Deck 1: Accounting: Information for Decision Making

Question 1

The best definition of an accounting system is:

A) Journals, ledgers, and worksheets.
B) Manual or computer-based records used in developing information about an entity for use by managers and also persons outside the organization.
C) The personnel, procedures, devices, and records used by an entity to develop accounting information and communicate this information to decision makers.
D) The concepts, principles, and standards specifying the information which should be included in financial statements, and how that information should be presented.

Answer 1

The personnel, procedures, devices, and records used by an entity to develop accounting information and communicate this information to decision makers.

Question 2

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 $7,000 to help get the company started, and have promised to repay your $7,000 plus 10% interest in one year. Of the following, which amount may be described as the return on your investment?

A) $7,000.
B) $ 700.
C) $7,700.
D) None of these is the correct amount.

Answer 2

$ 700.

Question 3

Which of the following is generally not considered one of the general purpose financial statements issued by a corporation?

A) Budget forecast.
B) Balance sheet.
C) Income statement.
D) Statement of cash flows.

Answer 3

Budget forecast.

Question 4

All of the following are characteristics of management accounting, except:

A) Reports are used primarily by insiders rather than by persons outside of the business entity.
B) Its purpose is to assist managers in planning and controlling business operations.
C) Information must be developed in conformity with generally accepted accounting principles or with income tax regulations.
D) Information may be tailored to assist in specific management decisions.

Question 5

Which of the following is not an objective of financial reporting?

A) Provide information useful in assessing amount, timing, and uncertainty of future cash flows.
B) Provide information useful in making investment and credit decisions.
C) Provide information about economic resources, claims to resources, and changes in resources and claims.
D) Provide information to guarantee the enterprise achieves its goals, objectives, and mission.

Question 6

Match the organizations with the descriptions . Each description should be used only once.

-Financial Accounting Standards Board

A) Government agency that regulates financial reporting by publicly held companies.
B) International organization dedicated to the advancement of internal auditing.
C) Private organization most directly involved in the development and issuance of accounting standards.
D) Organization dedicated to the advancement of accounting education and research.
E) Organization most involved with the ethical conduct of the accountants working within a company.
F) Organization that develops formal standards for auditing private companies in the United States.
G) A government agency that handles income tax returns of individuals and businesses and performs an audit function to verify the data presented.
H) An organization that develops international accounting standards.
I) An organization dedicated to improving organizational performance through developing guidance on fraud deterrence, ethics, internal controls, and corporate governance.

Question 7

Match the organizations with the descriptions . Each description should be used only once.

-Securities and Exchange Commission

A) Government agency that regulates financial reporting by publicly held companies.
B) International organization dedicated to the advancement of internal auditing.
C) Private organization most directly involved in the development and issuance of accounting standards.
D) Organization dedicated to the advancement of accounting education and research.
E) Organization most involved with the ethical conduct of the accountants working within a company.
F) Organization that develops formal standards for auditing private companies in the United States.
G) A government agency that handles income tax returns of individuals and businesses and performs an audit function to verify the data presented.
H) An organization that develops international accounting standards.
I) An organization dedicated to improving organizational performance through developing guidance on fraud deterrence, ethics, internal controls, and corporate governance.

Question 8

Match the organizations with the descriptions . Each description should be used only once.

-American Accounting Association

A) Government agency that regulates financial reporting by publicly held companies.
B) International organization dedicated to the advancement of internal auditing.
C) Private organization most directly involved in the development and issuance of accounting standards.
D) Organization dedicated to the advancement of accounting education and research.
E) Organization most involved with the ethical conduct of the accountants working within a company.
F) Organization that develops formal standards for auditing private companies in the United States.
G) A government agency that handles income tax returns of individuals and businesses and performs an audit function to verify the data presented.
H) An organization that develops international accounting standards.
I) An organization dedicated to improving organizational performance through developing guidance on fraud deterrence, ethics, internal controls, and corporate governance.

Question 9

Match the organizations with the descriptions . Each description should be used only once.

-Institute of Internal Auditors

A) Government agency that regulates financial reporting by publicly held companies.
B) International organization dedicated to the advancement of internal auditing.
C) Private organization most directly involved in the development and issuance of accounting standards.
D) Organization dedicated to the advancement of accounting education and research.
E) Organization most involved with the ethical conduct of the accountants working within a company.
F) Organization that develops formal standards for auditing private companies in the United States.
G) A government agency that handles income tax returns of individuals and businesses and performs an audit function to verify the data presented.
H) An organization that develops international accounting standards.
I) An organization dedicated to improving organizational performance through developing guidance on fraud deterrence, ethics, internal controls, and corporate governance.

Question 10

Match the organizations with the descriptions . Each description should be used only once.

