Question 1

Financial accounting standards issued by the FASB are considered generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Question 2

AICPA Code of Professional Conduct
State and discuss the six articles of the AICPA Code of Professional Conduct that guide members in performing their professional responsibilities.

Accepted Answer

(I.) Responsibilities
(II.) Th

Question 3

The Sarbanes-Oxley Act of 2002 created:

Accepted Answer

A)  The Security and Exchange Commission. 
B)  The Financial Accounting Standards Board. 
C)  The Public Company Accounting Oversight Board. 
D)  The Income Tax Return Overview Board. 
A)  The Security and Exchange Commission. 
B)  The Financial Accounting Standards Board. 
C)  The Public Company Accounting Oversight Board. 
D)  The Income Tax Return Overview Board.

Question 4

The Public Company Accounting Oversight Board is responsible for creating and promoting International Financial Reporting Standards.

Accepted Answer

A) True 
 B)False

Question 5

The financial statements of a business entity:

Accepted Answer

A)  Include the balance sheet, income statement, and income tax return. 
B)  Provide information about the cash flow prospects of the company. 
C)  Are the first step in the accounting process. 
D)  Are prepared for a fee by the Financial Accounting Standards Board. 
A)  Include the balance sheet, income statement, and income tax return. 
B)  Provide information about the cash flow prospects of the company. 
C)  Are the first step in the accounting process. 
D)  Are prepared for a fee by the Financial Accounting Standards Board.

Question 6

Which of the following is a characteristic of financial accounting information?

Accepted Answer

A)  Its preparation requires judgment. 
B)  It is more about the future than it is about the past. 
C)  None of it is based on estimates, assumptions, and judgments. 
D)  Notes and explanations from management are not included. 
A)  Its preparation requires judgment. 
B)  It is more about the future than it is about the past. 
C)  None of it is based on estimates, assumptions, and judgments. 
D)  Notes and explanations from management are not included.

Question 7

The general purpose financial statements prepared annually by a corporation would not include the:

Accepted Answer

A)  Balance sheet. 
B)  Income tax return. 
C)  Income statement. 
D)  Statement of cash flows. 
A)  Balance sheet. 
B)  Income tax return. 
C)  Income statement. 
D)  Statement of cash flows.

Question 8

Accounting Terminology
Listed below are 8 accounting terms.
Each of the following statements may (or may not) describe one of these terms. In the space provided, indicate the accounting term described or answer "None" if the statement does not accurately describe any of the terms.
(A.) Information describing the financial resources, obligations, and activities of an economic entity.
(B.) An entity's financial resources and obligations at a point in time.
(C.) Accounting information intended specifically to assist company's management.
(D.) The personnel, procedures, and technology used by an organization to develop accounting information and to communicate this information to decision makers.
(E.) An entity's financial activities during the year.
(F.) Measures used by an organization to guard against errors, waste, and fraud and to assure the reliability of accounting information.
(G.) A plan of financial operations for some future period.
(H.) A written assertion identifying, measuring, and communicating financial information about an economic entity.
 $\begin{array}{ll}
\text { Management Accounting } & \text { Accounting System } \
\text { Financial Accounting } & \text { Internal Controls } \
\text { Financial Position } & \text { Financial Statements } \
\text { Results of Operations } & \text { Financial Reporting }
\end{array}$

Accepted Answer

(A) Financial Accounting
(B) F

Question 9

Which of the following are not considered "external" users of financial statements?

Accepted Answer

A)  Owners. 
B)  Creditors. 
C)  Labor unions. 
D)  Managers. 
A)  Owners. 
B)  Creditors. 
C)  Labor unions. 
D)  Managers.

Question 10

The basic purpose of bookkeeping is to:

Accepted Answer

A)  Provide financial information about an economic entity. 
B)  Develop the types of information best-suited to specific managerial decisions. 
C)  Record the financial transactions of an economic entity. 
D)  Determine the taxable income of individuals and business entities. 
A)  Provide financial information about an economic entity. 
B)  Develop the types of information best-suited to specific managerial decisions. 
C)  Record the financial transactions of an economic entity. 
D)  Determine the taxable income of individuals and business entities.

