Chapter 1: Accounting in Business 1. Which financial statement is defined as reporting the inflows and outflows of cash in a proprietorship? A) Income statement B) Statement of owner’s equity C) Balance sheet D) Statement of cash flows 2. An obligation that a proprietorship owes to an outside person or agency is called a(n): A) asset B) liability C) owner’s equity D) revenue 3. There are relatively few types of revenue. Which of the following in NOT a type of revenue? A) Withdrawals paid to proprietors B) Service C) Interest D) Sales 4. A promise to pay from customers for goods and services that they received from a company represent: A) accounts receivable B) accounts payable C) revenues D) expenses 5. Accounting is the information system that provides information to various users. This process includes: A) compiling the data into reports B) measuring business activity C) communicating the results to decisions makers D) all of the above 6. Which of the following statements best describes managerial accounting? A) Managerial accounting focuses on information for internal decision making. B) Managerial accounting focuses on outside investors and lenders that are not part of day-to-day management. C) Managerial accounting provides information for the public. D) None of these statements is true. 7. The primary objective of financial reporting is to provide information useful for making investment and lending decisions. To be useful, information must possess cer ...
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