Question 1

Investors may be described as:

Accepted Answer

A)   Individuals and enterprises that have provided credit to a reporting entity.
B)   Individuals and enterprises that own a reporting entity business.
C)   Anyone that has an interest in the results of the operations of the reporting entity.
D)   Those whose primary economic activity consists of buying and selling stocks and bonds.

Question 2

The annual financial statements of large corporations such as Microsoft or PepsiCo need not be audited by independent certified public accountants, since these firms maintain large accounting departments as part of their organizations.

Accepted Answer

A) True 
 B)False

Question 3

Internal users of financial accounting information include all of the following except:

Accepted Answer

A)   Investors.
B)   Managers.
C)   Chief Financial Officer.
D)   Chief Executive Officer.

Question 4

Of the following objectives of financial reporting, which is the most specific?

Accepted Answer

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 useful to help the enterprise achieve its goals, objectives, and mission.

Question 5

In comparison with a financial statement prepared in conformity with generally accepted accounting principles, a management accounting report is more likely to:

Accepted Answer

A)   Be used by decision makers outside of the business organization.
B)   Focus upon the operation results of the most recently completed accounting period.
C)   View the entire organization as the reporting entity.
D)   Be tailored to the specific needs of an individual decision maker.

Question 6

Financial accounting information is characterized by all of the following except:

Accepted Answer

A)   It is historical in nature.
B)   It results from inexact and approximate measures.
C)   It is factual, so it does not require judgment to prepare.
D)   It is enhanced by management's explanation.

Question 7

Return on investment is the same as return of investment.

Accepted Answer

A) True 
 B)False

Question 8

To increase its usefulness to investors and creditors, the information is usually accompanied by explanations from management.

Accepted Answer

The answer of To increase its usefulness to investors and...

Question 9

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

Accepted Answer

Adherence to generally accepte...

Question 10

Public accounting is the segment of the profession where professionals offer audit, tax, and consulting services to clients.

Accepted Answer

A) True 
 B)False

Question 11

The best definition of an accounting system is:

Accepted Answer

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.

Question 12

The general purpose financial statements prepared annually by a corporation would not include the:

Accepted Answer

A)   Balance sheet.
B)   Income tax return.
C)   Income statement.
D)   Statement of cash flows.

Question 13

Objectives of financial reporting to external investors and creditors include preparing information about all of the following except:

Accepted Answer

A)   Information used to determine which products to produce.
B)   Information about economic resources, claims to those resources, and changes in both resources and claims.
C)   Information that is useful in assessing the amount, timing, and uncertainty of future cash flows.
D)   Information that is useful in making investment and credit decisions.

Question 14

The field of accounting may best be described as:

Accepted Answer

A)   Recording the financial transactions of an economic entity.
B)   Developing information in conformity with generally accepted accounting principles.
C)   The art of interpreting, measuring, and describing economic activity.
D)   Developing the information required for the preparation of income tax returns.

Question 15

The set of standards, assumptions, and concepts that form the "ground rules" for financial reporting in the United States is termed:

Accepted Answer

A)   The conceptual framework.
B)   Generally accepted accounting principles.
C)   Statements of Financial Accounting Concepts.
D)   American standards for certified public accountants.

Question 16

The Code of Ethics of the AICPA calls for a member in public practice to be independent in fact and appearance when providing auditing services.

Accepted Answer

A) True 
 B)False

Question 17

The Sarbanes-Oxley Act of 2002 created:

Accepted Answer

A)   The Security and Exchange Commission.
B)   The Financial Accounting Standards Board.
C)   The Public Company Accounting Oversight Board.
D)   The Income Tax Return Overview Board.

Question 18

The information is historical in nature. It reports the results of events and transactions that have already occurred.

Accepted Answer

The answer of The information is historical in nature. It...

Question 19

Which of the following is not characteristic of financial accounting?

Accepted Answer

A)   Information used in financial statements is prepared in conformity with generally accepted accounting principles.
B)   The information is confidential and is intended for use only by company management.
C)   The information is used in a wide variety of business decisions.
D)   The information is developed primarily by "private accountants" that is, accountants employed by business organizations.

Question 20

Generally accepted accounting principles:

Accepted Answer

A)   Are based on official decrees only.
B)   Are based on tradition only.
C)   Are based on an accountant's experience only.
D)   May change over time.

Exam 1: Accounting: Information for Decision Making

Investors may be described as:

Correct AnswerverifiedShow Answer

Internal users of financial accounting information include all of the following except:

Correct AnswerverifiedShow Answer

Financial accounting information is characterized by all of the following except:

Correct AnswerverifiedShow Answer

The annual financial statements of large corporations such as Microsoft or PepsiCo need not be audited by independent certified public accountants, since these firms maintain large accounting departments as part of their organizations.

Correct AnswerverifiedShow Answer

The field of accounting may best be described as:

Correct AnswerverifiedShow Answer

Which of the following is not characteristic of financial accounting?

Correct AnswerverifiedShow Answer

Objectives of financial reporting to external investors and creditors include preparing information about all of the following except:

Correct AnswerverifiedShow Answer

The Code of Ethics of the AICPA calls for a member in public practice to be independent in fact and appearance when providing auditing services.

Correct AnswerverifiedShow Answer

In comparison with a financial statement prepared in conformity with generally accepted accounting principles, a management accounting report is more likely to:

Correct AnswerverifiedShow Answer

The set of standards, assumptions, and concepts that form the "ground rules" for financial reporting in the United States is termed:

Correct AnswerverifiedShow Answer

Of the following objectives of financial reporting, which is the most specific?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedAdherence to generally accepte...View AnswerShow Answer

The general purpose financial statements prepared annually by a corporation would not include the:

Correct AnswerverifiedShow Answer

The best definition of an accounting system is:

Correct AnswerverifiedShow Answer

To increase its usefulness to investors and creditors, the information is usually accompanied by explanations from management.

Correct AnswerverifiedShow Answer

Generally accepted accounting principles:

Correct AnswerverifiedShow Answer

Return on investment is the same as return of investment.

Correct AnswerverifiedShow Answer

The information is historical in nature. It reports the results of events and transactions that have already occurred.

Correct AnswerverifiedShow Answer

Public accounting is the segment of the profession where professionals offer audit, tax, and consulting services to clients.

Correct AnswerverifiedShow Answer

The Sarbanes-Oxley Act of 2002 created:

Correct AnswerverifiedShow Answer

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Adherence to generally accepte...
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