Chapter 1: Accounting: The language of business

Which financial statement is used to show what the firm owns? (Difficulty: Easy)
1. Income statement
2. Balance sheet/Statement of financial position
3. Statement of retained earnings
4. Statement of cash flows
Financially, shareholders are rewarded by: (Difficulty: Easy)
1. Interest
2. Profits
3. Dividends
4. None of these
The type of accounting which reports on the performance of the firm to essential external users is called: (Difficulty: Easy)
1. External accounting
2. Managerial accounting
3. Financial accounting
4. Internal accounting
When does an accountant record a transaction? (Difficulty: Easy)
1. If it is materialized by a concrete document
2. If it has a tax implication
3. On managers’ demand
4. None of these
Which of the following describes a record of the transactions? (Difficulty: Easy)
1. General ledger
2. Income statement
3. Balance sheet
4. Journal
Which of the following groups use financial accounting? (Difficulty: Easy)
1. Management, employees, shareholders and lenders
2. Suppliers, customers and competitors
3. Tax authorities, government and general public
4. All of these
The four principal qualitative characteristics of useful financial statements are: (Difficulty: Moderate)
1. Understandability, relevance, reliability, comparability.
2. Timeliness, relevance, reliability, comparability.
3. Understandability, relevance, accuracy, comparability.
4. Understandability, relevance, reliability, simplicity.
Information is material if: (Difficulty: Moderate)
1. Its omission or misstatement could influence the economic decisions of users taken on the basis of the financial statements
2. It corresponds to financial variables
3. It is recorded on the basis of concrete documents
4. None of these

Chapter 1: Accounting: The language of business

Quiz