17 - 17 Student 1 Accounting is an easy subject for people...

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17 Student: _______________________________________________________________________________________ True False True False True False True False True False True False True False True False True False True False True False True False True False True False True False True False True False 1. Accounting is an easy subject for people to understand because almost everyone is exposed to basic accounting concepts in their everyday life. 2. Although managers who work for large firms must know something about accounting, people who run small businesses only need to know the basics of bookkeeping. 3. It is impossible to run a company effectively without the ability to read and understand basic accounting reports and financial statements. 4. With increased computer technology, the ability to read and understand financial statements is no longer an important skill for managers. 5. Accounting provides information about the financial condition and operating performance of a firm. 6. The sole purpose of accounting is to help managers evaluate the financial condition of the firm so that they may make better pricing decisions. 7. Inputs to the accounting system include sales documents. 8. Purchasing insurance, paying employees, and using supplies are examples of financial transactions. 9. Accounting provides financial information that can be useful to owners, creditors, suppliers, employees, and competitors of an organization. 10. Accountants do the work involved in recording financial events and transactions, but the actual classifying and interpreting of this data is left to financial managers. 11. Accounting involves both the recording and the interpreting of financial events. 12. In an effort to maintain a competitive advantage, firms do not share accounting information with people outside of the firm. 13. The U.S. government is a user of a firm's accounting information. 14. A business manager who keeps his/her customers satisfied can be successful without having a great deal of knowledge about accounting practices. 15. Jeremy operates his own small business, but he doesn't want to be bothered with accounting information. He tells his friends, "All I need accounting for is to prepare my income tax return for my business. I'll hire someone to do that for me." Jeremy's attitude would be disastrous if he managed a large firm, but is a reasonable view for a small business owner. 16. Good decisions are based on good information. Organizations need accounting—to provide good financial information. 17. A firm's financial statements represent a health report regarding the condition of the firm.
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True False True False True False True False True False True False True False True False True False True False True False True False True False True False True False True False True False True False 18. As noted in the story about the Bakery Barn, CPA Sean Perich's small business venture, trying to be everything for your business is often an impossible task. Due to the fact that solid accounting procedures are one of the lifelines for your business, it makes sense to hire an accountant even if you are knowledgeable about that functional unit of the business.
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