1. Which of the following statements best defines basic accounting

concepts?

A. A set of rules and regulations for maintaining accounting records

B. Principles and guidelines for preparing financial statements

C. Methods for calculating tax liabilities

D. Guidelines for internal control procedures

Answer: B. Principles and guidelines for preparing financial statements

Rationale: Basic accounting concepts provide the framework for preparing

financial statements and ensure consistency and accuracy in recording

financial transactions.

2. How does accounting information assist in making financial decisions

to increase profitability?

A. By providing information on sales and revenue

B. By tracking expenses and identifying cost-saving opportunities

C. By recognizing market trends and consumer behavior

D. All of the above

Answer: D. All of the above

Rationale: Accounting information provides insights into a business's

financial performance, allowing leaders to identify opportunities for

increasing profitability through revenue growth and cost management.

3. Which financial statement shows a company's profitability over a

specific period?

A. Balance sheet

B. Cash flow statement

C. Income statement

D. Statement of retained earnings

Answer: C. Income statement

Rationale: The income statement summarizes a company's revenues,

expenses, and profits over a specific period, providing insight into its

profitability.

4. How does accounting information contribute to gaining a competitive

advantage?