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POA sec 3 > Chap 1 Quiz > Flashcards

Chap 1 Quiz Flashcards

1
Q 
Which of the following processes is considered bookkeeping?
Analysing
Recording
Reporting
Summarising
A

Reporting

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2
Q 
A person who does not own a business but is given the responsibility to manage its resources is better known as the 
customer
steward
investor
supplier
A

steward

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3
Q 
Which of the following stakeholders is interested in all the financial information of a business?
Banks
Managers
Customers
Suppliers
A

Managers

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4
Q 
Which of the following stakeholders is interested in the financial information of the business that assesses its ability to repay its debt?
Creditors
Government
Employees
Public
A

Creditors

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5
Q 
Which of the following stakeholders is an internal stakeholder?
Customers
Creditors
Managers
Suppliers
A

Manager

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6
Q

Accountants provide financial information to the owners of the business. The recording, summarising and reporting of the financial information is done through an _________

A

accounting information system

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7
Q

Accouting is a process of recording, __________, analysing, ____________ and reporting of financial information to the stakeholders of the business

A

summarising, interpreting

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8
Q

The two roles of accounting are

A

stewardship and decision making

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9
Q

A steward is a person who does not ________ the business but is given the responsibility to _______ its resources

A

own, manage

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10
Q

Which stakeholder is interested whether the business is able to pay for it’s credit purchases

A

suppliers

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11
Q

Which stakeholder is interested whether the business is worth continuing to invest in

A

investors or owners

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12
Q

Which stakeholder is interested whether the business is able to provide salaries and career prospects

A

employees

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13
Q

Which stakeholder is interested whether the business is able to provide after-sales support

A

customers

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14
Q

What is accounting?

A

Process of recording, summarising, analysing, interpreting and reporting financial information

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15
Q

What is the purpose of accounting?

A

Presents the financial information of an organisation in the form of financial reports, which are important to stakeholders for making business decisions

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16
Q

What is the difference between accounting and bookkeeping?

A

Bookkeeping is recording of business transactions

Accounting is summarising, analysing, interpreting and reporting financial information

17
Q

Explain stewardship and how the stewardship role leads to the creation of an accounting system?

A

It is the responsibility of managing the resources of a business on behalf of the owners

18
Q

The two important ethics principles that guide the professional conduct of accountants are

A

integrity and objectivity

19
Q

To have ______ is to be straightforward and _________ in all professional and business relationships

A

integrity and honesty

20
Q

To be ________ is to be ___________ when making a professional judgement in the accounting process.

A

objective, unbiased

21
Q

Explain why it is important for accountants to have integrity and be objective

A

So that the financial reports prepared by them do not contain inaccurate or fake financial information

22
Q

Rahman is an accountant of a shoes trading firm. His boss threathens to dismiss him unless he reports higher sales revenue and profits so that the suppliers can extend more credit to the business. Rahman follows his boss instructions
Identify the professional ethics principle that Rahman has violated.

A

Objective, integrity principle

23
Q

Krishna started a speech therapy centre. He also sells professional books on speech development. What is the nature of his business.

A

Service and Trading

24
Q 
Which of the following is a trading business?
Clinic
Pharmacy
Law firm
Telecommunication company
A

Pharmacy

25
Q

Explain the difference between a trading business and service business?

A

Trading business buys and sells goods

Service business provides a service

26
Q

What is a sole proprietorship?

A

Only one owner; owner usually manages the business himself and has full control in running the business; assumes all profits and losses of the business;
needs to pay all debts of business if it fails

27
Q

What is a company?

A

One to fifty owners
shareholders usually not involved in running of the business
shareholders given a portion of the profits in the form of dividends
shareholders also assume limited investment risk

28
Q

State two advantages a company has over a sole proprietorship?

A

Limited investment risk, shareholders will only lose their investment
easier to raise funds,
easier to transfer ownership

29
Q

State two advantages a sole proprietorship has over a company?

A

More easily formed
fewer regulations
full control by owner
flexibility to withdraw capital and profits

POA sec 3 (11 decks)

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