Question 1

Establishing international accounting standards is the responsibility of:

Accepted Answer

A)  AICPA. 
B)  IASB. 
C)  SEC. 
D)  AAA. 
A)  AICPA. 
B)  IASB. 
C)  SEC. 
D)  AAA. B

Question 2

Management accounting refers to the preparation and use of accounting information designed to meet the needs of decision makers outside the business organization.

Accepted Answer

A) True 
 B)False  False

Question 3

Investors are individuals and other enterprises that have provided equity to the reporting enterprise.

Accepted Answer

A) True 
 B)False  True

Question 4

Which of the following is generally not considered one of the general purpose financial statements issued by a corporation?

Accepted Answer

A)  Income statement forecast for the coming year. 
B)  Balance sheet. 
C)  Statement of financial position. 
D)  Statement of cash flows. 
A)  Income statement forecast for the coming year. 
B)  Balance sheet. 
C)  Statement of financial position. 
D)  Statement of cash flows.

Question 5

Which organization best serves the professional needs of a CPA?

Accepted Answer

A)  FASB. 
B)  AICPA. 
C)  SEC. 
D)  AAA. 
A)  FASB. 
B)  AICPA. 
C)  SEC. 
D)  AAA.

Question 6

In the phrase "generally accepted accounting principles," the words accounting principles refers to:

Accepted Answer

A)  The standards, assumptions, and concepts that serve as "ground rules" for financial reporting. 
B)  Ethical standards that prohibit fraudulent or misleading financial reporting. 
C)  The steps in the accounting cycle. 
D)  The accounting practices authorized by the Financial Accounting Standards Board (FAS
B) . 
A)  The standards, assumptions, and concepts that serve as "ground rules" for financial reporting. 
B)  Ethical standards that prohibit fraudulent or misleading financial reporting. 
C)  The steps in the accounting cycle. 
D)  The accounting practices authorized by the Financial Accounting Standards Board (FAS
B) .

Question 7

The best definition of an accounting system is:

Accepted Answer

A)  Journals, ledgers, and worksheets. 
B)  Manual or computer-based records used in developing information about an entity for use by managers and also persons outside the organization. 
C)  The personnel, procedures, devices, and records used by an entity to develop accounting information and communicate this information to decision makers. 
D)  The concepts, principles, and standards specifying the information which should be included in financial statements, and how that information should be presented. 
A)  Journals, ledgers, and worksheets. 
B)  Manual or computer-based records used in developing information about an entity for use by managers and also persons outside the organization. 
C)  The personnel, procedures, devices, and records used by an entity to develop accounting information and communicate this information to decision makers. 
D)  The concepts, principles, and standards specifying the information which should be included in financial statements, and how that information should be presented.

Question 8

The information is summarized in a set of statements distributed to the public.

Accepted Answer

The answer of The information is summarized in a set...

Question 9

Financial statements must be prepared for which time period?

Accepted Answer

A)  One year. 
B)  Less than one year. 
C)  More than one year. 
D)  Any time period. 
A)  One year. 
B)  Less than one year. 
C)  More than one year. 
D)  Any time period.

Question 10

Financial statements are prepared:

Accepted Answer

A)  Only for publicly owned business organizations. 
B)  For corporations, but not for sole proprietorships or partnerships. 
C)  Primarily for the benefit of persons outside of the business organization. 
D)  In either monetary or nonmonetary terms, depending upon the need of the decision maker. 
A)  Only for publicly owned business organizations. 
B)  For corporations, but not for sole proprietorships or partnerships. 
C)  Primarily for the benefit of persons outside of the business organization. 
D)  In either monetary or nonmonetary terms, depending upon the need of the decision maker.

Question 11

The American Institute of Certified Public Accountants has the legal authority over publicly held corporations to enforce compliance with generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is true?

Accepted Answer

A)  The existence of generally accepted accounting principles (GAAP) virtually eliminates the need for professional judgment except in very unusual circumstances. 
B)  Federal securities laws regarding the issuance of misleading financial statements apply not only to the independent auditors, but to management of the company as well. 
C)  Attaining a passing score on the part of the Uniform CPA Examination that covers professional ethics is evidence of integrity and commitment to ethical conduct. 
D)  A professional accountant should resign his position rather than become involved in the distribution of financial statements indicating insolvency. 
A)  The existence of generally accepted accounting principles (GAAP) virtually eliminates the need for professional judgment except in very unusual circumstances. 
B)  Federal securities laws regarding the issuance of misleading financial statements apply not only to the independent auditors, but to management of the company as well. 
C)  Attaining a passing score on the part of the Uniform CPA Examination that covers professional ethics is evidence of integrity and commitment to ethical conduct. 
D)  A professional accountant should resign his position rather than become involved in the distribution of financial statements indicating insolvency.

