Question 1

The primary function of external auditors is to:

Accepted Answer

A)  Express an opinion on the fairness and reliability of the company's financial statements. 
B)  Determine the accuracy of the management reports. 
C)  Evaluate the efficiency of operations and the degree of compliance with management's policies in all departments within a large organization. 
D)  Determine that financial statements and all special reports to management are prepared in conformity with generally accepted accounting principles. 
A)  Express an opinion on the fairness and reliability of the company's financial statements. 
B)  Determine the accuracy of the management reports. 
C)  Evaluate the efficiency of operations and the degree of compliance with management's policies in all departments within a large organization. 
D)  Determine that financial statements and all special reports to management are prepared in conformity with generally accepted accounting principles.

Question 2

Which of the following is not an objective of financial reporting?

Accepted Answer

A)  Provide information useful in assessing amount, timing, and uncertainty of future cash flows. 
B)  Provide information useful in making investment and credit decisions. 
C)  Provide information about economic resources, claims to resources, and changes in resources and claims. 
D)  Provide information to guarantee the enterprise achieves its goals, objectives, and mission. 
A)  Provide information useful in assessing amount, timing, and uncertainty of future cash flows. 
B)  Provide information useful in making investment and credit decisions. 
C)  Provide information about economic resources, claims to resources, and changes in resources and claims. 
D)  Provide information to guarantee the enterprise achieves its goals, objectives, and mission.

Question 3

Which of the following does not describe accounting?

Accepted Answer

A)  Language of business. 
B)  Is an end rather than a means to an end. 
C)  Useful for decision-making. 
D)  Used by businesses, governments, non-profit organizations, and individuals. 
A)  Language of business. 
B)  Is an end rather than a means to an end. 
C)  Useful for decision-making. 
D)  Used by businesses, governments, non-profit organizations, and individuals.

Question 4

Development of generally accepted accounting principles
(A.) What is meant by the phrase "generally accepted accounting principles"?
(B.) Give the names of three organizations that currently play an active role in the development of accounting principles in the United States.

Accepted Answer

(A.) Generally accepted accounting princ

Question 5

Management accountants primarily are concerned with developing information:

Accepted Answer

A)  For use in income tax returns. 
B)  Suited to the needs of stockholders, creditors, and other external decision makers. 
C)  In conformity with generally accepted accounting principles. 
D)  Suited to the needs of decision makers within the organization. 
A)  For use in income tax returns. 
B)  Suited to the needs of stockholders, creditors, and other external decision makers. 
C)  In conformity with generally accepted accounting principles. 
D)  Suited to the needs of decision makers within the organization.

Question 6

A complete set of financial statements for Citywide Company, at December 31, 2009, would include each of the following, except:

Accepted Answer

A)  Balance sheet as of December 31, 2009. 
B)  Income statement for the year ended December 31, 2009. 
C)  Statement of projected cash flows for 2009. 
D)  Notes containing additional information that is useful in interpreting the financial statements. 
A)  Balance sheet as of December 31, 2009. 
B)  Income statement for the year ended December 31, 2009. 
C)  Statement of projected cash flows for 2009. 
D)  Notes containing additional information that is useful in interpreting the financial statements.

Question 7

Career opportunities in accounting exist in public accounting, management accounting, governmental accounting and accounting education.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not a user of management accounting information?

Accepted Answer

A)  Store manager. 
B)  Chief Executive Officer. 
C)  Creditor. 
D)  Chief Financial Officer. 
A)  Store manager. 
B)  Chief Executive Officer. 
C)  Creditor. 
D)  Chief Financial Officer.

Question 9

Generally accepted accounting principles are intended to assist accountants in preparing financial statements that:

Accepted Answer

A)  Are relevant, reliable, comparable, and understandable. 
B)  Show the business to be both solvent and profitable. 
C)  Comply with all income tax rules and regulations. 
D)  Are ideally suited to the specific needs of each user of the financial statements. 
A)  Are relevant, reliable, comparable, and understandable. 
B)  Show the business to be both solvent and profitable. 
C)  Comply with all income tax rules and regulations. 
D)  Are ideally suited to the specific needs of each user of the financial statements.

Question 10

Of the following objectives of financial reporting, which is the most specific?

Accepted Answer

A)  Provide information useful in assessing amount, timing, and uncertainty of future cash flows. 
B)  Provide information useful in making investment and credit decisions. 
C)  Provide information about economic resources, claims to resources, and changes in resources and claims. 
D)  Provide information useful to help the enterprise achieve its goals, objectives, and mission. 
A)  Provide information useful in assessing amount, timing, and uncertainty of future cash flows. 
B)  Provide information useful in making investment and credit decisions. 
C)  Provide information about economic resources, claims to resources, and changes in resources and claims. 
D)  Provide information useful to help the enterprise achieve its goals, objectives, and mission.

