115 test bank for financial and managerial accounting 15th edition

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115 Test Bank for Financial and Managerial Accounting 15th edition

True False Questions Free Text Questions

-True - False Questions

The Public Company Accounting Oversight Board is

responsible for creating and promoting International Financial Reporting Standards

1 True

2 False

One purpose of generally accepted accounting principles is to

make accounting information prepared by different

companies more comparable

1 True

2 False

Career opportunities in accounting exist in public accounting,

management accounting, governmental accounting and accounting education

1 True

2 False

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

Managerial accounting information is designed primarily to

assist investors and creditors in deciding how to allocate scarce resources

The Code of Ethics of the AICPA calls for a commitment to

ethical behavior but not at the sacrifice of personal

advantage

1 True

2 False

A statement of cash flows depicts the way profits have changed

during a designated period

1 True

2 False

Investors are individuals and other enterprises that have

provided equity to the reporting enterprise

1 True

2 False

Today the most authoritative source of generally accepted

accounting principles is the American Accounting

Association

1 True

2 False

Public accounting is the segment of the profession where

professionals offer audit, tax and consulting services to clients

1 True

2 False

The content of management accounting reports needs to be

presented in conformity with generally accepted

accounting principles

1 True

2 False

The CPA examination is administered by the General

Accounting Office of The U S Government

1 True

2 False

An accounting practice can become a "generally accepted

accounting principle" through widespread use, even if the practice is not mentioned in the official pronouncements

of the accounting standard-setting organizations

1 True

2 False

Management accounting refers to the preparation and use of

accounting information designed to meet the needs of decision makers outside the business organization.

1 True

2 False

Generally accepted accounting principles were established by

the American Accounting Association in 1934 and are

updated annually by Congress

1 True

2 False

The tailoring of an accounting report to meet the needs of a

specific decision maker is more characteristic of financial accounting reports than of management accounting

reports

1 True

2 False

Financial accounting standards issued by the FASB are

considered generally accepted accounting principles

1 True

2 False

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

1 True

2 False

Management accounting information is oriented toward the

future while financial accounting information is historical

in nature

1 True

2 False

The Sarbanes-Oxley Act places responsibility on CEOs and

CFOs of companies to certify the fairness of company's financial statements The Act also created the Public

Company Accounting Oversight Board which oversees the public accounting profession

1 True

2 False

The internal control structure of an organization has no

relationship to the reliability of accounting information

1 True

2 False

The Securities & Exchange Commission is instrumental in the

development of financial accounting standards

1 True

2 False

External users of accounting information have a financial

interest in an entity but are not involved with the day operations of the enterprise

day-to-1 True

2 False

The statement of financial position and the income statement

are one and the same.

1 True

2 False

The American Institute of Certified Public Accountants has the

legal authority over publicly held corporations to enforce compliance with generally accepted accounting

principles

1 True

2 False

Multiple Choice Questions - Page 1

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

The principal difference between management accounting and

financial accounting is that financial accounting

information is:

1 A Prepared by managers

2 B Intended primarily for use by decision makers outside the business organization

3 C Prepared in accordance with a set of accounting principles developed by the

Institute of Certified Management Accountants

4 D Oriented toward measuring solvency rather than profitability

Which of the following is considered a return "on" investment?

1 A Dividends

2 B Repayment of a loan

3 C Both of the above

4 D None of the above

Financial statements may be prepared for

1 A One year

2 B Less than one year

3 C Either A or B

4 D Neither A or B Financial statements can only be prepared on a monthly basis

The designation of CPA is given by:

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

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 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

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

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

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

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

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

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

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 financial

statements

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

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

Which of the following is generally not considered an external

user of accounting information?

1 A Stockholders of a corporation

2 B Bank lending officers

3 C Financial analysts

4 D Factory managers

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

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 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 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

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

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

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

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 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.

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 accounting principles

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

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

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 of their investments

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 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

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 organization best serves the professional needs of a

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

77 Free Test Bank for Financial and Managerial

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

The principal function of CPAs is to:

1 A Audit income tax returns to determine if taxpayers have underpaid their income taxes

2 B Conduct audits to determine whether the employees of a business are performing their jobs honestly and efficiently

3 C Advise individual investors on stock market investments

4 D Perform audits to determine the fairness and reliability of a company's financial statements