Question 1

Statements of Financial Accounting Standards are developed by:

Accepted Answer

A)  The Financial Accounting Standards Board. 
B)  Certified public accountants. 
C)  The Securities and Exchange Commission. 
D)  The Internal Revenue Service. 
A)  The Financial Accounting Standards Board. 
B)  Certified public accountants. 
C)  The Securities and Exchange Commission. 
D)  The Internal Revenue Service.

Question 2

The field of accounting may best be described as:

Accepted Answer

A)  Recording the financial transactions of an economic entity. 
B)  Developing information in conformity with generally accepted accounting principles. 
C)  The art of interpreting, measuring, and describing economic activity. 
D)  Developing the information required for the preparation of income tax returns. 
A)  Recording the financial transactions of an economic entity. 
B)  Developing information in conformity with generally accepted accounting principles. 
C)  The art of interpreting, measuring, and describing economic activity. 
D)  Developing the information required for the preparation of income tax returns.

Question 3

Which of the following is not considered a return "of" 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 4

Management accounting information is oriented toward the future while financial accounting information is historical in nature.

Accepted Answer

A) True 
 B)False

Question 5

Investors may be described as:

Accepted Answer

A)  Individuals and enterprises that have provided credit to a reporting entity. 
B)  Individuals and enterprises that own a reporting entity business. 
C)  Anyone that has an interest in the results of the operations of the reporting entity. 
D)  Those whose primary economic activity consists of buying and selling stocks and bonds. 
A)  Individuals and enterprises that have provided credit to a reporting entity. 
B)  Individuals and enterprises that own a reporting entity business. 
C)  Anyone that has an interest in the results of the operations of the reporting entity. 
D)  Those whose primary economic activity consists of buying and selling stocks and bonds.

Question 6

Generally accepted accounting principles:

Accepted Answer

A)  Are based on official decrees only. 
B)  Are based on tradition only. 
C)  Are based on an accountant's experience only. 
D)  May change over time. 
A)  Are based on official decrees only. 
B)  Are based on tradition only. 
C)  Are based on an accountant's experience only. 
D)  May change over time.

Question 7

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

Accepted Answer

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

Question 8

The basic purpose of audited financial statements is to:

Accepted Answer

A)  Provide the reporting company with assurance that all assets are protected from theft or embezzlement. 
B)  Prepare financial statements for companies that do not have their own accounting departments. 
C)  Provide users of the financial statements with assurance that the statements are reliable and are presented in conformity with generally accepted accounting principles. 
D)  Provide both the reporting company and the users of the statements with a written guarantee that the statements are error-free. 
A)  Provide the reporting company with assurance that all assets are protected from theft or embezzlement. 
B)  Prepare financial statements for companies that do not have their own accounting departments. 
C)  Provide users of the financial statements with assurance that the statements are reliable and are presented in conformity with generally accepted accounting principles. 
D)  Provide both the reporting company and the users of the statements with a written guarantee that the statements are error-free.

Question 9

External users of financial accounting information include all of the following except:

Accepted Answer

A)  Investors. 
B)  Labor unions. 
C)  Line managers. 
D)  General public. 
A)  Investors. 
B)  Labor unions. 
C)  Line managers. 
D)  General public.

Question 10

The Financial Accounting Standards Board is:

Accepted Answer

A)  Responsible for the review and audit of federal income tax returns. 
B)  Primarily concerned with the preparation of the annual federal budget. 
C)  A private group that conducts research and issues Statements that represent authoritative expressions of generally accepted accounting principles. 
D)  A government agency with legal authority to approve or disapprove the financial statements of corporations that sell their securities to the public. 
A)  Responsible for the review and audit of federal income tax returns. 
B)  Primarily concerned with the preparation of the annual federal budget. 
C)  A private group that conducts research and issues Statements that represent authoritative expressions of generally accepted accounting principles. 
D)  A government agency with legal authority to approve or disapprove the financial statements of corporations that sell their securities to the public.

Question 11

Financial statements
Briefly describe the balance sheet, the income statement, and the statement of cash flows.

Accepted Answer

Balance sheet (statement of financial po

Question 12

The tailoring of an accounting report to meet the needs of a specific decision maker is more characteristic of financial accounting reports than of management accounting reports.

Accepted Answer

A) True 
 B)False

Question 13

The basic purpose of generally accepted accounting principles is to:

Accepted Answer

A)  Minimize the possibility of a business becoming insolvent. 
B)  Provide a framework for financial reporting that is understood by both the preparers and the users of financial statements. 
C)  Ensure that financial statements include the type of information that is best suited to every type of business decision. 
D)  Eliminate the need for professional judgment in preparing financial statements. 
A)  Minimize the possibility of a business becoming insolvent. 
B)  Provide a framework for financial reporting that is understood by both the preparers and the users of financial statements. 
C)  Ensure that financial statements include the type of information that is best suited to every type of business decision. 
D)  Eliminate the need for professional judgment in preparing financial statements.

