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

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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?

Whether the business is making a profit Signup and view all the answers

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

Assets, liabilities, and owners' or shareholders' equity Signup and view all the answers

What is the primary purpose of a balance sheet?

To communicate financial information Signup and view all the answers

How are assets listed on a balance sheet?

Based on their liquidity Signup and view all the answers

What is the definition of liabilities?

Sums that are owed to others Signup and view all the answers

What is the main focus of bookkeeping?

Recording of accounting transactions Signup and view all the answers

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

Assets = Owners' Equity Signup and view all the answers

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

Customary rules Signup and view all the answers

What is the main feature of religious rules?

Contain an order or a prohibition Signup and view all the answers

What is the definition of law?

A set of regulations imposed by a governing body Signup and view all the answers

What is the subject matter of moral rules?

Human beings and human behaviors Signup and view all the answers

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

Subject of the rule Signup and view all the answers

What is the role of order in a society?

To regulate relations among its members Signup and view all the answers

What does 'ubi societas ibi jus' mean?

Where there is society, there is law Signup and view all the answers

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

Subjection to order and regulations Signup and view all the answers

What is the primary function of law in a society?

To limit and regulate the activities of individuals Signup and view all the answers

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

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