Question 1

According to Arthur Levitt,a former chair of the U.S.Securities and Exchange Commission (SEC),what has resulted from the degree of flexibility that currently exists within GAAP?

Accepted Answer

A) It has been a great benefit to shareholders, because it gives them greater access to financial information than would be possible if rules were less flexible. 
B) It allows managers to use creative accounting that makes their company's financial results look better than they really are. 
C) It makes accounting statements more consistent and comparable. 
D) It is one of the greatest strengths of the accounting system because it allows managers the ability to quickly adapt to changing market conditions.

Question 2

Internal auditors are also known as chartered accountants.

Accepted Answer

A) True 
 B)False

Question 3

As a result of the accounting scandals of the late 1990s and early 21st century,many countries have imposed new ethics-related requirements on accountants.

Accepted Answer

A) True 
 B)False

Question 4

Triple bottom line is a broader set of performance measures focusing on people,planet,and profits.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following would be listed in the owners' equity section of a balance sheet?

Accepted Answer

A) accounts receivable 
B) cash 
C) net income 
D) retained earnings

Question 6

Which statement describes the accounting profession during the first few years of the 21st century?

Accepted Answer

A) It focused mainly on helping firms improve the quality and accuracy of the financial information provided to stakeholders. 
B) It was recognized as the most ethical of all the business professions. 
C) It suffered a loss of jobs as computerized systems did away with the need for professional accountants. 
D) It was embarrassed by a series of scandals that seemed to suggest a serious decline in accounting standards.

Question 7

Which of the following is concerned with preparing financial statements for external stakeholders according to a fixed schedule?

Accepted Answer

A) audit results 
B) a master budget 
C) managerial accounting 
D) financial accounting

Question 8

Identify the four goals of generally accepted accounting principles (GAAP).

Accepted Answer

The answer of Identify the four goals of generally accepted...

Question 9

A college student registers for classes and pays the tuition with a credit card.Because it uses accrual-basis accounting,the college will recognize the payment as revenue as soon as the transaction turns into cash in the school's bank account.

Accepted Answer

A) True 
 B)False

Question 10

A company's balance sheet will "balance" even if it is on the verge of bankruptcy.

Accepted Answer

A) True 
 B)False

Question 11

What is the body of principles that guides the financial accounting process used to create financial statements?

Accepted Answer

A) GAAP (generally accepted accounting principles) 
B) GRASP (guidelines for reliable accounting standards and procedures) 
C) AAASP (American Association of Accountants Standards and Principles) 
D) GRAPE (generally reliable accounting principles and ethics)

Question 12

In order for accounting firms to perform external audits that meet the needs of stakeholders,what must the firms do?

Accepted Answer

A) remain independent and objective 
B) serve as consultants to the firms they audit 
C) work closely with the firm's comptroller throughout the year 
D) become actively involved in the firm's management

Question 13

The owners' equity section of the balance sheet indicates the claims a firm's owners have against their company's assets.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following would provide stakeholders with information about how a firm obtained and used cash in the most recent accounting period,as well as its cash balance at the end of the accounting period?

Accepted Answer

A) shareholders' equity statement 
B) income statement 
C) statement of cash flows 
D) cash budget

Question 15

Through additional preparation,accountants may become a certified management accountant (CMA),chartered accountant (CA),and/or certified internal auditor.These certifications signify advanced preparation in their field.

Accepted Answer

A) True 
 B)False

Question 16

Many of today's leading accountants are using TBL performance measures,TBL stands for True Bottom Line.

Accepted Answer

A) True 
 B)False

Question 17

Mason owns stock in Munnymacher Inc.and wants to see if he can identify any trends in its financial performance over the past few years.What would he therefore want to perform?

Accepted Answer

A) vertical analysis 
B) horizontal analysis 
C) incremental analysis 
D) elasticity analysis

Question 18

Arvid's Moving and Storage has a fleet of 37 trucks.Arvid currently has two of his own mechanics who perform all of the routine maintenance as well as other minor repairs on all of the trucks.However,he wonders whether outsourcing this work would be more cost-effective and asks his accountant to work with two managers to analyze such a change.What type of analysis would the accountant be most likely to use?

Accepted Answer

A) ratio analysis 
B) horizontal analysis 
C) incremental analysis 
D) CPM analysis

Question 19

Business expenses are available resources that stakeholders control.

Accepted Answer

A) True 
 B)False

Question 20

Key users of a corporation's accounting information include managers,government agencies,and shareholders.

Accepted Answer

A) True 
 B)False

Exam 7: Accounting: Decision Making by the Numbers

According to Arthur Levitt,a former chair of the U.S.Securities and Exchange Commission (SEC) ,what has resulted from the degree of flexibility that currently exists within GAAP?

Internal auditors are also known as chartered accountants.

As a result of the accounting scandals of the late 1990s and early 21st century,many countries have imposed new ethics-related requirements on accountants.

Triple bottom line is a broader set of performance measures focusing on people,planet,and profits.

Which of the following would be listed in the owners' equity section of a balance sheet?

Which statement describes the accounting profession during the first few years of the 21st century?

Which of the following is concerned with preparing financial statements for external stakeholders according to a fixed schedule?

Identify the four goals of generally accepted accounting principles (GAAP).

A college student registers for classes and pays the tuition with a credit card.Because it uses accrual-basis accounting,the college will recognize the payment as revenue as soon as the transaction turns into cash in the school's bank account.

A company's balance sheet will "balance" even if it is on the verge of bankruptcy.

What is the body of principles that guides the financial accounting process used to create financial statements?

In order for accounting firms to perform external audits that meet the needs of stakeholders,what must the firms do?

The owners' equity section of the balance sheet indicates the claims a firm's owners have against their company's assets.

Which of the following would provide stakeholders with information about how a firm obtained and used cash in the most recent accounting period,as well as its cash balance at the end of the accounting period?

Through additional preparation,accountants may become a certified management accountant (CMA),chartered accountant (CA),and/or certified internal auditor.These certifications signify advanced preparation in their field.

Many of today's leading accountants are using TBL performance measures,TBL stands for True Bottom Line.

Mason owns stock in Munnymacher Inc.and wants to see if he can identify any trends in its financial performance over the past few years.What would he therefore want to perform?

Business expenses are available resources that stakeholders control.

Key users of a corporation's accounting information include managers,government agencies,and shareholders.