77 test bank for financial and managerial accounting 15th

Record changes in the financial position of an organization by applying the concepts of double entry accounting.. Audited financial statements Which of the following decision makers is l

77 Test Bank for Financial and Managerial Accounting 15th

edition by Williams

Multiple Choice Questions

The basic purpose of an audit is to:

1. A Assure financial statements are in conformity with GAAP

2. B Provide as much useful information to decision makers as possible, regardless of cost

3. C Record changes in the financial position of an organization by applying the concepts of double entry accounting

4. D Meet an organization's need for accounting information as efficiently as possible

Which financial statement is prepared as of a specific date?

1. A The balance sheet

2. B The income statement

3. C The statement of cash flows

4. D All three of the above are for a period of time rather than at a specific date

Investors and creditors are interested in the probability that their original investment or loan will eventually be returned, and that they will receive a reasonable return while their funds are

invested or borrowed These expectations are collectively referred

to as:

1. A Expected profitability

2. B The objectives of financial reporting

3. C Cash flow prospects

4. D Financial position

The field of accounting may best be described as:

1. A Recording the financial transactions of an economic entity

2. B Developing information in conformity with generally accepted accountingprinciples

3. C The art of interpreting, measuring, and describing economic activity

4. D Developing the information required for the preparation of income tax returns

It is the function of management accounting to perform the

following activities, except:

1. A Financial forecasts

2. B Cost accounting

3. C Internal audits

4. D Audited financial statements

Which of the following decision makers is least likely to be among the users of management accounting reports developed by Sears Roebuck and Co?

1. A The chief executive officer of Sears

2. B The manager of the Automotive Department in a Sears' store

3. C The manager of a mutual fund considering investing in Sears' common stock

4. D Internal auditors within the Sears organization

The designation of CPA is given by:

1. A Universities

2. B States

3. C The AICPA

4. D The SEC

A complete set of financial statements for Citywide Company, at December 31, 2009, would include each of the following, except:

1. A Balance sheet as of December 31, 2009

2. B Income statement for the year ended December 31, 2009

3. C Statement of projected cash flows for 2009

4. D Notes containing additional information that is useful in interpreting the financial statements

Financial statements are prepared:

1. A Only for publicly owned business organizations

2. B For corporations, but not for sole proprietorships or partnerships

3. C Primarily for the benefit of persons outside of the business organization

4. D In either monetary or nonmonetary terms, depending upon the need of the decision maker

Which of the following is not a basic function of an accounting system?

1. A To interpret and record the effects of business transactions

2. B To classify the effects of similar transactions in a manner that permits determination of various totals and subtotals useful to management

3. C To ensure that a business organization will be managed profitably

4. D To summarize and communicate information to decision makers

Which financial statement is primarily concerned with reporting the financial position of a business at a particular time?

1. A The balance sheet

2. B The income statement

3. C The statement of cash flows

4. D All three statements are concerned with the financial position of a business at a particular time

Which of the following is not characteristic of financial

3. C The information is used in a wide variety of business decisions

4. D The information is developed primarily by "private accountants" that is, accountants employed by business organizations

The measures used by an organization to provide reasonable assurance that the organization produces reliable financial

reports, complies with applicable laws and regulations, and

conducts its operations in an efficient and effective manner are collectively referred to as:

1. A Generally accepted accounting principles

2. B Financial accounting standards

3. C Securities and exchange regulations

4. D The internal control structure

Which of the following would not be considered a user of financial information?

1. A A large pension fund

2. B A real estate investor

3. C Company management

4. D All the above are considered interested in financial information

Although accounting information is used by a wide variety of

external parties, financial reporting is primarily directed toward the information needs of:

1. A Investors and creditors

2. B Government agencies such as the Internal Revenue Service.

3. C Customers

4. D Trade associations and labor unions

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

1. A Be used by decision makers outside of the business organization

2. B Focus upon the operation results of the most recently completed accounting period

3. C View the entire organization as the reporting entity

4. D Be tailored to the specific needs of an individual decision maker

Which of the following is generally not considered an external user of accounting information?

3. C Both of the above

4. D None of the above

The basic purpose of bookkeeping is to:

1. A Provide financial information about an economic entity

2. B Develop the types of information best-suited to specific managerial decisions

3. C Record the financial transactions of an economic entity.

4. D Determine the taxable income of individuals and business entities

Financial accounting information is

1. A Designed to assist investors and creditors

2. B Used by managers and in income tax returns

3. C Called "general-purpose" accounting information

4. D All of the above

The FASB takes on a responsibility to do the following, except:

1. A Set the objectives of financial reporting

2. B Describe the elements of financial statements

3. C Judge disputes between management and the CPA

4. D Determine the criteria for deciding what information to include in financialstatements

The Sarbanes-Oxley Act of 2002 created:

1. A The Security and Exchange Commission

2. B The Financial Accounting Standards Board

3. C The Public Company Accounting Oversight Board

4. D The Income Tax Return Overview Board

Which of the following is a characteristic of financial accounting information?

