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Financial Accounting Framework: Chapter 1 Quiz

16 Questions

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Financial Accounting Framework: Chapter 1 Quiz

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Questions and Answers

What is the primary focus of financial accounting?

Communicating business activities of a company

Analyzing business activities of a company

Measuring business activities of a company (correct)

Recording business activities of a company

Which term best describes the accounting information provided to external users?

Cost accounting

Financial accounting (correct)

Managerial accounting

Tax accounting

What are the two primary functions of financial accounting?

Monitoring and controlling business activities

Recording and analyzing business activities

Forecasting and budgeting business activities

Measuring and communicating business activities (correct)

Which statement accurately describes the focus of financial accounting?

It focuses on measuring and communicating business activities to external users Signup and view all the answers

What type of information does financial accounting provide to external users?

Historical financial performance information Signup and view all the answers

Which function does financial accounting not serve?

Providing real-time business performance data Signup and view all the answers

What are the functions of financial accounting?

To measure business activities and communicate information to investors and creditors Signup and view all the answers

What are the three basic forms of business entities mentioned in the text?

Sole Proprietorship, Partnership, Corporation Signup and view all the answers

What is the advantage of a corporation being legally separate from its owners?

Stockholders have limited liability Signup and view all the answers

What are the advantages of a sole proprietorship mentioned in the text?

Easy to start, Taxed at personal tax rate Signup and view all the answers

What are the disadvantages of a partnership mentioned in the text?

Partners jointly share unlimited liability Signup and view all the answers

What is the accounting equation mentioned in Illustration 1-3?

$Assets = Total resources of the company$; $Liabilities = Amounts owed to creditors$ Signup and view all the answers

What are financing activities according to the text?

Transactions with investors and creditors Signup and view all the answers

What do operating activities relate to according to the text?

Primary operations of the company Signup and view all the answers

What is a partnership?

A business owned by two or more persons Signup and view all the answers

What is a corporation according to the text?

A company that is legally separate from its owners Signup and view all the answers