Test Bank for Accounting: What the Numbers Mean 13e 13th Edition by David Marshall, Wayne McManus ISBN-13: 6743 Full chapters Include;... Chapter 1: Accounting—Present and Past 2 Part 1: Financial Accounting Chapter 2: Financial Statements and Accounting Concepts/Principles Chapter 3: Fundamental...
MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
answers the question.
1) Which of the following entities would not require accounting information pertaining to
their economic activities?
A) Social clubs
B) Not-for-profit entities
C) State governments
D) Small businesses
E) All of these entities require accounting information.
2) The authoritative financial accounting standards-setting body in the United States is
presently the:
A) Public Company Accounting Oversights Board (PCAOB)
B) Financial Accounting Standards Board (FASB)
C) Accounting Principles Board (APB)
D) Securities and Exchange Commission (SEC)
E) International Accounting Standards Board (IASB)
3) Which of the following statements about the Financial Accounting Standards Board
is correct?
A) The FASB follows a due process procedure that permits input from interested
parties before an Accounting Standards Update (ASU) is issued.
B) The FASB is controlled by the American Institute of CPAs.
C) The FASB is an agency of the Federal government.
D) The FASB has the authority to fine a noncompliant firm.
4) Major classifications of accounting activity would not include:
A) financial accounting, internal auditing, public accounting.
B) internal auditing, governmental accounting, managerial accounting.
C) financial accounting, national accounting, cost accounting.
5) Which of the following is not an example of a decision or informed judgment that a
potential investor would make from accounting information?
A) A forecast of dividends
B) Assessment of risk that a company may have more debt than it can repay if
the economy enters a recession
C) Future profitability based on past profitability
D) Probability of success of a new product development
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6) Which of the following is not an example of a decision or informed judgment that a
potential employee could make from accounting information?
A) The extent of the company's commitment to a research program
B) Personnel turnover statistics (i.e., hiring and terminations)
C) Probability of the company's ability to make profit sharing plan contributions in
the future
D) Assessmentof the risk that the company may become bankrupt in the near future
7) Which of the following are qualified to express an auditor's opinion about an
entity's financial statements?
A) A Comptroller
B) A Certified Management Accountant
C) A Certified Internal Auditor
D) A Certified Public Accountant
8) Which classification of accounting is most concerned with the use of economic and
financial information to plan and control many of the activities of the entity?
A) Financial accounting
B) Auditing / Public accounting
C) Managerial accounting
D) Income tax accounting
9) An unqualified auditors' opinion about an entity's financial statements:
A) is a clean bill of health.
B) means that all of the entity's transactions during the audited period were checked out.
C) guarantees that the entity was not involved in or the victim of any fraudulent
activities during the audited period.
D) states that they are presented in conformity with accounting principles generally
10) Cost accounting is a subset of which of the following?
A) Cost analysis
B) Managerial accounting
C) Internal auditing
D) Public auditing
11) The officer of a corporation responsible for the firm's published financial statements
would be most concerned about pronouncements of the:
A) FASB.
B) AICPA.
C) GASB.
D) SEC.
E) IRS.
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12) Which of the following is not a characteristic or limitation of the kind of information
that financial reporting by business enterprises can provide?
A) The information results in approximate, rather than exact, measures.
B) The information largely reflects the financial effects of transactions that have
already taken place.
C) The information is provided and used at a cost.
D) All of the answers are characteristics or limitations of the kind of information
that financial reporting by business enterprises can provide.
13) The ethical concept of independence means that an accountant employed:
A) by a corporation cannot prepare financial statements for use by the company's bank.
B) by one comSptauvniay.ccoamn-nTohte w
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C) by an auditing firm cannot own any stock in the company being audited.
D) by one company cannot accept a job with another company in the same industry.
14) The objectives of financial reporting for nonbusiness enterprises:
A) have more of an internal utilization rather than external reporting focus.
B) do not give consideration to the cost of providing information.
C) are exactly the same as those for business enterprises.
D) focus on providing information for resource providers, rather than investors.
15) The ethical concept of integrity means that an individual must:
A) attempt to be honest and forthright in dealings and communications with others.
B) sign a pledge to abide by all laws and regulations.
C) report to a supervisor any violation of the code of conduct of her company that
is observed.
D) read, understand, and agree to follow all provisions of her employer's code
of conduct.
16) Which of the following is an objective of financial reporting by business enterprises?
A) Financial reporting should provide assurance that all liabilities of business
enterprises will be paid.
B) The primary focus of financial reporting is information about the assets of the entity.
C) Financial reporting should provide information about the economic resources of an
enterprise, the claims to those resources, and changes in those resources and claims
to them.
D) Financial reporting should show the timing and amount of future cash dividends
to potential investors.
17) Which of the following is not true about the International Accounting Standards
Board (IASB)?
A) The IASB is the authoritative accounting standards setting body for all
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