INTEGRATED ACCOUNTING TEST #1 QUESTIONS AND
ANSWERS
What is a service company? - correct answer sells a service
What is a merchandising company? - correct answer resells a product
What is a manufacturing company? - correct answer makes a product
What is a sole proprietorship? - correct answer single owner management
What is a partnership? - correct answer two or more people/entities contributing to the
business
What is a corporation? - correct answer a company organized as a separate legal entity
How does accounting assist with the planning , operating, and evaluating of a
business's operations? - correct answer Planning establishes the company's goals and
the means of achieving these goals. Operating refers to the set of activities that the
company engages in to conduct its business according to its plan. Evaluating measures
actual operations and progress against standards or benchmarks
What does GAAP stand for? - correct answer Generally Accepted Accounting Principles
What are generally accepted accounting principles? - correct answer The currently
accepted principles, procedures, and practices that companies use for financial
accounting and reporting in the US
What is financial accounting? - correct answer involves identifying, measuring,
recording, summarizing and then communicating economic information about a
company to external users for use in their various decisions
What is managerial accounting? - correct answer involves identifying, measuring,
recording, summarizing, and then communicating economic information about a
company to internal users for management decision making
Why would a business need an audit? - correct answer Auditing involves the
examination of a company's accounting records and financial statements by an
independent CPA. During an audit, an auditor must communicate with a company's
managers to gain a better understanding of the company's internal control, accounting
system, and transactions.
What is the purpose of an income statement? - correct answer summarizes the results
of its operating activities for a specific time period and shows the company's profit for
that period
ANSWERS
What is a service company? - correct answer sells a service
What is a merchandising company? - correct answer resells a product
What is a manufacturing company? - correct answer makes a product
What is a sole proprietorship? - correct answer single owner management
What is a partnership? - correct answer two or more people/entities contributing to the
business
What is a corporation? - correct answer a company organized as a separate legal entity
How does accounting assist with the planning , operating, and evaluating of a
business's operations? - correct answer Planning establishes the company's goals and
the means of achieving these goals. Operating refers to the set of activities that the
company engages in to conduct its business according to its plan. Evaluating measures
actual operations and progress against standards or benchmarks
What does GAAP stand for? - correct answer Generally Accepted Accounting Principles
What are generally accepted accounting principles? - correct answer The currently
accepted principles, procedures, and practices that companies use for financial
accounting and reporting in the US
What is financial accounting? - correct answer involves identifying, measuring,
recording, summarizing and then communicating economic information about a
company to external users for use in their various decisions
What is managerial accounting? - correct answer involves identifying, measuring,
recording, summarizing, and then communicating economic information about a
company to internal users for management decision making
Why would a business need an audit? - correct answer Auditing involves the
examination of a company's accounting records and financial statements by an
independent CPA. During an audit, an auditor must communicate with a company's
managers to gain a better understanding of the company's internal control, accounting
system, and transactions.
What is the purpose of an income statement? - correct answer summarizes the results
of its operating activities for a specific time period and shows the company's profit for
that period
