Accounting and Its Environment

Accounting is a process of recording, ____________, analyzing, interpreting, and reporting of financial information to the stakeholders of the business.

• Measuring

• Summarizing

• Communicating

• Classifying

True or False

Accounting is often characterized as the "language of business".

• TRUE

• FALSE

Which form of business organization is characterized by limited liability?

• Sole Proprietorship

• Partnership

• Corporation

• Both sole proprietorship and partnership

Which of the following processes best defines accounting?

• Measuring economic activities

• Communicating results to interested parties

• Preventing fraud

• Both measuring economic activities and communicating results to interested parties

Which of the following is not one of the three-types of business activities?

• Investing

• Financing

• Marketing

• Operating

A partnership is a business owned and operated by two or more persons who bind themselves to contribute money, property or industry to a common fund, with the intention of dividing profits among themselves.

• TRUE

• FALSE

For accounting purposes, a business and its owner are considered one and the same

• TRUE

• FALSE

Which of the following processes is considered bookkeeping?

• Analyzing

• Reporting

• Recording

• Summarizing

Which of the following is a trading business?

• a clinic

• a law firm

• a pharmacy

• a telecommunications company

Which type of business organizations is owned by its stockholders?

• Corporation

• Partnership

• Proprietorship

• All of the above are owned by stockholders