Accounting Principles and Concepts Quiz

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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?

Accountants Signup and view all the answers

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

Financial reporting Signup and view all the answers

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

It always has a credit balance Signup and view all the answers

Where can a reserve appear in shareholders' equity?

Any part except contributed or basic share capital Signup and view all the answers

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

Unrestricted cash available to sustain the organization Signup and view all the answers

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

Capital reserves, revenue reserves, statutory reserves, realized reserves, unrealized reserves Signup and view all the answers

From where can equity reserves be created?

Shareholders' contributions Signup and view all the answers

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

Always has a credit balance Signup and view all the answers

Where can a reserve appear in shareholders' equity?

Any part except for contributed or basic share capital Signup and view all the answers

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

Unrestricted cash available to sustain the organization Signup and view all the answers

From which sources are equity reserves created?

Shareholders' contributions Signup and view all the answers

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

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

Accounting Principles and Concepts Quiz

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Questions and Answers

What is the main purpose of accounting?

Which field of accounting focuses on the reporting of financial information to external users?

What is the primary focus of management accounting?

What do practitioners of accounting refer to as?

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

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

Where can a reserve appear in shareholders' equity?

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

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

From where can equity reserves be created?

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

Where can a reserve appear in shareholders' equity?

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

From which sources are equity reserves created?

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

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