Financial Management and Business Organizations
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Questions and Answers

What is the primary purpose of the Statement of Financial Position/Balance Sheet?

  • To show the cash inflows and outflows of the business
  • To show the changes in owner's equity over time
  • To show the income and expenses of the business
  • To show how healthy the enterprise is (correct)

    • What is the correct sequence of the accounting cycle?

  • Journalizing, Posting, Documentation, Preliminary Trial Balance
  • Documentation, Journalizing, Posting, Preliminary Trial Balance (correct)
  • Preliminary Trial Balance, Documentation, Journalizing, Posting
  • Posting, Journalizing, Documentation, Preliminary Trial Balance

    • What is the accounting equation that represents the relationship between assets, liabilities, and owner's equity?

  • Assets = Liabilities + Owner's Equity (correct)
  • Owner's Equity = Assets + Liabilities
  • Assets = Liabilities - Owner's Equity
  • Liabilities = Assets - Owner's Equity

    • What type of business organization purchases goods that are ready for sale?

    <p>Merchandising organization</p> Signup and view all the answers

    What is the term for the process of transferring entries from the journal to the general ledger?

    <p>Posting</p> Signup and view all the answers

    What is the purpose of adjusting entries at the end of the accounting period?

    <p>To update the books and reflect the current financial situation</p> Signup and view all the answers

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