Accounting plays a vital role in the decision-making process. Which action is the first step in the decision-making process?
A. Identify the issue
B. identify the alternatives
C. Gather information
D. Guarantee a good outcome correct answers A. Identify the issue
The money that a company n...
accounting plays a vital role in the decision maki
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Accounting plays a vital role in the decision-making process. Which action is the first step in the
decision-making process?
A. Identify the issue
B. identify the alternatives
C. Gather information
D. Guarantee a good outcome correct answers A. Identify the issue
The money that a company needs to buy its land, pay its employees, and buy its supplies is called
capital. What are the potential sources of capital for a business?
A. Gross business earnings, employees, and taxes
B. Investors, creditors, and retained business earnings
C. Taxes, investors, and retained business earnings
D. Employees, investors, and retained business earnings correct answers B. Investors, creditors,
and retained business earnings
True or False: Accountants measure and communicate the results of business activities. correct
answers True
What is the role and purpose of Accounting? correct answers To accumulate, measure and
communicate(report) the financial information about the performance, financial position and
cash flow of a business to help reach decisions about how to manage business.
Who uses accounting information and why? correct answers Fed. and state Gov., banks giving
out loans, investors; to see if company can handle the loan and if the company is worth investing
in.
Which primary area of accounting generates reports for internal users?
A. Financial accounting
B. Management accounting
C. General-purpose accounting
D. Governmental accounting correct answers B. Management accounting
(Management accounting generates reports for internal users, such as budgets and cost analyses.)
Which group uses financial information to evaluate whether a company will be able to repay a
loan?
a. Investors
b. Management
c. Lenders
Correct! Lenders are interested in whether or not a company will be able to repay a loan, so they
use financial information to analyze the company's financial ability to do so.
,d. Employees correct answers c. Lenders
Lenders are interested in whether or not a company will be able to repay a loan, so they use
financial information to analyze the company's financial ability to do so
Which of the primary financial statements reports the resources, obligations, and owner's equity
of a company?
a. Statement of cash flows
b. Income statement
c. Balance sheet
d. Master budget correct answers c. Balance sheet.
The balance sheet reports the resources of a company (the assets), the company's obligations (the
liabilities), and the owners' equity, which represents the difference between what is owned
(assets) and what is owed (liabilities).
What are the important influences on Accounting? correct answers the development of
"generally accepted accounting principles" (GAAP), international business, and ethical
considerations
What is the role of the IASB in regulating accounting standards?
a. Establish international accounting standards
b. Work as a subcommittee of the American Institute of Certified Public Accountants (AICPA)
to regulate accounting instruction
c. Use legal authority to establish financial accounting standards for U.S. companies
d. Work under the direction of the SEC to establish financial accounting standards correct
answers a. Establish international accounting standards
What group of people make up the FASB?
a. Senior SEC staff members
b. People from a variety of business-related backgrounds
c. Financial accounting specialists appointed by the U.S. Congress
d. Senior IRS staff members correct answers b. People from a variety of business-related
backgrounds
What is the role of the GASB in setting accounting standards?
a. The GASB establishes accounting and financial reporting standards together with the IASB.
b. The GASB is a private-sector organization that establishes accounting and financial reporting
standards for U.S. state and local governments.
c. The GASB establishes accounting and reporting standards together with the SEC.
d. The GASB establishes accounting and reporting standards together with the IRS. correct
answers b. The GASB is a private-sector organization that establishes accounting and financial
reporting standards for U.S. state and local governments.
, What is the role of ethics in Accounting? correct answers Ethics require accounting professionals
to comply with the laws and regulations that govern their jurisdictions and their bodies of work.
In what way do accountants have an economic incentive to conduct themselves ethically?
a. It is not possible for an unethical accountant to become a certified public accountant.
b. Most computerized accounting systems recognize unethical accounting procedures.
c. The value of the information produced by accountants is related to the confidence that users
have in the reliability of that information.
d. It is not possible for an unethical accountant to rise to a top management position in a
company. correct answers c. The value of the information produced by accountants is related to
the confidence that users have in the reliability of that information.
How is it possible for an accountant to intentionally deceive financial statement users and yet
still technically be in compliance with generally accepted accounting principles (GAAP)?
a. There is conflict between FASB rules and SEC rules.
b. The mismatch between the timing of the filing of tax returns and the deadlines for the
completion of the financial statements leaves room for dishonesty.
c. An accountant can use a computerized accounting system to cover up deceptive practices.
d. There is flexibility inherent in the assumptions underlying the preparation of financial
statements. correct answers d. There is flexibility inherent in the assumptions underlying the
preparation of financial statements.
Your boss approaches you with a concerning letter from the IRS and asks you to explain the role
of the IRS in regulating accounting standards. Based on the role of the IRS, what could be the
problem detailed in the letter?
A. company has not complied with certification requirements for its accounting department
B. the company has not filed its taxes in accordance with the law
C. the companys accounting practices are not up to international standards.
D. the companys accounting practices are not up to state financial accounting standards correct
answers B. the company has not filed its taxes in accordance with the law
Anika is considering investing in a tech company that is known for developing smart home
appliances. Before investing, Anika first wants to ensure that the company's past financial
performance has been satisfactory and that the company manages its cash flows well. What type
of accounting information would provide this evidence for Anika?
A. Bank statements
B. Corporate budget
C. Cost analysis
D. Financial reports correct answers D. Financial reports
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