Question 1: Which of the following best describes the function of accounting?
a) accounting is the means by which company insiders manage their business
b) accounting must be understood primarily by government officials who tracks company progress
c) accounting is a process that measures the economic activities of a firm, summarized the results of those activities, and report those results
d) accounting is a process that keeps track of economic transactions and maintains its integrity by remaining apart from the main stream of a business
Question 2: Which of the following best describes the inter-relationships of the income statement, balance sheet, and statements of cash flows?
a) the balance sheet is used to reconcile the cash flow statement its directly derived from the balance sheet, and the income statement is a combination of elements from both the balance sheet and the cash flow statement
b) the cash flow statement converts the income statement and balance sheet from an accrual basis to a cash statement . Net earnings or losses from the income statement affected retained earnings on the balance sheet.
c) The operating section of the cash flow statement reconciles net earnings from the income statement to cash from operations
d) The cash flow statement is distinct from the income statement and balance sheet, which is why the U.S. government requires the statement