1b. Correct. Page 6: The purpose of accounting is to provide accurate financial information to enable decision-makers to achieve their personal and organizational economic goals.

2. d. Correct. The overall purpose of accounting information is to assist in attaining economic goals. The decisions reflected in a., b., and c. are decisions based primarily on nonfinancial factors.

3. d. Correct. Answer a is incorrect because taxes are not revenues of the business. Answer b is incorrect as cash flow is a special measurement of the financial health of the business. Answer c is incorrect as profit is the difference between total revenues and total expenses for a specific time period.

4. a. Correct. Revenues and expenses are summarized in the income statement for a specific time period such as a month or a year. b. is incorrect because it suggests a non specific time period such as 3 months or fourteen years. c. is incorrect because it refers only to revenue. The last alternative answer is incorrect because it defines the income statement as only measuring losses (not profits) during one particular period- the start up period. This definition is too limiting..

5. b. Correct.

6. a. Correct. Opportunity cost is stated in b and is not measured as an expense in accounting. Borrowed money is a liability not an expense. Expenses do not have to be paid in cash.

7. d. Correct. While the other alternatives may be true statements in most cases, they are not the most essential distinguishing features when comparing a proprietorship to a corporation. Alternative d is true all the time.

8. a. Correct. The balance sheet and its equation show the reader who provided the assets of the business- how the assets are financed. Some businesses can finance assets entirely by its owner(s). Other businesses may require the credit of banks or others to supply the funds with which to acquire the necessary assets in order to conduct the business. Rarely is the government a supplier of funds to a business to help it pay for its assets.

9. c. Correct. Alternative c is not a business liability- it is a personal liability.

10.b. Correct. Alternative a is incorrect because the income statement measures the profit of a business; a business can earn a profit but have a negative cash flow meaning the cash balance goes down over a specific time period. "Since the start of the business" makes c. incorrect. "Expenses" in d. are the cost of resources used during specific time period and this amount can differ from the amount paid for expenses during a specific time period.