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| 1 | |
In which order does the accounting process continue in its cycle? |
| | A) | | Accounting process → Accounting information → Decision makers → Economic Activities |
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| | B) | | Accounting information → Accounting process → Decision makers → Economic Activities |
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| | C) | | Accounting process → Accounting information → Economic Activities → Decision makers |
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| | D) | | Economic Activities → Accounting process → Accounting information → Decision makers |
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| 2 | |
Which of the following provides information about the financial resources, obligations, and activities of an economic entity that is intended for use primarily by external decision makers? |
| | A) | Financial accounting |
| | B) | Management accounting |
| | C) | Tax accounting |
| | D) | Cost accounting |
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| 3 | |
Which of the following provides information that is intended primarily for use by internal management in making decisions required to run the business? |
| | A) | Financial accounting |
| | B) | Management accounting |
| | C) | Tax accounting |
| | D) | Cost accounting |
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| 4 | |
Which of the following involves determining the cost of certain business activities and interpreting cost information? |
| | A) | Financial accounting |
| | B) | Management accounting |
| | C) | Tax accounting |
| | D) | Cost accounting |
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| 5 | |
The personnel, procedures, devices, and records used by an organization to develop accounting information and communicate that information to decision makers are called: |
| | A) | audits. |
| | B) | accounting systems. |
| | C) | personnel systems. |
| | D) | internal control structures. |
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| 6 | |
An accounting system is cost-effective when it: |
| | A) | produces useful information. |
| | B) | produces reports required by law. |
| | C) | uses computers to replace manual activities. |
| | D) | produces information that is more valuable than the cost of obtaining the information. |
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| 7 | |
The basic functions of an accounting system include: |
| | A) | interpreting and recording the effects of business transactions. |
| | B) | classifying the effects of similar transactions. |
| | C) | summarizing and communicating the information contained in the system. |
| | D) | all of the above. |
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| 8 | |
Which of the following components of internal control involves putting in place those procedures that address risks identified by management? |
| | A) | Risk assessment |
| | B) | Information and communication |
| | C) | Control activities |
| | D) | Monitoring |
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| 9 | |
Which of the following components of internal control is the foundation for all of the components of internal control? |
| | A) | Monitoring |
| | B) | Information and communication |
| | C) | Control activities |
| | D) | Control environment |
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| 10 | |
Which of the following affect a company's control environment? |
| | A) | Procedures for hiring and training of personnel |
| | B) | Management's assignment of authority and responsibility |
| | C) | Oversight by the board of directors |
| | D) | All of the above. |
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| 11 | |
A criticism of the Sarbanes-Oxley Act (SOX) of 2002 is that it: |
| | A) | is specifically aimed at large utilities. |
| | B) | is specially aimed at the energy industry. |
| | C) | it is not cost effective. |
| | D) | it places no responsibility on top management. |
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| 12 | |
Measures used by an organization to guard against errors, waste, and fraud are called: |
| | A) | audits. |
| | B) | the internal control structure. |
| | C) | internal auditing. |
| | D) | integrity. |
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| 13 | |
Which of the following would be considered an external user? |
| | A) | Owner |
| | B) | Store manager |
| | C) | Plant manager |
| | D) | Board of directors |
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| 14 | |
Which of the following is not considered to be an external user? |
| | A) | Owner |
| | B) | Labor union |
| | C) | Board of directors |
| | D) | Trade associations |
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| 15 | |
Which of the following makes up a company's cash flow prospects? |
| | A) | Accessibility to investment |
| | B) | Return of investment |
| | C) | Return on investment |
| | D) | Both (B) and (C) |
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| 16 | |
You made a $10,000 loan to your cousin's company. At the end of one year, the company returned to you $10,700. The $700 is called which of the following? |
| | A) | The return of investment |