1. A It's preparation requires judgment

2. B It is more about the future than it is about the past

3. C None of it is based on estimates, assumptions, and judgments

4. D Notes and explanations from management are not included

Investors may be described as:

1. A Individuals and enterprises that have provided credit to a reporting entity

2. B Individuals and enterprises that own a reporting entity business

3. C Anyone that has an interest in the results of the operations of the

reporting entity

4. D Those whose primary economic activity consists of buying and selling stocks and bonds

Information is cost effective when:

1. A The information aids management in controlling costs

2. B The information is based upon historical costs, rather than upon

estimated market values

3. C The value of the information exceeds the cost of producing it

4. D The information is generated by a computer based accounting system

The principal difference between management accounting and financial accounting is that financial accounting information is:

4. D Oriented toward measuring solvency rather than profitability

The objectives of financial reporting are to provide information

1. A that is useful in assessing cash flow prospects

2. B about claims to enterprise resources

3. C that is useful in investment and credit decisions

4. D all of the above

Financial statements may be prepared for

The financial statements of a business entity:

1. A Include the balance sheet, income statement, and income tax return

2. B Provide information about the cash flow prospects of the company

3. C Are the first step in the accounting process

4. D Are prepared for a fee by the Financial Accounting Standards Board

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

1. A Balance sheet

2. B Income tax return

3. C Income statement

4. D Statement of cash flows

Which of the following events is not a transaction that would be recorded in a company's accounting records?

1. A The purchase of equipment for cash

2. B The purchase of equipment on account

3. C The investment of additional cash in the business by the owner

4. D The death of a key executive

Financial statements are designed primarily to:

1. A Provide managers with detailed information tailored to the managers' specific information needs.

2. B Provide people outside the business organization with information about the company's financial position and operating results

3. C Report to the Internal Revenue Service the company's taxable income

4. D Indicate to investors in a particular company the current market values oftheir investments

Which organization best serves the professional needs of a

The accounting systems of most business organizations:

1. A Are tailored to meet the organization's needs for accounting information and the resources available for operating the system

2. B Are similar in design to the journals, ledgers, and worksheets illustrated

in this text

3. C Utilize data bases, rather than ledger accounts

4. D Are designed by the CPA firm that performs the annual financial audit

A strong internal control structure:

1. A Contributes to the accuracy and reliability of the accounting records

2. B Will prevent a business from operating at a loss

3. C Assures that a business will remain solvent

4. D Will prevent fraud, theft, and embezzlement

Generally accepted accounting principles

1. A Originate from a combination of tradition, experience and official decree

2. B May change over time

3. C Both A & B

4. D Neither A nor B

77 Free Test Bank for Financial and Managerial

Accounting 15th edition by Williams Multiple Choice Questions - Page 2

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

1. A Provide information useful in assessing amount, timing, and uncertainty

of future cash flows

2. B Provide information useful in making investment and credit decisions

3. C Provide information about economic resources, claims to resources, andchanges in resources and claims

4. D Provide information useful to help the enterprise achieve its goals, objectives, and mission

Which of the following is not an objective of generally accepted accounting principles?

1. A To minimize the amount of income taxes owed

2. B To ensure that both preparers and users of financial statements

understand the concepts and assumptions used in presenting information within these statements

3. C To enhance the relevance and reliability of information contained in financial statements

4. D To increase the comparability of financial statements prepared by

2. B Balance sheet.

3. C Statement of financial position

4. D Statement of cash flows

Which of the following are important factors in ensuring the

integrity of accounting information?

1. A Institutional factors, such as standards for preparing information

2. B Professional organizations, such as the American Institute of CPAs

3. C Competence, judgment, and ethical behavior of individual accountants

4. D All of the above

Which of the following is true?

1. A The existence of generally accepted accounting principles (GAAP) virtually eliminates the need for professional judgment except in very

unusual circumstances

2. B Federal securities laws regarding the issuance of misleading financial statements apply not only to the independent auditors, but to management

of the company as well

3. C Attaining a passing score on the part of the Uniform CPA Examination that covers professional ethics is evidence of integrity and commitment to ethical conduct

4. D A professional accountant should resign his position rather than becomeinvolved in the distribution of financial statements indicating insolvency

Characteristics of internal accounting information include all of the following except:

1. A It is audited by a CPA

2. B It must be timely

3. C It is oriented toward the future

4. D It measures efficiency and effectiveness

The objectives of an accounting system include all of the following except:

1. A Interpret and record the effects of business transactions

2. B Classify the effects of transactions to facilitate the preparation of reports

3. C Summarize and communicate information to decision makers

4. D Dictate the specific types of business transactions that the enterprise may engage in

The code of ethics of the American Institute of Certified Public Accountants includes requirements in which of the following

areas?

1. A The Public Interest

2. B Objectivity

3. C Independence

4. D All of the above

The basic purpose of audited financial statements is to:

1. A Provide the reporting company with assurance that all assets are

protected from theft or embezzlement

2. B Prepare financial statements for companies that do not have their own accounting departments

3. C Provide users of the financial statements with assurance that the

statements are reliable and are presented in conformity with generally

accepted accounting principles

4. D Provide both the reporting company and the users of the statements with

a written guarantee that the statements are error-free

The primary function of external auditors is to:

1. A Express an opinion on the fairness and reliability of the company's financial statements

2. B Determine the accuracy of the management reports

3. C Evaluate the efficiency of operations and the degree of compliance with management's policies in all departments within a large organization.

4. D Determine that financial statements and all special reports to

management are prepared in conformity with generally accepted accounting principles

Which of the following does not describe accounting?

1. A It is commonly referred to as the language of business

2. B It is an end rather than a means to an end

3. C It is useful for decision-making

4. D It is used by businesses, governments, non-profit organizations, and individuals

The auditor's report on the published financial statements of a large corporation should be viewed as:

1. A The opinion of independent experts as to the overall fairness of the statements

2. B The opinion of the corporation's chief accountant as to the overall

fairness of the statements

3. C A guarantee by a firm of certified public accountants that the statements are accurate

4. D A guarantee by the Financial Statements Insurance Board that the statements do not overstate assets or net income

Which of the following is not considered a return "of" investment?

1. A Dividends

2. B Repayment of a loan

3. C Both of the above

4. D None of the above

The set of standards, assumptions, and concepts that form the

"ground rules" for financial reporting in the United States is

termed: