Midterm

Question 1

What is accounting?

Answer 1

An information system that MEASURES, PROCESSES, AND COMMUNICATES financial information about an economic entity.

Question 2

What is an economic entity?

Answer 2

It is a unit that exists interdependently. Such as: A business, hospital, or governmental body.

Question 3

What do accountants do?

Answer 3

They would MEASURE the business activities and PROCESS the data from the measurements to supply the information (COMMUNICATION) to the decision makers so that the decision makers would be able to make a sensible decision with acquirable resources for the production of business and economic activities.

Question 4

What is the input and output of the accounting system?

Answer 4

Input- Business Activities
Output- Information for Decision makers

Question 5

Define profitability

Answer 5

The ability to earn enough income to attract and hold investment capital.

Question 6

Define Liquidity

Answer 6

The ability to have enough income to pay debts when they are due.

Question 7

Define operating activities

Answer 7

Include selling goods and services to customers, employing managers and workers, buying and producing goods and services, and paying taxes.

Question 8

Define Investing Activities

Answer 8

To buy factors within the company to help it develop and achieve goals with the capital the company receives . This also includes selling the “investments” when they are no longer needed.