-American Institute of CPAs

A) Government agency that regulates financial reporting by publicly held companies.
B) International organization dedicated to the advancement of internal auditing.
C) Private organization most directly involved in the development and issuance of accounting standards.
D) Organization dedicated to the advancement of accounting education and research.
E) Organization most involved with the ethical conduct of the accountants working within a company.
F) Organization that develops formal standards for auditing private companies in the United States.
G) A government agency that handles income tax returns of individuals and businesses and performs an audit function to verify the data presented.
H) An organization that develops international accounting standards.
I) An organization dedicated to improving organizational performance through developing guidance on fraud deterrence, ethics, internal controls, and corporate governance.

Question 11

Match the organizations with the descriptions . Each description should be used only once.

-Institute of Management Accountants

A) Government agency that regulates financial reporting by publicly held companies.
B) International organization dedicated to the advancement of internal auditing.
C) Private organization most directly involved in the development and issuance of accounting standards.
D) Organization dedicated to the advancement of accounting education and research.
E) Organization most involved with the ethical conduct of the accountants working within a company.
F) Organization that develops formal standards for auditing private companies in the United States.
G) A government agency that handles income tax returns of individuals and businesses and performs an audit function to verify the data presented.
H) An organization that develops international accounting standards.
I) An organization dedicated to improving organizational performance through developing guidance on fraud deterrence, ethics, internal controls, and corporate governance.

Question 12

Match the organizations with the descriptions . Each description should be used only once.

-Internal Revenue Service

A) Government agency that regulates financial reporting by publicly held companies.
B) International organization dedicated to the advancement of internal auditing.
C) Private organization most directly involved in the development and issuance of accounting standards.
D) Organization dedicated to the advancement of accounting education and research.
E) Organization most involved with the ethical conduct of the accountants working within a company.
F) Organization that develops formal standards for auditing private companies in the United States.
G) A government agency that handles income tax returns of individuals and businesses and performs an audit function to verify the data presented.
H) An organization that develops international accounting standards.
I) An organization dedicated to improving organizational performance through developing guidance on fraud deterrence, ethics, internal controls, and corporate governance.

Question 13

Match the organizations with the descriptions . Each description should be used only once.

-International Accounting Standards Board

A) Government agency that regulates financial reporting by publicly held companies.
B) International organization dedicated to the advancement of internal auditing.
C) Private organization most directly involved in the development and issuance of accounting standards.
D) Organization dedicated to the advancement of accounting education and research.
E) Organization most involved with the ethical conduct of the accountants working within a company.
F) Organization that develops formal standards for auditing private companies in the United States.
G) A government agency that handles income tax returns of individuals and businesses and performs an audit function to verify the data presented.
H) An organization that develops international accounting standards.
I) An organization dedicated to improving organizational performance through developing guidance on fraud deterrence, ethics, internal controls, and corporate governance.

Question 14

Match the organizations with the descriptions . Each description should be used only once.

-Committee of Sponsoring Organizations

A) Government agency that regulates financial reporting by publicly held companies.
B) International organization dedicated to the advancement of internal auditing.
C) Private organization most directly involved in the development and issuance of accounting standards.
D) Organization dedicated to the advancement of accounting education and research.
E) Organization most involved with the ethical conduct of the accountants working within a company.
F) Organization that develops formal standards for auditing private companies in the United States.
G) A government agency that handles income tax returns of individuals and businesses and performs an audit function to verify the data presented.
H) An organization that develops international accounting standards.
I) An organization dedicated to improving organizational performance through developing guidance on fraud deterrence, ethics, internal controls, and corporate governance.

Question 15

The following is a list of various characteristics of accounting information. In the space provided identify each as a characteristic of either financial or management accounting information.
-The information is summarized in a set of statements distributed to the public.

Question 16

The following is a list of various characteristics of accounting information. In the space provided identify each as a characteristic of either financial or management accounting information.
-The information is historical in nature. It reports the results of events and transactions that have already occurred.

Question 17

The following is a list of various characteristics of accounting information. In the space provided identify each as a characteristic of either financial or management accounting information.
-The timeliness of the information is more critical than its completeness.

Question 18

The following is a list of various characteristics of accounting information. In the space provided identify each as a characteristic of either financial or management accounting information.
-To increase its usefulness to investors and creditors, the information is usually accompanied by explanations from management.

Question 19

The following is a list of various characteristics of accounting information. In the space provided identify each as a characteristic of either financial or management accounting information.
-The information is intended to be used for planning and control decisions.

Question 20

Provide concise written answers to the following:

-Investors and creditors are interested in a company's "cash flow prospects." What two specific concerns of investors and creditors are summarized by the term "cash flow prospects?"

Question 21

List three financial statements that are used to communicate financial accounting information to interested external parties.

Question 22

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

Question 23

Briefly explain how generally accepted accounting principles enhance the integrity of financial accounting information.