Accounting Principles and Concepts Quiz
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Questions and Answers

What is the main purpose of accounting?

  • To convey information only to investors
  • To measure the results of an organization's economic activities (correct)
  • To focus solely on financial reporting
  • To process information about economic entities
  • Which field of accounting focuses on the reporting of financial information to external users?

  • Financial accounting (correct)
  • Management accounting
  • Cost accounting
  • Tax accounting
  • What is the primary focus of management accounting?

  • Preparation of financial statements
  • Measurement, analysis, and reporting of information for internal use by management (correct)
  • Processing information about economic entities
  • Conveying information to a variety of stakeholders
  • What do practitioners of accounting refer to as?

    <p>Accountants</p> Signup and view all the answers

    What are the synonyms often used for the term 'accounting'?

    <p>Financial reporting</p> Signup and view all the answers

    What is the primary characteristic of a reserve in financial accounting?

    <p>It always has a credit balance</p> Signup and view all the answers

    Where can a reserve appear in shareholders' equity?

    <p>Any part except contributed or basic share capital</p> Signup and view all the answers

    What is the purpose of an 'operating reserve' in nonprofit accounting?

    <p>Unrestricted cash available to sustain the organization</p> Signup and view all the answers

    What are the different types of reserves used in financial accounting?

    <p>Capital reserves, revenue reserves, statutory reserves, realized reserves, unrealized reserves</p> Signup and view all the answers

    From where can equity reserves be created?

    <p>Shareholders' contributions</p> Signup and view all the answers

    What is the primary characteristic of a reserve in financial accounting?

    <p>Always has a credit balance</p> Signup and view all the answers

    Where can a reserve appear in shareholders' equity?

    <p>Any part except for contributed or basic share capital</p> Signup and view all the answers

    What is the purpose of an 'operating reserve' in nonprofit accounting?

    <p>Unrestricted cash available to sustain the organization</p> Signup and view all the answers

    From which sources are equity reserves created?

    <p>Shareholders' contributions</p> Signup and view all the answers

    What is the purpose of an 'Operating Reserve Ratio' specified by nonprofit boards?

    <p>Maintaining several months of operating cash or a percentage of their annual income</p> Signup and view all the answers

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