Section 2

Chapter One

An Overview of Financial Management

Revision Questions

1- An accounting information system is a system designed to transform

financial and other data into information. True

2- The daily report is the most important output of the accounting system.
False (the annual report)

3- The Annual Report

 It consists of the following:
1) Management Report.
2) The Balance Sheet.
3) The Income Statement.
4) The Statement of Retained earnings.
5) The Statement of Cash Flows.
6) Auditor’s Report.
7) Footnotes.

4- The income statement comprises assets, liabilities, and owners’ or

stockholders’ equity. False (A balance sheet)

5- The Cash Flow Statement provides information about the cash receipts and
cash payments of a business entity during the accounting period. True
6- Any transactions that enter into the determination of net income are
classified as operating activities. True

7- Classification of Cash Flows:

The Statement of Cash Flows must include the following three sections:
-Cash Flows from Operating Activities
-Cash Flows from Investing Activities
-Cash Flows from Financing Activities

8- Assets = Liabilities - Owners’ Equity. False (+)

9- Liabilities are the resources that the firm controls. False (Assets)
10- The income statement also known as the Earnings Statement or
Statement of Operations. True

11- The Audit report is a report issued by an independent (internal)

Auditor. False (external)