Chapter 1 Flashcards
Which of the following is NOT part of the process of accounting for financial information?
A) recording
B) identifying
C) communicating
D) classifying
identifying
Which of the following is NOT a goal of an accounting system?
a) to accumulate data about a firm’s financial affairs
b) to classify data about a firm’s financial affairs in a meaningful way
c) to interpret the relative success of a business through the examination of data about its financial affairs
d) to summarize data about a firm’s financial affairs in periodic reports called financial statements
c) to interpret the relative success of a business through the examination of data about its financial affairs
Management advisory services are designed to help:
clients
Managerial accounting is:
private accounting
Which of the following is NOT an activity performed by managerial accountants:
a) preparing financial statements
b) conducting independent audits of financial statements
c) preparing tax forms
d) interpreting financial information
b) conducting independent audits of financial statements
Identifying which of the following parties would not be involved in maintaining internal controls
a) employees
b) managers
c) owners
d) banks
BANKS
The Securities and Exchange Commission (SEC) regulates the accounting methods and financial reporting of which types of corporations?
publicly owned
The Sarbanes-Oxley Act includes rules on:
auditor rotation
Identify the form of business that is considered a separate legal entity
a corporation
The separate entity assumption applies to which of the following corporate forms
a) sole proprietorship
b) partnership
c) corporation
d) all of these are correct
d) all of these are correct
What is the correct order in which the FASB develops statements of financial accounting standards
discussion memorandum, public hearings, exposure draft, vote
All financial statements submitted to the SEC by publicly owned corporations must include an auditors report prepared by:
an independent CPA
The FASB has the authority to develop generally accepted accounting principles. Choose the option below that contains the steps used by the FASB in developing GAAP steps include:
issuing a discussion memorandum, issuing an exposure draft, and issuing a statement of principle
The Financial Accounting Standards Board is responsible for:
developing generally accepted accounting principles
Which of the following is not a service typically provided by a public accounting firm?
managing the accounting system
Which of the following is not an activity typically associated with managerial accounting?
auditing tax returns
Which of the following does not accurately describe a partnership?
a) a business entity owned by two or more people
b) stock represents the ownership of a partnership
c) a partnership pays no income tax
d) a partnership ends upon the death or withdrawal of a partner
b) stock represents the ownership of a partnership
Financial statements are:
accumulated financial data summarized in periodic reports
True or false:
Generally accepted accounting principles are accounting standards that are changed and refined in response to changes in the environment in which businesses operate.
True
True or false:
Generally accepted accounting principles are not needed to ensure that financial information is fairly presented in the operating results and financial positions of firms.
False
The process by which financial information about a business is recorded, classified, summarized, interpreted, and communicated to owners, managers, and other interested parties is called:
Accounting
Which of the following is NOT a task undertaken by the accountant within an organization?
a) establish the records and procedures that make up the accounting system
b) supervise the operations of the accounting system
c) interpret the financial information that results from the accounting system
d) create generally accepted accounting principles upon which the accounting system is based
d) create generally accepted accounting principles upon which the accounting system is based
Which of the following is the purpose of financial statements?
to periodically summarize data about a firm’s financial affairs
Which of the following is NOT an occupation with similar job duties to accountants and auditors?
a) budget analyst
b) cost estimator
c) actuary
d) personal financial advisor
c) actuary
Tax planning includes:
suggesting actions to reduce tax liability.
The review of financial statements to assess their fairness and adherence to GAAP is:
auditing
Which of the following is not a goal of the internal controls implemented by owners and managers?
a) to safeguard assets
b) to ensure reliability of accounting data
c) to promote compliance with management policies and applicable laws
d) to reduce expenses through the use of efficient processes
d) to reduce expenses through the use of efficient processes
Which of the following did NOT result from the Sarbanes-Oxley Act?
a) the creation of a five-member Public Company Accounting Oversight Board
b) the reduction of the “Big Five” accounting firms to the “Big Four”
c) the requirement that chief executives and chief financial officers of publicly-traded corporations certify their financial statements
d) the requirement that accounting firms maintain the same lead auditor for a company for at least ten years
d) the requirement that accounting firms maintain the same lead auditor for a company for at least ten years
Identify the advantages of forming a business as an S Corporation.
owners avoid double taxation and owners have limited liability
A nonprofit organization such as a public school is a(n):
social entity