Question 11

The information is intended to be used for planning and control decisions.

Accepted Answer

The answer of The information is intended to be used...

Question 12

The Code of Ethics of the AICPA calls for a member in public practice to be independent in fact and appearance when providing auditing services.

Accepted Answer

A) True 
 B)False

Question 13

Public accounting is the segment of the profession where professionals offer audit, tax, and consulting services to clients.

Accepted Answer

A) True 
 B)False

Question 14

Investors and creditors are interested in a company's "cash flow prospects" What two specific concerns of investors and creditors are summarized by the term "cash flow prospects?"
List three financial statements that are used to communicate financial accounting information to interested external parties.
Provide a brief example to illustrate that externally reported financial accounting information must be based in part on estimates, judgments, and assumptions.
Briefly explain how generally accepted accounting principles enhance the integrity of financial accounting information.

Accepted Answer

1. Return of investment and return on in

Question 15

All of the following are characteristics of management accounting, except:

Accepted Answer

A)  Reports are used primarily by insiders rather than by persons outside of the business entity. 
B)  Its purpose is to assist managers in planning and controlling business operations. 
C)  Information must be developed in conformity with generally accepted accounting principles or with income tax regulations. 
D)  Information may be tailored to assist in specific managerial decisions. 
A)  Reports are used primarily by insiders rather than by persons outside of the business entity. 
B)  Its purpose is to assist managers in planning and controlling business operations. 
C)  Information must be developed in conformity with generally accepted accounting principles or with income tax regulations. 
D)  Information may be tailored to assist in specific managerial decisions.

Question 16

Return on investment is the same as return of investment.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following has the least impact upon the reliability of financial statements issued by publicly owned corporations?

Accepted Answer

A)  Federal securities laws. 
B)  Professional judgment of the accountants who prepare the financial statements. 
C)  Audits of the financial statements by the Internal Revenue Service. 
D)  Competence and integrity of the CPAs who perform audits. 
A)  Federal securities laws. 
B)  Professional judgment of the accountants who prepare the financial statements. 
C)  Audits of the financial statements by the Internal Revenue Service. 
D)  Competence and integrity of the CPAs who perform audits.

Question 18

The auditor's report on the published financial statements of a large corporation should be viewed as:

Accepted Answer

A)  The opinion of independent experts as to the overall fairness of the statements. 
B)  The opinion of the corporation's chief accountant as to the overall fairness of the statements. 
C)  A guarantee by a firm of certified public accountants that the statements are accurate. 
D)  A guarantee by the Financial Statements Insurance Board that the statements do not overstate assets or net income. 
A)  The opinion of independent experts as to the overall fairness of the statements. 
B)  The opinion of the corporation's chief accountant as to the overall fairness of the statements. 
C)  A guarantee by a firm of certified public accountants that the statements are accurate. 
D)  A guarantee by the Financial Statements Insurance Board that the statements do not overstate assets or net income.

Question 19

Today, the most authoritative source of generally accepted accounting principles is the American Accounting Association.

Accepted Answer

A) True 
 B)False

Question 20

Managerial accounting information is designed primarily to assist investors and creditors in deciding how to allocate scarce resources.

Accepted Answer

A) True 
 B)False

Exam 1: Accounting: Information for Decision Making

The primary function of external auditors is to:

Which of the following is not an objective of financial reporting?

Which of the following does not describe accounting?

Development of generally accepted accounting principles (A.) What is meant by the phrase "generally accepted accounting principles"? (B.) Give the names of three organizations that currently play an active role in the development of accounting principles in the United States.

Management accountants primarily are concerned with developing information:

A complete set of financial statements for Citywide Company, at December 31, 2009, would include each of the following, except:

Career opportunities in accounting exist in public accounting, management accounting, governmental accounting and accounting education.

Which of the following is not a user of management accounting information?

Generally accepted accounting principles are intended to assist accountants in preparing financial statements that:

Of the following objectives of financial reporting, which is the most specific?

The information is intended to be used for planning and control decisions.

The Code of Ethics of the AICPA calls for a member in public practice to be independent in fact and appearance when providing auditing services.

Public accounting is the segment of the profession where professionals offer audit, tax, and consulting services to clients.

All of the following are characteristics of management accounting, except:

Return on investment is the same as return of investment.

Which of the following has the least impact upon the reliability of financial statements issued by publicly owned corporations?

The auditor's report on the published financial statements of a large corporation should be viewed as:

Today, the most authoritative source of generally accepted accounting principles is the American Accounting Association.

Managerial accounting information is designed primarily to assist investors and creditors in deciding how to allocate scarce resources.

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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