EXERCISES

A. Answer the following question about accounting.

1. Why is accounting called the “language of business”?
2. How is a standardized accounting system achieved?
3. What do the balance sheet and income statement have in common? How are they
different?
4. How are accountants classified in the United States?
5. What kinds of services do public accountants provide?

B. Circle the letter of the answer that best completes each of the sentences below.
1. Accounting information is used by ______to help them make financial decisions.
a. managers
b. potential investors
c. creditors
d. all of the above

2. Regardless of the type of business or the amount of money involved:

a. all companies use identical accounting systems
b. balance sheets are more important than income statements
c. common procedures are used in handling financial information
d. no standardized accounting system is employed

3. Business monetary transactions are summarized in :

a. bank books
b. financial statements
c. computers
d. cash registers

4. Public accountants may earn the title of CPA by :

a. becoming governmental accountants
b. paying a fee
c. fulfilling rigorous requirements
d. obtaining a Bachelor of arts degree in accounting
 5. Private and governmental accountants are paid on a ____ basis.
a. salary
b. monthly
c. fee
d. weekly

C. Substitute appropriate terms for the italicized words or phrases in the sentences below.
status agencies monitored maintain independently
procedure fee hire rigorous solely

1. Many accounting departments have strict entrance requirements; only the most qualified
applicants are allowed to enter these programs. ______________
2. The particular method used to process employee insurance claims may vary from company
to company. ____________________
3. The stock market is closely watched every day. _________________
4. Rather than expand into foreign lines, the dress shop manager chose to deal only with
domestic fashion designers. ____________________
5. Although the consultant’s charge for services was high, his guidance and advice were well
worth the money. _________________
6. The financial condition of a company is reflected in its financial statements.
______________
7. When the business began to expand, a second bookkeeper was brought in to help keep the
books. _______________
8. In the United States there are numerous organizations that provide services at the local,
state, and national levels. _________________