Financial Accounting_1

#1. According to the American Institute of Certified Public Accountants (AICPA), Financial Accounting is:

a) The recording of personal transactions

b) The art of recording, classifying, and summarizing financial transactions

c) The process of budgeting and forecasting

d) The preparation of tax reports only

#2. Financial Accounting helps businesses by:

a) Reducing overall expenses

b) Making financial data accessible for decision-making

c) Managing employee benefits

d) Creating marketing strategies

#3. Classifying transactions in appropriate accounts is done in which book?

a) Journal

b) Ledger

c) Cash Flow Statement

d) Trial Balance

#4. What is the first step in Financial Accounting?

a) Summarizing transactions

b) Identifying financial transactions

c) Preparing financial statements

d) Communicating reports to stakeholders

#5. Which financial statement provides information on a company’s profitability?

a) Balance Sheet

b) Cash Flow Statement

c) Profit & Loss Account

d) Notes to Accounts

#6. The process of entering financial transactions in books of accounts is called:

a) Classifying

b) Recording

c) Summarizing

d) Communicating

#7. Which of the following statements about Financial Accounting is TRUE?

a) It focuses only on cash transactions

b) It helps in tracking financial health through statements

c) It does not follow any standard principles

d) It is not required for business operations

#8. Which of the following is NOT a key aspect of Financial Accounting?

a) Analyzing market trends

b) Identifying transactions

c) Recording financial data

d) Preparing financial reports

#9. Financial Accounting ensures:

a) Compliance with tax laws

b) Accurate and transparent financial reporting

c) Maximization of employee salaries

d) Reduction in production costs

#10. The American Accounting Association (AAA) defines Financial Accounting as:

a) A method to attract investors

b) The analysis of internal business strategies

c) The process of identifying, measuring, and communicating economic information

d) The act of controlling business operations

#11. Financial Accounting provides financial information mainly for:

a) Internal management

b) External stakeholders like investors and creditors

c) Employees only

d) Marketing teams

#12. Financial Accounting is mainly used by:

a) Customers and suppliers

b) Investors, creditors, and regulatory authorities

c) HR and marketing teams

d) Business competitors

#13. According to John N. Myer, Financial Accounting is concerned with:

a) Preparing company marketing strategies

b) Communicating financial results to external users

c) Setting employee salaries

d) Managing business operations

#14. According to Smith and Ashburne, Financial Accounting involves:

a) Classification and recording of monetary transactions

b) Management of a company's employees

c) Marketing and branding of a company

d) Making production-related decisions

#15. What does the term “communicating” mean in Financial Accounting?

a) Recording transactions

b) Preparing budget estimates

c) Sending financial reports to stakeholders

d) Managing supply chains

#16. What is Financial Accounting primarily concerned with?

a) Internal decision-making

b) Recording and reporting financial transactions

c) Managing employees

d) Conducting market research

#17. Which of the following is a major limitation of Financial Accounting?

a) It focuses only on past transactions

b) It provides future projections

c) It considers non-monetary factors

d) It includes management accounting reports

#18. Which of the following is NOT a feature of Financial Accounting?

a) Systematic recording of transactions

b) Future planning and budgeting

c) Preparation of financial statements

d) Communication of financial information

#19. Financial Accounting follows which set of standardized principles?

a) GAAP and IFRS

b) Marketing strategies

c) Human resource policies

d) Taxation laws only

#20. R. N. Anthony defines Financial Accounting as:

a) Preparing and analyzing financial statements for internal use only

b) The recording of business transactions and preparation of financial statements for external stakeholders

c) A system of financial planning for future investments

d) A method of increasing business revenue