ACCOUNTING 1010-01

Question 1

What are the three steps in the accounting process?

Answer 1

Identification, recording, and communication

Question 2

Bookkeeping encompasses all steps in the accounting process.

Answer 2

FALSE

Question 3

Accountants prepare but do not interpret financial reports.

Answer 3

FALSE

Question 4

The two most common types of external users are investors and company officers.

Answer 4

FALSE

Question 5

Managerial accounting focuses on reports for internal users.

Answer 5

TRUE

Question 6

Ethics are standards of conduct by which one’s actions are judged:

Answer 6

Right or wrong, honest and dishonest, and fair and not fair.

Question 7

Combining the activities of Kellogg and General Mills would violate the

Answer 7

Economic entity assumption

Question 8

A business organized as a separate legal entity under state law having ownership divided into shares of stock is

Answer 8

corporation

Question 9

Why did Congress pass SOA?

Answer 9

To reduce unethical behavior and decrease the likelihood of future corporate scandals

Question 10

What is the primary accounting standard-setting body in the US?

Answer 10

The Financial Accounting Standards Board.

Question 11

The historical cost principle dictates that companies record assets at their cost. In later periods, however, the fair value of the asset must be used if the fair value is higher than its cost.

Answer 11

False

Question 12

Relevance means that financial information matches what really happened; the information is factual.

Answer 12

FALSE

Question 13

A business owner’s personal expenses must be separated from the expenses of the business to comply with accounting’s economic entity assumption.

Answer 13

TRUE