| | B) | The return on investment |
| | C) | An 7.0% return on investment |
| | D) | Both (B) and (C) |
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| 17 | |
Which diagram shows the objectives of financial accounting, building from the general to the specific? |
| | A) | | Provide information useful in assessing amount, timing, and uncertainty of future cash flows. ?Provide information useful in making investment and credit decisions. ?Provide information useful in making investment and credit decisions. |
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| | B) | | Provide information useful in making investment and credit decisions. ?Provide information about economic resources, claims to resources and changes in resources and claims. ?Provide information useful in assessing amount, timing, and uncertainty of future cash flows. |
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| | C) | | Provide information about economic resources, claims to resources and changes in resources and claims. ?Provide information useful in making investment and credit decisions. ?Provide information useful in assessing amount, timing, and uncertainty of future cash flows. |
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| | D) | | Provide information useful in making investment and credit decisions.? Provide information useful in assessing amount, timing, and uncertainty of future cash flows.? Provide information about economic resources, claims to resources and changes in resources and claims. |
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| 18 | |
The two things that make up cash flow prospects are: |
| | A) | return of investment and return on investment. |
| | B) | return on investment and timing of investment. |
| | C) | return of investment and timing of investment. |
| | D) | periodic interest and dividends. |
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| 19 | |
Which of the following financial statements is also known as a statement of financial position? |
| | A) | Balance sheet |
| | B) | Income statement |
| | C) | Statement of cash flows |
| | D) | Bank statement |
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| 20 | |
Which of the following shows the details and results of the company's profit-related activities for a period of time? |
| | A) | Balance sheet |
| | B) | Income statement |
| | C) | Statement of cash flows |
| | D) | Statement of financial position |
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| 21 | |
Which of the following shows the details of the company's activities involving cash during a period of time? |
| | A) | Income statement |
| | B) | Statement of financial position |
| | C) | Balance sheet |
| | D) | Statement of cash flows |
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| 22 | |
A characteristic of externally reported information is that it: |
| | A) | is largely historical in nature. |
| | B) | may be inexact and contain approximations. |
| | C) | is general-purpose in nature. |
| | D) | is all of the above. |
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| 23 | |
The general-purpose assumption of externally reported information relates to which of the following? |
| | A) | The historical nature of reported information |
| | B) | The notion that 'one size fits all' |
| | C) | The notion that financial statements are the means by which the end is achieved |
| | D) | Using notes and explanations as footnotes to financial statements for clarification |
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| 24 | |
An income statement prepared at the end of the first quarter of the fiscal year is called which of the following? |
| | A) | A temporary statement of operations |
| | B) | An interim statement |
| | C) | Short statement |
| | D) | Statement of quarterly position |
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| 25 | |
The qualities and characteristics of externally reported information are that it does which of the following?: |
| | A) | Provides accurate information |
| | B) | Deals with future events and probabilities |
| | C) | Provides financial reporting that is narrower in scope than financial statements |
| | D) | Provides general-purpose information |
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| 26 | |
In a simple organization chart of internal users of financial information, who is at the top of the chart? |
| | A) | Chief executive officer (CEO) |
| | B) | Chief financial officer (CFO) |
| | C) | Board of directors |
| | D) | Plant managers |
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| 27 | |
Which of the following would be considered an internal user? |
| | A) | Owner |
| | B) | Creditor |
| | C) | Chief financial officer (CFO) |
| | D) | Labor union |
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| 28 | |
Which of the following is not a characteristic of a management accounting information? |
| | A) | Timeliness is of importance |
| | B) | Decision-making authority is identified |
| | C) | Historically oriented |
| | D) | Measures efficiency and effectiveness |
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| 29 | |
Which of the following provides the framework for determining what information is to be included in financial statements and how that information is to be presented? |