Question 11

Accounting terminology
Listed below are seven accounting organizations introduced in this chapter:
Each of the following statements may (or may not) describe one of these organizations. In the space provided below each statement, indicate the accounting organization described, or answer "None" if the statement does not correctly describe any of the organizations.
(A.) Private sector organization that establishes accounting standards.
(B.) A professional organization that establishes auditing standards.
(C.) A government organization that establishes financial reporting requirements for publicly-held companies in the United States.
(D.) A federal government agency that audits many other agencies of the federal government and reports its findings to Congress.
(E.) A professional organization dedicated to the improvement of accounting education, research, and practice.
(F.) A professional organization that influences the concepts and ethical practice of management accounting.
(G.) A professional organization that establishes global accounting standards.
 $$\begin{array} { c c c } 
\text { American Accounting } & \text { Financial Accounting } & \text { Institute of Internal } \
\text { Association } & \text { Standards Board } & \text { Auditors } \
\text { American Institute of } & \text { Securities and Exchange } & \text { Institute of Management } \
\text { CPAs } & \text { Commission } & \text { Accountants } \
\text { Internal Revenue Service } & & \text { International Accounting } \
& & \text { Standards Board }
\end{array}$$

Accepted Answer

(A.) Financial Accounting Standards Boar

Question 12

Which of the following is considered a return "on" investment?

Accepted Answer

A)  Dividends. 
B)  Repayment of a loan. 
C)  Purchase of an asset. 
D)  Securing a loan. 
A)  Dividends. 
B)  Repayment of a loan. 
C)  Purchase of an asset. 
D)  Securing a loan.

Question 13

Characteristics of management accounting information include all of the following except:

Accepted Answer

A)  Is audited by a CPA. 
B)  It must be timely. 
C)  It is oriented toward the future. 
D)  It measures efficiency and effectiveness. 
A)  Is audited by a CPA. 
B)  It must be timely. 
C)  It is oriented toward the future. 
D)  It measures efficiency and effectiveness.

Question 14

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 15

Objectives of financial reporting
List and briefly describe the objectives of financial reporting beginning with the most general and ending with the most specific.

Accepted Answer

(1.) Provide information useful in makin

Question 16

Suppose a number of your friends have organized a company to develop and sell a new software product. They have asked you to loan them $8,000 to help get the company started, and have promised to repay your $8,000 plus 10% interest in one year. Of the following, which amount may be described as the return on your investment?

Accepted Answer

A)  $8,000. 
B)  $800. 
C)  $8,800. 
D)  $7,200. 
A)  $8,000. 
B)  $800. 
C)  $8,800. 
D)  $7,200.

Question 17

Investors and creditors are interested in the probability that their original investment or loan will eventually be returned, and that they will receive a reasonable return while their funds are invested or borrowed. These expectations are collectively referred to as:

Accepted Answer

A)  Expected profitability. 
B)  The objectives of financial reporting. 
C)  Cash flow prospects. 
D)  Financial position. 
A)  Expected profitability. 
B)  The objectives of financial reporting. 
C)  Cash flow prospects. 
D)  Financial position.

Question 18

An accounting practice can become a "generally accepted accounting principle" through widespread use, even if the practice is not mentioned in the official pronouncements of the accounting standard-setting organizations.

Accepted Answer

A) True 
 B)False

Question 19

The FASB takes on a responsibility to do the following, except:

Accepted Answer

A)  Set the objectives of financial reporting. 
B)  Describe the elements of financial statements. 
C)  Judge disputes between management and the CPA. 
D)  Determine the criteria for deciding what information to include in financial statements. 
A)  Set the objectives of financial reporting. 
B)  Describe the elements of financial statements. 
C)  Judge disputes between management and the CPA. 
D)  Determine the criteria for deciding what information to include in financial statements.

Question 20

Financial and management accounting information
Explain one way in which the characteristics of financial and management accounting information differ.

Accepted Answer

Financial accounting information is prim

Exam 1: Accounting: Information for Decision Making

Financial accounting standards issued by the FASB are considered generally accepted accounting principles.

AICPA Code of Professional Conduct State and discuss the six articles of the AICPA Code of Professional Conduct that guide members in performing their professional responsibilities.

The Sarbanes-Oxley Act of 2002 created:

The Public Company Accounting Oversight Board is responsible for creating and promoting International Financial Reporting Standards.

The financial statements of a business entity:

Which of the following is a characteristic of financial accounting information?

The general purpose financial statements prepared annually by a corporation would not include the:

Which of the following are not considered "external" users of financial statements?

The basic purpose of bookkeeping is to:

Which of the following is considered a return "on" investment?

Characteristics of management accounting information include all of the following except:

The best definition of an accounting system is:

Objectives of financial reporting List and briefly describe the objectives of financial reporting beginning with the most general and ending with the most specific.

Investors and creditors are interested in the probability that their original investment or loan will eventually be returned, and that they will receive a reasonable return while their funds are invested or borrowed. These expectations are collectively referred to as:

An accounting practice can become a "generally accepted accounting principle" through widespread use, even if the practice is not mentioned in the official pronouncements of the accounting standard-setting organizations.

The FASB takes on a responsibility to do the following, except:

Financial and management accounting information Explain one way in which the characteristics of financial and management accounting information differ.

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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