Chap 1 Quiz Flashcards
Which of the following processes is considered bookkeeping? Analysing Recording Reporting Summarising
Reporting
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
steward
Which of the following stakeholders is interested in all the financial information of a business? Banks Managers Customers Suppliers
Managers
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
Creditors
Which of the following stakeholders is an internal stakeholder? Customers Creditors Managers Suppliers
Manager
Accountants provide financial information to the owners of the business. The recording, summarising and reporting of the financial information is done through an _________
accounting information system
Accouting is a process of recording, __________, analysing, ____________ and reporting of financial information to the stakeholders of the business
summarising, interpreting
The two roles of accounting are
stewardship and decision making
A steward is a person who does not ________ the business but is given the responsibility to _______ its resources
own, manage
Which stakeholder is interested whether the business is able to pay for it’s credit purchases
suppliers
Which stakeholder is interested whether the business is worth continuing to invest in
investors or owners
Which stakeholder is interested whether the business is able to provide salaries and career prospects
employees
Which stakeholder is interested whether the business is able to provide after-sales support
customers
What is accounting?
Process of recording, summarising, analysing, interpreting and reporting financial information
What is the purpose of accounting?
Presents the financial information of an organisation in the form of financial reports, which are important to stakeholders for making business decisions
What is the difference between accounting and bookkeeping?
Bookkeeping is recording of business transactions
Accounting is summarising, analysing, interpreting and reporting financial information
Explain stewardship and how the stewardship role leads to the creation of an accounting system?
It is the responsibility of managing the resources of a business on behalf of the owners
The two important ethics principles that guide the professional conduct of accountants are
integrity and objectivity
To have ______ is to be straightforward and _________ in all professional and business relationships
integrity and honesty
To be ________ is to be ___________ when making a professional judgement in the accounting process.
objective, unbiased
Explain why it is important for accountants to have integrity and be objective
So that the financial reports prepared by them do not contain inaccurate or fake financial information
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.
Objective, integrity principle
Krishna started a speech therapy centre. He also sells professional books on speech development. What is the nature of his business.
Service and Trading
Which of the following is a trading business? Clinic Pharmacy Law firm Telecommunication company
Pharmacy
Explain the difference between a trading business and service business?
Trading business buys and sells goods
Service business provides a service
What is a sole proprietorship?
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
What is a company?
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
State two advantages a company has over a sole proprietorship?
Limited investment risk, shareholders will only lose their investment
easier to raise funds,
easier to transfer ownership
State two advantages a sole proprietorship has over a company?
More easily formed
fewer regulations
full control by owner
flexibility to withdraw capital and profits