| | A) | Generally accepted auditing standards |
| | B) | Generally accepted amortization standards |
| | C) | Accounting standards and practices |
| | D) | Generally accepted accounting principles |
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| 30 | |
Which of the following enhances the integrity of accounting information? |
| | A) | Institutional features can add significantly to the integrity. |
| | B) | Professional accounting organizations play a significant role. |
| | C) | Personal competence, judgment, and ethical behavior play a role. |
| | D) | All of the above. |
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| 31 | |
International Financial Reporting Standards (IFRSs) are issued by which of the following? |
| | A) | Securities and Exchange Commission. |
| | B) | International Accounting Standards Board. |
| | C) | American Institute of Certified Public Accountants. |
| | D) | Public Company Accounting Oversight Board. |
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| 32 | |
The Public Company Accounting Oversight Board (PCAOB) has: |
| | A) | limited powers in overseeing the accounting profession. |
| | B) | no power in overseeing the accounting profession. |
| | C) | extensive powers in overseeing the accounting profession. |
| | D) | been replaced by the Institute of Internal Auditors. |
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| 33 | |
Which of the following is not true about accounting principles? |
| | A) | They do not require any means of enforcement. |
| | B) | They are sometimes arbitrary. |
| | C) | They may change over time. |
| | D) | They must be clearly understood and observed by all participants in the process. |
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| 34 | |
The conceptual framework for financial accounting sets forth the FASB's views as |
| | A) | objectives of financial reporting. |
| | B) | elements of financial statements. |
| | C) | valuation concepts related to financial statement amounts. |
| | D) | all of the above. |
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| 35 | |
The authoritative accounting pronouncements issued by the FASB are called which of the following? |
| | A) | Statements of Financial Accounting Standards. |
| | B) | Statements of Changes in the Conceptual Framework. |
| | C) | Statements of Financial Auditing Standards. |
| | D) | Statement of the AICPA. |
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| 36 | |
Accounting principles are given the force of law when they are adopted by the |
| | A) | Internal Revenue Service (IRS). |
| | B) | Securities Exchange Commission (SEC). |
| | C) | Financial Accounting Standards Board (FASB). |
| | D) | American Accounting Association (AAA). |
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| 37 | |
An investigation of financial statements designed to determine their fairness in relation to generally accepted accounting principles is called: |
| | A) | the internal control structure. |
| | B) | the external control structure. |
| | C) | an audit. |
| | D) | bookkeeping. |
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| 38 | |
The major purpose of an audit is to: |
| | A) | uncover fraud, only. |
| | B) | determine who is committing fraud. |
| | C) | place blame for failure to meet company goals. |
| | D) | determine the fairness of the financial statements. |
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| 39 | |
The Sarbanes-Oxley Act in 2002 provided for the establishment of the __________________ which is responsible for overseeing all aspects of the public accounting profession related to audits of publicly held companies. |
| | A) | Public Company Accounting Oversight Board |
| | B) | Public Company Auditing Oversight Board |
| | C) | Public Accounting Compliance Board |
| | D) | Professional Accounting Oversight Board |
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| 40 | |
Which of the following professional accounting organizations is dedicated to the promotion and development of the practice of internal auditing? |
| | A) | Institute of Internal Auditors (IIA) |
| | B) | Institute of Management Accountants (IMA) |
| | C) | American Institute of Certified Public Accountants (AICPA) |
| | D) | Financial Accounting Standards Board (FASB) |
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| 41 | |
Which of the following is a professional accounting organization of certified public accountants that engages in a variety of professional activities, including establishing auditing standards, conducting research, and working closely with the FASB in establishing financial reporting standards? |
| | A) | Institute of Internal Auditors (IIA) |
| | B) | Institute of Management Accountants (IMA) |
| | C) | American Institute of Certified Public Accountants (AICPA) |
| | D) | Financial Accounting Standards Board (FASB) |
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| 42 | |
Which of the following is not a government agency? |
| | A) | Internal Revenue Service (IRS) |
| | B) | Security and Exchange Commission (SEC) |
| | C) | General Accounting Office (GAO) |
| | D) | American Accounting Association (AAA) |
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| 43 | |
