The accounting systems of most business organizations:

Multiple Choice

• Are designed by the CPA firm that performs the annual financial audit.

• Are tailored to meet the organization's needs for accounting information and the resources available for operating the system.

• Are similar in design to the journals, ledgers, and worksheets illustrated in this text.

• Utilize data bases, rather than ledger accounts.

2/

Which of the following is not a basic function of an accounting system?

Multiple Choice

• To ensure that a business organization will be managed profitably.

• To interpret and record the effects of business transactions.

• To classify the effects of similar transactions in a manner that permits determination of various totals and subtotals useful to management.

• To summarize and communicate information to decision makers.

3/

Information is cost effective when:

Multiple Choice

• The information is based upon historical costs, rather than upon estimated market values.

• The value of the information exceeds the cost of producing it.

• The information is generated by a computer based accounting system.

• The information aids management in controlling costs.