Introduction to Accounting: Definition and Purpose

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What is the definition of accounting according to the American Institute of Certified Public Accountants (AICPA)?

The economic value of an item which is possessed by the enterprise

The process of making effective choices by providing information on the financial status of the business

The process of reporting, recording, interpreting and summarizing economic data

The art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof (correct)

What are assets in accounting?

Items that can be transformed into cash or that generates income for the enterprise shortly

The economic value of an obligation or debt

The economic value of an item which is possessed by the enterprise (correct)

The economic value of an obligation or debt that is payable by the enterprise to other establishment or individual

What does accounting help decision-makers with?

Classifying and summarizing events in terms of money

Making effective choices by providing information on the financial status of the business (correct)

Transforming items into cash or generating income

Recording and interpreting economic data

What is the significance of liabilities in accounting?

<p>They represent the economic value of an obligation or debt that is payable by the enterprise to other establishment or individual</p> Signup and view all the answers