The membership of which of the following consists primarily of accounting educators? |
| | A) | Institute of Internal Auditors (IIA) |
| | B) | Institute of Management Accountants (IMA) |
| | C) | American Accounting Association (AAA) |
| | D) | Financial Accounting Standards Board (FASB) |
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| 44 | |
Which of the following organizations issues the Certificate in Internal Auditing? |
| | A) | Institute of Internal Auditors (IIA) |
| | B) | Institute of Management Accountants (MA) |
| | C) | American Institute of Certified Public Accountants (AICPA) |
| | D) | Financial Accounting Standards Board (FASB) |
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| 45 | |
Which of the following organizations issues the Certificate in Financial Management (CFM)? |
| | A) | American Institute of Public Accounting |
| | B) | Institute of Internal Auditors |
| | C) | Institute of Management Accountants |
| | D) | American Accounting Association |
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| 46 | |
Which of the following organizations is dedicated specifically to improving the quality of financial reporting? |
| | A) | Committee of Sponsoring Organizations of the Treadway Commission (COSO) |
| | B) | American Institute of Certified Public Accountants (AICPA) |
| | C) | American Accounting Association (AAA) |
| | D) | Institute of Internal Auditors (IIA) |
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| 47 | |
Expectations of ethical conduct are important for accountants. For management accountants, the code of ethics includes which of the following requirements? |
| | A) | Competence |
| | B) | Confidentiality |
| | C) | Integrity |
| | D) | All of the above |
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| 48 | |
For management accountants, refraining from disclosing confidential information is included in the code of ethics requirement of: |
| | A) | competence. |
| | B) | confidentiality. |
| | C) | integrity. |
| | D) | credibility. |
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| 49 | |
For management accountants, avoiding conflicts of interest by refusing compromising gifts and favors is included in the code of ethics requirement of |
| | A) | competence. |
| | B) | confidentiality. |
| | C) | integrity. |
| | D) | credibility. |
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| 50 | |
For management accountants, communicating information fairly and objectively is included in the code of ethics requirement of |
| | A) | competence. |
| | B) | confidentiality. |
| | C) | integrity. |
| | D) | credibility. |
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| 51 | |
Which of the following issues licenses to practice as a Certified Public Accountant (CPA)? |
| | A) | Institute of Management Accountants |
| | B) | A state licensing board |
| | C) | Financial Accounting Standards Board (FASB) |
| | D) | American Accounting Association |
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| 52 | |
Which of the following involves the preparation of income tax returns and anticipating the tax effects of business transactions and structuring them in such a way as to minimize the income tax burden? |
| | A) | Financial accounting |
| | B) | Management accounting |
| | C) | Tax accounting |
| | D) | Cost accounting |
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| 53 | |
Which of the following refers to recording the routine transactions and day-to-day record keeping of an enterprise? |
| | A) | Financial accounting |
| | B) | Management accounting |
| | C) | Tax accounting |
| | D) | Bookkeeping |
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| 54 | |
Internal auditors: |
| | A) | do not perform independent audits of the company's financial statements. |
| | B) | are independent of the organization. |
| | C) | are employed by an independent auditing firm. |
| | D) | do not adhere to any particular code of ethics. |
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| 55 | |
When your authors use the expression "the watchdog of professional accounting," they are referring to which of the following? |
| | A) | Internal Revenue Service (IRS). |
| | B) | Securities Exchange Commission (SEC). |
| | C) | Financial Accounting Standards Board (FASB). |
| | D) | American Institute of Public Accountants (AICPA) |
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| 56 | |
The General Accountability Office, an organization responsible for auditing the government, reports directly to which group or person? |
| | A) | Congress. |
| | B) | the President of the United States. |
| | C) | the Vice President of the United States. |
| | D) | the Securities and Exchange Commission (SEC). |
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| 57 | |
Which of the following is a false statement about professional accountants? |
| | A) | Their activities consist primarily of bookkeeping functions. |
| | B) | One of their primary functions is financial forecasting. |
| | C) | They are involved more with interpretation of accounting information than its preparation. |
| | D) | They are often highly sought after for top management positions. |
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