Question 1

Generally accepted accounting principles were established by the American Accounting Association in 1934 and are updated annually by Congress.

Accepted Answer

A) True 
 B)False  False

Question 2

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. C

Question 3

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 verifiability 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 verifiability of information contained in financial statements. 
D) To increase the comparability of financial statements prepared by different companies. A

Question 4

Which of the following events is not a transaction that would be recorded in a company's accounting records?

Accepted Answer

A) The purchase of equipment for cash. 
B) The purchase of equipment on account. 
C) The investment of additional cash in the business by the owner. 
D) The death of a key executive. 
A) The purchase of equipment for cash. 
B) The purchase of equipment on account. 
C) The investment of additional cash in the business by the owner. 
D) The death of a key executive.

Question 5

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

Accepted Answer

A) Are relevant,verifiable,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,verifiable,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 6

One of the principal functions of CPAs is to:

Accepted Answer

A) Audit income tax returns to determine if taxpayers have underpaid their income taxes. 
B) Conduct audits to determine whether the employees of a business are performing their jobs honestly and efficiently. 
C) Advise individual investors on stock market investments. 
D) Perform audits to determine the fairness of a company's financial statements. 
A) Audit income tax returns to determine if taxpayers have underpaid their income taxes. 
B) Conduct audits to determine whether the employees of a business are performing their jobs honestly and efficiently. 
C) Advise individual investors on stock market investments. 
D) Perform audits to determine the fairness of a company's financial statements.

Question 7

Which of the following is generally not considered an external user of accounting information?

Accepted Answer

A) Stockholders of a corporation. 
B) Bank lending officers. 
C) Financial analysts. 
D) Factory managers. 
A) Stockholders of a corporation. 
B) Bank lending officers. 
C) Financial analysts. 
D) Factory managers.

Question 8

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 they 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 9

All internal control systems need to be monitored.

Accepted Answer

A) True 
 B)False

Question 10

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 11

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 12

A strong internal control structure:

Accepted Answer

A) Contributes to the accuracy and verifiability of the accounting records. 
B) Will prevent a business from operating at a loss. 
C) Ensures a business will remain solvent. 
D) Will prevent fraud,theft,and embezzlement. 
A) Contributes to the accuracy and verifiability of the accounting records. 
B) Will prevent a business from operating at a loss. 
C) Ensures a business will remain solvent. 
D) Will prevent fraud,theft,and embezzlement.

Question 13

Information is cost effective when:

Accepted Answer

A) The information aids management in controlling costs. 
B) The information is based upon historical costs,rather than upon estimated market values. 
C) The value of the information exceeds the cost of producing it. 
D) The information is generated by a computer based accounting system. 
A) The information aids management in controlling costs. 
B) The information is based upon historical costs,rather than upon estimated market values. 
C) The value of the information exceeds the cost of producing it. 
D) The information is generated by a computer based accounting system.

Question 14

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 15

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 the enterprise may pursue. 
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 the enterprise may pursue.

Question 16

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 17

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

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

The SEC requires corporate officers to sign the Form 10-K,which is filed annually with the SEC.Which of the following officers is not among those required to sign?

Accepted Answer

A) CEO (Chief Executive Officer). 
B) CAO (Chief Accounting Officer). 
C) CFO (Chief Financial Officer). 
D) COO (Chief Operating Officer). 
A) CEO (Chief Executive Officer). 
B) CAO (Chief Accounting Officer). 
C) CFO (Chief Financial Officer). 
D) COO (Chief Operating Officer).

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

Generally accepted accounting principles were established by the American Accounting Association in 1934 and are updated annually by Congress.

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:

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

Which of the following events is not a transaction that would be recorded in a company's accounting records?

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

One of the principal functions of CPAs is to:

Which of the following is generally not considered an external user of accounting information?

All internal control systems need to be monitored.

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

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

A strong internal control structure:

Information is cost effective when:

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

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

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

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

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

The SEC requires corporate officers to sign the Form 10-K,which is filed annually with the SEC.Which of the following officers is not among those required to sign?

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

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

the Time Value of Money: Future Amounts and Present Values

Forms of Business Organization

Filters