Foundation of Financial Management Quiz

Accounting consists of three basic activities. Which of the following is NOT one of them?

• Identifying

• Recording

• Communicating

• Investing

Who among the following is considered an internal user of accounting information?

• Banker

• Supplier

• Marketing Manager

• Investor

Which group uses accounting information to decide whether to buy, hold, or sell ownership shares?

• Government

• Investors

• Creditors

• Employees

Which financial statement shows a company’s assets, liabilities, and owner’s equity at a specific date?

• Income Statement

• Statement of Cash Flow

• Statement of Financial Position

• Statement of Comprehensive Income

Which of the following is an example of a liability?

• Accounts Receivable

• Notes Payable

• Cash

• Land

Owner’s Equity can be computed as:

• Assets – Liabilities

• Liabilities – Assets

• Assets + Liabilities

• Assets ÷ Liabilities

Which of the following increases Owner’s Equity?

• Revenues

• Expenses

• Dividends

• Withdrawals

Which is NOT considered a business asset?

• Equipment

• Copyrights

• Salaries Payable

• Cash

Expenses are best defined as:

• Decreases in owner’s equity from business operations

• Resources a business owns

• Increases in owner’s equity from sales

• Claims against assets

In the basic accounting equation, liabilities are placed before owner’s equity because:

• They are larger in value

• They are always equal to assets

• They must be paid first in case of liquidation

• They represent investments