REVIEW QUESTIONS 1. The basic language of business is: a. financial numbers b. English c. universal business language 2. A material error is a mistake that affects a company's supplies and work- place materials. 3. Reports prepared using the accrual basis of accounting reflect income earned and expenses incurred, regard- less of whether or not they've been paid for. 4. Most companies are better off em- ploying the cash method of account- ing. 5. While financial statements are spe- cific and must adhere to certain guide- lines, financial reports are less formal and can assume many forms. 6. Generally Accepted Accounting Prin- cipals, or GAAP, were established by the: a. Securities and Exchange Commis- sion b. Small Business Administration c. American Institute of Certified Pub- lic Accountants 7. External financial statements are those prepared by someone from out- sideof the company to which they per- tain. TF