Business in Action: Chapter 15 Financial Information and Accounting Concepts Quiz
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Questions and Answers

What is the accounting equation used by accountants to balance data for a firm's financial transactions?

  • Assets - Liabilities = Owners' Equity
  • Liabilities = Assets + Owners' Equity
  • Assets = Liabilities + Owners' Equity (correct)
  • Owners' Equity - Liabilities = Assets

    • What is the income statement sometimes called because it shows how a business performs over a period of time?

  • Profit-and-Loss Statement (correct)
  • Balance Sheet
  • Cash Flow Statement
  • Owners' Equity Statement

    • What represents the assets that remain after deducting what the business owes from what it owns?

  • Revenue
  • Liabilities
  • Operating Expenses
  • Owners' Equity (correct)

    • What does the income statement reveal about the business?

    <p>Whether the business is making a profit</p> Signup and view all the answers

    What does the balance sheet reveal about a business's financial condition?

    <p>Assets, liabilities, and owners' or shareholders' equity</p> Signup and view all the answers

    What is the primary purpose of a balance sheet?

    <p>To communicate financial information</p> Signup and view all the answers

    How are assets listed on a balance sheet?

    <p>Based on their liquidity</p> Signup and view all the answers

    What is the definition of liabilities?

    <p>Sums that are owed to others</p> Signup and view all the answers

    What is the main focus of bookkeeping?

    <p>Recording of accounting transactions</p> Signup and view all the answers

    How would you describe the relationship between assets and owners' equity?

    <p>Assets = Owners' Equity</p> Signup and view all the answers

    Which type of rule has the society as the maker of the rules?

    <p>Customary rules</p> Signup and view all the answers

    What is the main feature of religious rules?

    <p>Contain an order or a prohibition</p> Signup and view all the answers

    What is the definition of law?

    <p>A set of regulations imposed by a governing body</p> Signup and view all the answers

    What is the subject matter of moral rules?

    <p>Human beings and human behaviors</p> Signup and view all the answers

    What is the main similarity among religious, customary, moral, and legal rules?

    <p>Subject of the rule</p> Signup and view all the answers

    What is the role of order in a society?

    <p>To regulate relations among its members</p> Signup and view all the answers

    What does 'ubi societas ibi jus' mean?

    <p>Where there is society, there is law</p> Signup and view all the answers

    What does living in a society entail, according to the text?

    <p>Subjection to order and regulations</p> Signup and view all the answers

    What is the primary function of law in a society?

    <p>To limit and regulate the activities of individuals</p> Signup and view all the answers

    What is the legal concept of order, as mentioned in the text?

    <p>The body of laws, rules, regulations, and customs within a society</p> Signup and view all the answers

    Study Notes

    Accounting Equation

    • The accounting equation is Assets = Liabilities + Owner's Equity.
    • It helps accountants balance data for a firm's financial transactions.
    • Assets represent what a business owns.
    • Liabilities represent what a business owes to others.
    • Owner's equity represents the owner's investment in the business.

    Income Statement

    • The income statement is also called the profit and loss statement.
    • It shows how a business performs over a period of time.
    • It reveals the business' revenue, expenses, and net income or loss for that period.

    Balance Sheet

    • The balance sheet is a snapshot of a business's financial condition at a specific point in time.
    • It reveals the business' assets, liabilities, and owner's equity.
    • The primary purpose of a balance sheet is to show the financial position of a business.
    • Assets are listed on a balance sheet in order of liquidity, meaning how easily they can be converted to cash.

    Liabilities

    • Liabilities are obligations a business owes to others.
    • Examples of liabilities include accounts payable, salaries payable, and loans payable.

    Bookkeeping

    • Bookkeeping is the process of recording and classifying financial transactions.
    • It is the foundation of accounting.
    • It helps businesses track their financial performance.

    Assets and Owners Equity

    • Assets and owners' equity are related because owners' equity represents the amount of assets that the owners have a claim to after deducting liabilities.

    Rules and Society

    • Social rules are made by the society and influence behavior within that society.

    Religious Rules

    • Religious rules are based on beliefs and practices of a faith.
    • They are often associated with divine authority.

    Law

    • Law is a set of rules that are enforced by a governing authority.
    • Law is meant to regulate behavior and maintain order in society.

    Moral Rules

    • Moral rules are concerned with right and wrong conduct.
    • They are based on individual or societal values.

    Rules Similarity

    • Religious, customary, moral, and legal rules all aim to guide behavior and maintain order in society.

    Order in Society

    • Order in society is essential for stability and progress.
    • It allows individuals and institutions to function harmoniously.

    'Ubi Societas Ibi Jus'

    • The phrase 'Ubi Societas Ibi Jus' means "Where there is a society, there is law".
    • It emphasizes the interconnected relationship between society and law.

    Living in Society

    • Living in society requires individuals to follow rules, respect others, and contribute to the common good.

    Law's Function

    • The primary function of law is to regulate behavior, protect rights, and resolve disputes.
    • Order, in a legal context, refers to the organized and predictable functioning of society based on agreed-upon rules and principles.

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    Description

    Test your knowledge of financial information and accounting concepts from Chapter 15 of the book 'Business in Action: Thriving in the Digital Enterprise Ninth Edition, Global Edition.' This quiz covers topics such as the comprehensive system of accounting, bookkeeping, and the uses of accounting information.

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