Question 1

Objectives of financial reporting to external investors and creditors include preparing information about all of the following except:

Accepted Answer

A)  Information used to determine which products to produce. 
B)  Information about economic resources, claims to those resources, and changes in both resources and claims. 
C)  Information that is useful in assessing the amount, timing, and uncertainty of future cash flows. 
D)  Information that is useful in making investment and credit decisions. 
A)  Information used to determine which products to produce. 
B)  Information about economic resources, claims to those resources, and changes in both resources and claims. 
C)  Information that is useful in assessing the amount, timing, and uncertainty of future cash flows. 
D)  Information that is useful in making investment and credit decisions.

Question 2

The IRS tax return is one of the primary financial statements.

Accepted Answer

A) True 
 B)False

Question 3

Accounting terminology
Listed below are nine accounting terms introduced in this chapter:
Each of the following statements may (or may not) describe one of these terms. In the space provided below each statement, indicate the accounting term described, or answer "None" if the statement does not correctly describe any of the terms.
(A.) The repayment to an investor of the amount originally invested in an enterprise.
(B.) An investigation of financial statements designed to determine their fairness in relation to generally accepted accounting principles.
(C.) The accounting standards and concepts used in the preparation of financial statements.
(D.) A system of measures designed to assure management that all aspects of the business are operating according to plan.
(E.) A listing of assets, liabilities, and stockholders' equity as of a specific date.
(F.) The payment of an amount for using another's money.
(G.) An activity statement that shows the details of the company's activities involving cash during a period of time.

Accepted Answer

(A.) Return of investment; (B.

Question 4

Which of the following does not describe accounting?

Accepted Answer

A)  It is commonly referred to as the language of business. 
B)  It is an end rather than a means to an end. 
C)  It is useful for decision-making. 
D)  It is used by businesses, governments, non-profit organizations, and individuals. 
A)  It is commonly referred to as the language of business. 
B)  It is an end rather than a means to an end. 
C)  It is useful for decision-making. 
D)  It is used by businesses, governments, non-profit organizations, and individuals.

Question 5

The objectives 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 6

Which of the following are important factors in ensuring the integrity of accounting information?

Accepted Answer

A)  Institutional factors, such as standards for preparing information. 
B)  Professional organizations, such as the American Institute of CPAs. 
C)  Competence, judgment and ethical behavior of individual accountants. 
D)  All of the above. 
A)  Institutional factors, such as standards for preparing information. 
B)  Professional organizations, such as the American Institute of CPAs. 
C)  Competence, judgment and ethical behavior of individual accountants. 
D)  All of the above.

Question 7

The designation of CPA is given by:

Accepted Answer

A)  Universities. 
B)  States. 
C)  The AICPA. 
D)  The SEC. 
A)  Universities. 
B)  States. 
C)  The AICPA. 
D)  The SEC.

Question 8

The code of conduct of the American Institute of Certified Public Accountants includes requirements in which of the following areas?

Accepted Answer

A)  The Public Interest. 
B)  Objectivity. 
C)  Independence. 
D)  All of the above. 
A)  The Public Interest. 
B)  Objectivity. 
C)  Independence. 
D)  All of the above.

Question 9

The information is historical in nature. It reports the results of events and transactions that have already occurred.

Accepted Answer

The answer of The information is historical in nature. It...

Question 10

The timeliness of the information is more critical than its completeness.

Accepted Answer

The answer of The timeliness of the information is more...

Question 11

A statement of cash flows depicts the way profits have changed during a designated period.

Accepted Answer

A) True 
 B)False

Question 12

In the phrase "generally accepted accounting principles," the words generally accepted mean that the principles:

Accepted Answer

A)  Have been adopted by Congress or approved by the voters in a general election. 
B)  Are acceptable to the Internal Revenue Service. 
C)  Are understood and observed by all the participants in the financial reporting process. 
D)  Have been approved by a majority of the members of the Financial Accounting Standards Board. 
A)  Have been adopted by Congress or approved by the voters in a general election. 
B)  Are acceptable to the Internal Revenue Service. 
C)  Are understood and observed by all the participants in the financial reporting process. 
D)  Have been approved by a majority of the members of the Financial Accounting Standards Board.

Question 13

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 14

Which financial statement is primarily concerned with reporting the financial position of a business at a particular time?

Accepted Answer

A)  The balance sheet. 
B)  The income statement. 
C)  The statement of cash flows. 
D)  All three statements are concerned with the financial position of a business at a particular time. 
A)  The balance sheet. 
B)  The income statement. 
C)  The statement of cash flows. 
D)  All three statements are concerned with the financial position of a business at a particular time.

Question 15

The accounting systems of most business organizations:

Accepted Answer

A)  Are tailored to meet the organization's needs for accounting information and the resources available for operating the system. 
B)  Are similar in design to the journals, ledgers, and worksheets illustrated in this text. 
C)  Utilize data bases, rather than ledger accounts. 
D)  Are designed by the CPA firm that performs the annual financial audit. 
A)  Are tailored to meet the organization's needs for accounting information and the resources available for operating the system. 
B)  Are similar in design to the journals, ledgers, and worksheets illustrated in this text. 
C)  Utilize data bases, rather than ledger accounts. 
D)  Are designed by the CPA firm that performs the annual financial audit.

Exam 1: Accounting: Information for Decision Making

Objectives of financial reporting to external investors and creditors include preparing information about all of the following except:

The IRS tax return is one of the primary financial statements.

Which of the following does not describe accounting?

The objectives of an accounting system include all of the following except:

Which of the following are important factors in ensuring the integrity of accounting information?

The designation of CPA is given by:

The code of conduct of the American Institute of Certified Public Accountants includes requirements in which of the following areas?

The information is historical in nature. It reports the results of events and transactions that have already occurred.

The timeliness of the information is more critical than its completeness.

A statement of cash flows depicts the way profits have changed during a designated period.

In the phrase "generally accepted accounting principles," the words generally accepted mean that the principles:

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

Which financial statement is primarily concerned with reporting the financial position of a business at a particular time?

The accounting systems of most business organizations:

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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