Question 1

Name one type of detective control that would be useful in a computerized information system.

Accepted Answer

The answer of Name one type of detective control that...

Question 2

All of Team Shirts' financial statements are presented in U.S.dollars.The accounting rule that applies is the ________.

Accepted Answer

A) separate-entity assumption 
B) going-concern assumption 
C) monetary-unit assumption 
D) historical-cost principle

Question 3

The accountant called the bank after noticing that a $200 deposit made on July 21 did not appear on the July 31 bank statement.This call is an example of a ________.

Accepted Answer

A) business control 
B) detective control 
C) corrective control 
D) preventive control

Question 4

Use the following information for DeltaCo for the year ended December 31,2011 to answer the questions below.Assume no new common stock was issued during the year.
  1.What were the total revenues for the year?
2.What was the dividend during the year?
3.What were the total liabilities on the balance sheet at December 31,2011?
4.How much is contributed capital at December 31,2011?

Accepted Answer

The answer of Use the following information for DeltaCo for...

Question 5

A classified balance sheet shows subtotals for ________.

Accepted Answer

A) revenues and expenses 
B) current assets,long-term assets,current liabilities,long-term liabilities and shareholders' equity 
C) operating activities,investing activities and financing activities 
D) retained earnings,net income,and dividends

Question 6

Corrective controls include ________.

Accepted Answer

A) requiring authorization for certain transactions 
B) limiting access to assets 
C) requiring passwords to access the computerized accounting records 
D) procedures for handling any errors that are detected

Question 7

Team Shirts has $189,000 in total current assets and $165,000 in total current liabilities.Calculate the current ratio for Team Shirts.Round your answer to one decimal place.

Accepted Answer

The answer of Team Shirts has $189,000 in total current...

Question 8

On December 31,2012,Twisted Pretzel was told by an appraiser that its land,which cost $100,000,was worth $120,000.How should Twisted Pretzel show this information on its financial statements prepared under U.S.GAAP?

Accepted Answer

A) Report a gain of $20,000 on its income statement. 
B) Report land at $100,000 on its income statement. 
C) Report land at $120,000 on its income statement. 
D) Continue showing the land at its cost of $100,000.

Question 9

The SEC has ________.

Accepted Answer

A) ordered all U.S.companies to begin using IFRS immediately 
B) ruled that U.S.companies may never use IFRS for financial reporting 
C) established a time table for the convergence of U.S.GAAP and IFRS 
D) established an International Accounting Standards Board to create international accounting rules

Question 10

Reliable information ________.

Accepted Answer

A) needs to be current so it can be used to make decisions 
B) can be verified as accurate and truthful 
C) allows users to make comparisons across financial statements 
D) is presented the same way period after period

Question 11

________ are more concept-based than ________.

Accepted Answer

A) IFRS; U.S.GAAP 
B) U)S.GAAP; IFRS 
C) This is a trick question,since U.S.GAAP and IFRS are the same. 
D) IGAAP; U.S.GAAP

Question 12

The four basic financial statements are the ________.

Accepted Answer

A) income statement,balance sheet,statement of changes in shareholders' equity,and cash budget 
B) income statement,balance sheet,cash budget,and statement of cash flows 
C) income statement,balance sheet,statement of changes in shareholders' equity,and statement of cash flows 
D) balance sheet,shareholders' equity,statement of cash flows,and cash budget

Question 13

Lisa Vogle has been running the Bird's Nest Inn since the death of her husband.Common sense tells Lisa that she should take some action to protect the assets of the business and the financial records.Explain the basic concepts of internal control to Lisa.

Accepted Answer

The answer of Lisa Vogle has been running the Bird's...

Question 14

The three basic elements of the income statement are ________.

Accepted Answer

A) operating activities,investing activities,and financing activities 
B) assets,liabilities,and shareholders' equity 
C) revenues,expenses,and net income or loss 
D) retained earnings,net income,and dividends

Question 15

Adjusting the books is done ________.

Accepted Answer

A) every time a sale is made 
B) every time an asset is purchased 
C) as expenses are used up 
D) at the end of every accounting period

Question 16

The monetary-unit assumption refers to ________.

Accepted Answer

A) measuring financial statement items at their cost at the time of the transaction 
B) an assumption that a company will continue to be in business in the future 
C) the use of monetary units,such as dollars,to measure the value of financial statement amounts 
D) the way revenues and expenses are recognized

Question 17

Characteristics of useful information include ________.

Accepted Answer

A) rationality and reliability 
B) comparability and consistency 
C) materiality and conservatism 
D) comprehensive and complete

Question 18

Team Shirts has $233,000 in total current assets and $141,500 in total current liabilities.
1.Calculate the current ratio (rounded to one decimal place)for Team Shirts.
2.Is this a more favorable ratio than 0.9 to 1?

Accepted Answer

The answer of Team Shirts has $233,000 in total current...

Question 19

Which of the following is an example of using the materiality concept?

Accepted Answer

A) recording significant purchases as assets even though technically they are considered expenses 
B) recording insignificant purchases as expenses even though technically they are considered assets 
C) not recording insignificant purchases at all 
D) recording insignificant liabilities as assets

Question 20

An accrual transaction is one in which ________.

Accepted Answer

A) the action comes before the cash 
B) cash comes before the action 
C) a company postpones recognizing cash transactions 
D) the exchange of cash coincides with the economic substance of a transaction

Exam 2: Qualities of Accounting Information