Accounting Principles and Concepts Quiz

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Questions and Answers

What is accounting?

Accounting is the measurement, processing, and communication of financial and non-financial information about economic entities such as businesses and corporations.

Why is accounting known as the 'language of business'?

It measures the results of an organization's economic activities and conveys this information to stakeholders such as investors, creditors, management, and regulators.

What are the different fields of accounting?

Financial accounting, management accounting, tax accounting, and cost accounting.

What is the focus of financial accounting?

Financial accounting focuses on the reporting of an organization's financial information, including the preparation of financial statements, to external users such as investors, regulators, and suppliers. Signup and view all the answers

What is the focus of management accounting?

Management accounting focuses on the measurement, analysis, and reporting of financial information for internal decision-making purposes. Signup and view all the answers

What is a private company limited by shares?

A private company limited by shares is a type of private limited company where the liability of shareholders to creditors is limited to the capital originally invested in the company. Signup and view all the answers

In which countries is a private company limited by shares incorporated?

A private company limited by shares is incorporated under the laws of England and Wales, Hong Kong, Northern Ireland, Scotland, certain Commonwealth jurisdictions, and the Republic of Ireland. Signup and view all the answers

What does it mean for a company to be 'limited by shares'?

Being 'limited by shares' means that the liability of shareholders to creditors is limited to the capital originally invested in the company. Signup and view all the answers

What protection do shareholders have in the event of the company's insolvency?

Shareholders' personal assets are protected in the event of the company's insolvency, but any money invested in the company may be lost. Signup and view all the answers

What are the differences between a private limited company and a public limited company?

A private limited company has lighter disclosure requirements, its shares cannot be offered to the general public, and they cannot be traded on a public stock exchange. Signup and view all the answers