Accounting Quiz

What is the primary purpose of accounting in businesses?

• To control finances

• To increase sales

• To hire employees

• To design products

Who are considered internal users of a business's accounting information?

• Business’s managers

• Investors

• Creditors

• Government

What does accrual accounting involve?

• Journalizing income and expenditures at the time they occur

• Recording transactions only when money changes hands

• Focusing solely on cash flow

• Ignoring liabilities

What does a balance sheet show?

• Assets = Liabilities + Owner’s Equity

• Income - Expenses

• Cash inflow and outflow

• Profit and loss

What is the purpose of an income statement?

• To show profitability

• To show final positions

• To show cash movements

• To show liabilities

What is net worth calculated as?

• Income - Expenses

• Assets - Liabilities

• Cash inflow - Cash outflow

• Revenue - Costs

What is the formula for calculating net income?

• Revenues - Expenses

• Assets = Liabilities + Owner’s Equity

• Ending Cash Balance - Beginning Cash Balance

• Revenues + Expenses

Which of the following is a finance activity involving making decisions about a firm’s investments?

• Acquisition of funds

• Administration of assets

• Capital investment decisions

• Dividends

What is the main focus of operations managers?

• Efficiency and effectiveness

• Financial transactions

• Journalizing transactions

• Paying dividends

What does inventory control involve?

• Tracking the amount, the kind, and the value of inventory

• Deciding which projects to invest in

• Making decisions about financing

• Paying dividends to shareholders