Exam 8: Accounting: Decision Making by the Numbers

Jenny, an external auditor from a public accounting firm, verified the financial statements of a real estate company. At the end of her review, Jenny did not find any discrepancies in the figures presented by the company or the accounting methods of the company. In this scenario, the independent auditor's report most likely offered a(n) _____.

In top-down budgeting, top management prepares the budget with the involvement of the middle and supervisory managers.

Sigborne Corp., a food and beverage company, commences its budgeting process by requesting the middle managers of the company to collect data from their respective departments and submit a consolidated report stating the needs of their departments. Harold, the manager of the packaging department, overstates the needs of his department. In this scenario, Harold is guilty of _____.

The deduction of a firm's expenses from its revenue is shown in the income statement of the firm.

In which of the following ways do public accountants differ from management accountants?

The management of a fertilizer company decides to increase the company's cash flow by increasing its financing activities. In this context, the company is most likely to:

In the context of financial accounting, if a firm wants to introduce any significant changes in how it prepares its financial statements, _____.

Daniel, the owner of a bookstore, decides to reinvest his personal profits from the current fiscal year toward renovating the store and expanding its inventory. In the context of owners' equity, the profits that Daniel reinvests in the bookstore are called:

If an auditor doesn't find any problems with the way a firm's financial statements were prepared and presented, the report will offer a(n) _____ opinion.

A steel manufacturing company is going through a financial crisis because of which it is unable to pay its employees and suppliers their dues. The management of the company sells some of the fixed assets of the company to cover these expenses. In the context of the statement of cash flows, the company gets the required capital by engaging in _____.

The Financial Accounting Standards Board (FASB) comprises of thirteen members elected by the Financial Accounting Foundation.

Machvile Corporation, a robotics company, decides to acquire Chancera Inc., a start-up company that operates within the same industry. To better assess its decision, the management of Machvile Corporation needs to find out the value of Chancera Inc.'s total assets. The management has information regarding Chancera Inc.'s liabilities and stockholders' equity. In this scenario, the management should most likely use the _____ to get the required information.

In the accounting equation, assets are equal to liabilities minus the owners' equity.

In the accounting equation, assets are equal to:

Grengard Corp., a public relations firm, pays a hefty rent for its office space as it is set up in one of the best commercial areas of London. In the given scenario, the rent paid by the firm for its office space is an example of _____.

While performing a financial analysis for his organization, Morris discovers that there has been mismanagement of employee funds over the past three months. He immediately reports this to his supervisors. In this scenario, Morris is most likely a(n) _____.

Common stock is a key owners' equity account for corporations.

The income statement is also known as the statement of financial position.

In order for CPA firms to perform audits with integrity, they must be tied to the firms they audit.

Congress passed the _____ that banned business relationships that might create conflicts of interest between certified public accounting (CPA) firms and the companies they audit.