Financial Accounting Quiz
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Questions and Answers

Which of the following best describes the focus of financial accounting?

  • Managing a company's financial resources and investments.
  • Assessing the economic impact of a company's operations on society.
  • Recording, summarizing, and presenting a company's financial transactions and results to internal stakeholders. (correct)
  • Analyzing and interpreting a company's financial data for decision-making purposes.

What is the purpose of financial accounting?

  • To evaluate the effectiveness of a company's internal controls.
  • To provide a standardized and comprehensive view of a company's financial performance and position. (correct)
  • To identify potential investment opportunities for a company.
  • To forecast future financial trends and outcomes for a company.

Which financial statements are prepared under financial accounting?

  • Profit and loss statement, trial balance, and statement of retained earnings.
  • General ledger, accounts receivable aging report, and bank reconciliation statement.
  • Statement of cash flows, statement of changes in equity, and statement of financial position.
  • Income statement, balance sheet, and cash flow statement. (correct)

How does accounting facilitate replacing human memory?

<p>By maintaining a complete record of financial transactions.</p> Signup and view all the answers

Why is human memory limited when it comes to financial transactions?

<p>Because there are numerous transactions and it is almost impossible to remember all of them.</p> Signup and view all the answers

How can accounting act as legal evidence in disputes?

<p>By maintaining proper books of accounts that serve as evidence.</p> Signup and view all the answers

What is the role of accounting in assisting management?

<p>It helps in managing and making informed decisions based on the records and data.</p> Signup and view all the answers

Why is it important for a businessman to rely on accounting data instead of memory?

<p>Because memory may not be sufficient to establish the nature of a transaction, especially in disputes.</p> Signup and view all the answers

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