business 1301 chapter 8 quiz

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1

A system for recognizing, organizing, analyzing and reporting information about the financial transactions that affect an organization is known as ________.

accounting

2

GAAP uses FASB in order to bring consistency to accounting among companies.

False

3

Items that a company owns are considered its __________.

assets

4

What are amounts a company owes referred to as?

liabilities

5

What is a company's profit or loss is determined by?

subtracting expenses from revenues

6

All of the following statements about the cash flow statement are true except:

shows revenues earned during the period.

7

The purpose of an independent audit is to verify that the financial statements were prepared in accordance with GAAP and that they fairly present the financial condition of the organization.

True

8

Companies provide comparative financial statements so that potential investors can perform ________.

horizontal analysis

9

While financial accounting is intended to provide financial information to outside parties, such as stockholders and creditors, _________ accounting is intended to provide information to parties inside the organization.

managerial

10

The ________ budget represents the firm's overall plan of action for a specified time.

master