
• Michelangelo
• Galileo Galilei

What is the purpose of double-entry bookkeeping?

• To double check that all entries are correct
• To create twice as many accounting jobs
• To keep the accounting equation in balance

What is the primary function of the balance sheet?

• Reporting market trends
• Providing information on managerial decisions
• Summarizing a firm’s financial position at a specific point in time

Which of these are intangible assets:

• All of these
• Patents
• Copyrights
• Trademarks

What is the purpose of depreciation in accounting for fixed assets?

• Showing the increase in value of fixed assets
• Reflecting the declining value of fixed assets over time
• Adjusting the assets for inflation