Which of the Following Statements Is True Regarding Accounting Information

question 239

Multiple Choice

Which of the following statements is true regarding accounting information systems?

• A)Both large and small firms should use the same type of accounting system.
• B)All firms should have the same types of transactions.
• C)The volume of data to be handled should not vary between firms.
• D)The kind of information that management requires of an accounting system will vary,
• Depending on the type of firm.

Calculate goodwill from a business combination and assess its impairment.

Apply the equity method for intercompany investments and understand how it affects the investment account and income statement.

Record journal entries for equity method income, dividends, and acquisition differentials.

Distinguish between the cost and equity methods of accounting for investments.

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Definitions:

Indirect Method

An approach to report cash flows from operating activities on the cash flow statement, adjusting net income for changes in non-cash accounts.

Operating Activities

Activities that constitute the primary or main operations of a company, including sales, service, and administrative functions, as reflected in the cash flow statement.

Cash Flow Ratio

A financial metric that measures a company's ability to cover its obligations with cash from operating activities, indicating its liquidity position.

Total Assets

The sum of all owned resources with economic value that are expected to provide future benefit to the business.