Principles of Business Test 4B

Which of the following is a true statement about a management information system (MIS):

It may be one part of a business's overall information management program.

What type of accounting method would most likely be used by a small business owner who does not offer credit?

Cash accounting method/Cash method

Managing information for business continuity is important in case of

a disaster.

Decisions about financing refer to the

acquisition of funds.

Appropriate information management helps a business build a good reputation by

being consistent.

Information usually comes in either physical form or __________ form.

electronic

Assets a company already owns and can use to finance a new venture are called

equity.

When return on capital is positive, the company is

growing in value.

Riley is an employee of the federal government who studies the financial reports of major businesses in a specific industry. The government's purpose in assigning this task to Riley is to

identify trends in the industry.

The finance function ensures that the company's financial goals are

in line with organizational priorities.

Accounting is distinct from finance because its main focus is on

record keeping activities.

A benefit of informed decisions is that they

reduce a business's risk.

Which of the following is a true statement about information:

It is data put into a useful form.

Checks, receipts, invoices, and purchase orders are examples of

source documents.

The process of keeping the financial records of a business is known as

accounting.

Money the business owes is known as

accounts payable.

Money owed to the business is known as

accounts receivable.

For an accounting system to be useful to the business, the accounting information it contains must be

accurate and up to date.

A creditor is most likely to examine a business's financial accounting records if the business is

applying for a bank loan.

What accounting record would summarize a business's profit or loss for a previous year?

Income statement

Which of the following is a trend in information management:

Increased compliance laws and regulations

Determining which projects a business should invest in is known as

capital budgeting.

Information management can be a challenge because the business world is

constantly changing.

The overall purpose of accounting is to

control the finances of the business.

A risk involved with information management is leaving customers unprotected from

identity theft.

Managing information regarding copyrights and trademarks helps a company to preserve its

identity.

Finance is the business function that involves managing

money.

The finance function would definitely be involved in a decision regarding

new business projects and strategies.

The goals of the finance function are to ensure profitability and to

reduce risks.

Accounting records for a business show that the week's total sales revenues were $125,000. Cash sales accounted for $50,000 and credit sales, $75,000. This is an example of

the accrual method of accounting.

Which of the following actions is a part of information management:

Disseminating information

Who is responsible for information management?

Everyone in the organization

Which of the following is a capital investment decision:

How to finance investments

Carson is a staff accountant, and he needs to look at last year's tax return. However, he can't find it anywhere. Which information management guideline is not being followed in this situation?

Make sure that information is retrievable.

Which of the following U.S. laws relates to information management:

The Sarbanes-Oxley Act

Why are accurate accounting records important to a business?

They show the business how it is doing.

To keep communication flowing with other departments, the finance function depends on

information systems.

The administration of assets refers to decisions about

investments.

Which of the following makes comparisons of the financial conditions at multiple organizations possible:

Accounting standards

What type of accounting method would most likely be used by a large business that has a large number of outstanding loans and customer charge accounts?

Accrual method

Which of the following presents the first three steps in the accounting cycle in the correct order:

Analyze, journalize, and post

Which of the following categories of information are found on a balance sheet:

Assets, liabilities, owner's equity

A bank denies a business owner's application for credit saying, "We feel that you would be unable to make the monthly payments because of your other debts." What financial report did the bank review?

Balance sheet

Which of the following is a true statement:

Bookkeeping records business transactions.

The finance function is usually responsible for which of the following processes:

Budgeting

How does appropriate information management affect a business's relationship with its customers?

Businesses serve customers more effectively.

Which of the following is a key component of managing working capital:

Cash conversion cycle

Which of the following financial reports provides estimates of when, where, and how much money will come into and out of a business next year:

Cash flow statement

How does the finance function relate to company spending?

It plans and controls spending.

Which of the following is a requirement for a good accounting system:

It should provide needed information quickly.

Which of the following groups makes regular use of a business's managerial accounting information:

Managers

Which of the following is a measure of how well a business generates cash flow:

Return on capital

Wireless networks are now more common due to

increased distribution of the workforce.

Appropriate information management saves businesses time and money by

maintaining higher levels of productivity.

Information management can be a challenge because

many people don't understand what it is.

Which of the following is an example of a type of information a business must manage:

Accounting records

Two employees used a business's computerized accounting system to change some records. They were able to steal $50,000 from the business because the accounting system lacked which of the following:

Protection from theft and fraud

The cash conversion cycle should be

as short as possible.

A risk involved with information management is being unprepared for a government

audit.

A company's current balance of assets and liabilities falls under the focus of

working capital management.