Question 13

Which of the following is not characteristic of financial accounting?

Accepted Answer

A)  Information used in financial statements is prepared in conformity with generally accepted accounting principles. 
B)  The information is confidential and is intended for use only by company management. 
C)  The information is used in a wide variety of business decisions. 
D)  The information is developed primarily by "private accountants" that is, accountants employed by business organizations. 
A)  Information used in financial statements is prepared in conformity with generally accepted accounting principles. 
B)  The information is confidential and is intended for use only by company management. 
C)  The information is used in a wide variety of business decisions. 
D)  The information is developed primarily by "private accountants" that is, accountants employed by business organizations.

Question 14

External users of accounting information have a financial interest in an entity but are not involved with the day-to-day operations of the enterprise.

Accepted Answer

A) True 
 B)False

Question 15

The Securities and Exchange Commission is instrumental in the development of financial accounting standards.

Accepted Answer

A) True 
 B)False

Question 16

List the three financial statements that are used to communicate financial accounting information to interested external parties.

Accepted Answer

Balance sheet (State

Question 17

Purposes of an accounting system include all of the following except:

Accepted Answer

A)  Interpret and record the effects of business transactions. 
B)  Classify the effects of transactions to facilitate the preparation of reports. 
C)  Summarize and communicate information to decision makers. 
D)  Dictate the specific types of business transactions that the enterprise may engage in. 
A)  Interpret and record the effects of business transactions. 
B)  Classify the effects of transactions to facilitate the preparation of reports. 
C)  Summarize and communicate information to decision makers. 
D)  Dictate the specific types of business transactions that the enterprise may engage in.

Question 18

Which of the following is not an objective of generally accepted accounting principles?

Accepted Answer

A)  To minimize the amount of income taxes owed. 
B)  To ensure that both preparers and users of financial statements understand the concepts and assumptions used in presenting information within these statements. 
C)  To enhance the relevance and reliability of information contained in financial statements. 
D)  To increase the comparability of financial statements prepared by different companies. 
A)  To minimize the amount of income taxes owed. 
B)  To ensure that both preparers and users of financial statements understand the concepts and assumptions used in presenting information within these statements. 
C)  To enhance the relevance and reliability of information contained in financial statements. 
D)  To increase the comparability of financial statements prepared by different companies.

Question 19

The content of management accounting reports needs to be presented in conformity with generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A)  To interpret and record the effects of business transactions. 
B)  To classify the effects of similar transactions in a manner that permits determination of various totals and subtotals useful to management. 
C)  To ensure that a business organization will be managed profitably. 
D)  To summarize and communicate information to decision makers. 
A)  To interpret and record the effects of business transactions. 
B)  To classify the effects of similar transactions in a manner that permits determination of various totals and subtotals useful to management. 
C)  To ensure that a business organization will be managed profitably. 
D)  To summarize and communicate information to decision makers.

Exam 1: Accounting: Information for Decision Making

Establishing international accounting standards is the responsibility of:

Management accounting refers to the preparation and use of accounting information designed to meet the needs of decision makers outside the business organization.

Investors are individuals and other enterprises that have provided equity to the reporting enterprise.

Which of the following is generally not considered one of the general purpose financial statements issued by a corporation?

Which organization best serves the professional needs of a CPA?

In the phrase "generally accepted accounting principles," the words accounting principles refers to:

The best definition of an accounting system is:

The information is summarized in a set of statements distributed to the public.

Financial statements must be prepared for which time period?

Financial statements are prepared:

The American Institute of Certified Public Accountants has the legal authority over publicly held corporations to enforce compliance with generally accepted accounting principles.

Which of the following is true?

Which of the following is not characteristic of financial accounting?

External users of accounting information have a financial interest in an entity but are not involved with the day-to-day operations of the enterprise.

The Securities and Exchange Commission is instrumental in the development of financial accounting standards.

List the three financial statements that are used to communicate financial accounting information to interested external parties.

Purposes of an accounting system include all of the following except:

Which of the following is not an objective of generally accepted accounting principles?

The content of management accounting reports needs to be presented in conformity with generally accepted accounting principles.

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

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values Answer Key

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