Question 14

The Sarbanes-Oxley Act places responsibility on CEOs and CFOs of companies to certify the fairness of company's financial statements. The Act also created the Public Company Accounting Oversight Board which oversees the public accounting profession.

Accepted Answer

A) True 
 B)False

Question 15

Provide a brief example to illustrate that externally reported financial accounting information must be based in part on estimates, judgments, and assumptions.

Accepted Answer

To account for the use of long

Question 16

The set of standards, assumptions, and concepts that form the "ground rules" for financial reporting in the United States is termed:

Accepted Answer

A)  The conceptual framework. 
B)  Generally accepted accounting principles. 
C)  Statements of Financial Accounting Concepts. 
D)  American standards for certified public accountants. 
A)  The conceptual framework. 
B)  Generally accepted accounting principles. 
C)  Statements of Financial Accounting Concepts. 
D)  American standards for certified public accountants.

Question 17

Financial accounting information is characterized by all of the following except:

Accepted Answer

A)  It is historical in nature. 
B)  It results from inexact and approximate measures. 
C)  It is factual, so it does not require judgment to prepare. 
D)  It is enhanced by management's explanation. 
A)  It is historical in nature. 
B)  It results from inexact and approximate measures. 
C)  It is factual, so it does not require judgment to prepare. 
D)  It is enhanced by management's explanation.

Question 18

The accounting standards and concepts used in the preparation of financial statements are called:

Accepted Answer

A)  Certified principles of accounting (CP
A) . 
B)  Generally accepted accounting principles (GAAP). 
C)  Federal accounting standards and bylaws (FAS
B) . 
D)  Standards enforcing consistency (SE
C) . 
A)  Certified principles of accounting (CP
A) . 
B)  Generally accepted accounting principles (GAAP). 
C)  Federal accounting standards and bylaws (FAS
B) . 
D)  Standards enforcing consistency (SE
C) .

Question 19

Which of the following is not recognized as a source of generally accepted accounting principles?

Accepted Answer

A)  Widespread and long-term use of a particular practice. 
B)  The Financial Accounting Standards Board (FAS
B) . 
C)  The American Institute of Certified Public Accountants (AICP
A) . 
D)  Statements of the Committee of Sponsoring Organizations (COSO). 
A)  Widespread and long-term use of a particular practice. 
B)  The Financial Accounting Standards Board (FAS
B) . 
C)  The American Institute of Certified Public Accountants (AICP
A) . 
D)  Statements of the Committee of Sponsoring Organizations (COSO).

Question 20

The principal difference between management accounting and financial accounting is that financial accounting information is:

Accepted Answer

A)  Prepared by managers. 
B)  Intended primarily for use by decision makers outside the business organization. 
C)  Prepared in accordance with a set of accounting principles developed by the Institute of Certified Management Accountants. 
D)  Oriented toward measuring solvency rather than profitability. 
A)  Prepared by managers. 
B)  Intended primarily for use by decision makers outside the business organization. 
C)  Prepared in accordance with a set of accounting principles developed by the Institute of Certified Management Accountants. 
D)  Oriented toward measuring solvency rather than profitability.

Exam 1: Accounting: Information for Decision Making

Statements of Financial Accounting Standards are developed by:

The field of accounting may best be described as:

Which of the following is not considered a return "of" investment?

Management accounting information is oriented toward the future while financial accounting information is historical in nature.

Investors may be described as:

Generally accepted accounting principles:

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

The basic purpose of audited financial statements is to:

External users of financial accounting information include all of the following except:

The Financial Accounting Standards Board is:

Financial statements Briefly describe the balance sheet, the income statement, and the statement of cash flows.

The tailoring of an accounting report to meet the needs of a specific decision maker is more characteristic of financial accounting reports than of management accounting reports.

The basic purpose of generally accepted accounting principles is to:

The Sarbanes-Oxley Act places responsibility on CEOs and CFOs of companies to certify the fairness of company's financial statements. The Act also created the Public Company Accounting Oversight Board which oversees the public accounting profession.

Provide a brief example to illustrate that externally reported financial accounting information must be based in part on estimates, judgments, and assumptions.

The set of standards, assumptions, and concepts that form the "ground rules" for financial reporting in the United States is termed:

Financial accounting information is characterized by all of the following except:

The accounting standards and concepts used in the preparation of financial statements are called:

Which of the following is not recognized as a source of generally accepted accounting principles?

The principal difference between management accounting and financial accounting is that financial accounting information is:

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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