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| 1 | |
To Walmart, bank loan officers, corporation shareholders, and the Internal Revenue Service are all examples of internal users of Walmart's financial statements. |
| | A) | True |
| | B) | False |
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| 2 | |
The Internal Revenue Service conducts independent audits of a company's financial statements to insure they comply with generally accepted accounting principles. |
| | A) | True |
| | B) | False |
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| 3 | |
Internal users of financial accounting information are those persons directly involved in the day-to-day operations of the firm. |
| | A) | True |
| | B) | False |
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| 4 | |
The CPA designation stands for Certified Public Auditor. |
| | A) | True |
| | B) | False |
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| 5 | |
The designations CMA and CIA stand for Certified Management Accountant and Certified Internal Auditor. |
| | A) | True |
| | B) | False |
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| 6 | |
The two main groups that establish generally accepted accounting principles (GAAP) in the United States are the Financial Accounting Standards Board (FASB) and the Securities and Exchange Commission (SEC). |
| | A) | True |
| | B) | False |
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| 7 | |
The historical cost principle guides the accountant by informing him or her on when a company must recognize revenue. |
| | A) | True |
| | B) | False |
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| 8 | |
A sole proprietorship is a separate entity for both financial accounting purposes and for legal purposes. |
| | A) | True |
| | B) | False |
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| 9 | |
A corporation is responsible for its own acts, and its own debts, and may hold property in its own name rather than the name(s) of its shareholders. |
| | A) | True |
| | B) | False |
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| 10 | |
The basic accounting equation can be expressed as Assets minus Liabilities equal Equity. |
| | A) | True |
| | B) | False |
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| 11 | |
The business entity principle is based on the notion that transactions and events should be measured and recorded from the vantage point of the business entity itself and not from the vantage point of its owners. |
| | A) | True |
| | B) | False |
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| 12 | |
An excess of revenues over expenses for a period is called net profit. |
| | A) | True |
| | B) | False |
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| 13 | |
A financial statement that describes where a company's cash came from (receipts) and where it went (payments) during the period is called the statement of owner's equity. |
| | A) | True |
| | B) | False |
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| 14 | |
The area of accounting aimed at serving external users is called financial accounting. |
| | A) | True |
| | B) | False |
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| 15 | |
Internal users of accounting information include bank loan officers, the company's president, and the company's controller. |
| | A) | True |
| | B) | False |
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| 16 | |
The balance sheet reports the changes that occurred in assets, liabilities, and owner's equity for a given time period such as one year or one month. |
| | A) | True |
| | B) | False |
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| 17 | |
Liabilities comprise the entity's debts that are owed to persons and entities outside of the business. |
| | A) | True |
| | B) | False |
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| 18 | |
The owner's claims to an organization's assets are called the owner's equity or the owner's capital. |
| | A) | True |
| | B) | False |
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| 19 | |
A partnership is a business that is owned by shareholders who have invested in the stock of the partnership. |
| | A) | True |
| | B) | False |
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| 20 | |
The Financial Accounting Standards Board (FASB) can overrule an accounting rule established by the Securities and Exchange Commission (SEC) but the SEC cannot overrule an accounting rule established by the FASB. |
| | A) | True |
| | B) | False |
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| 21 | |
Accounting involves only recording economic transactions and events, either electronically or manually and is also known as record keeping. |
| | A) | True |
| | B) | False |
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| 22 | |
Assets are the economic resources that are expected to produce future benefits. |
| | A) | True |
| | B) | False |
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| 23 | |
Net income is an important connection between the income statement and the statement of changes in owner's equity. |
| | A) | True |
| | B) | False |
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| 24 | |
Ethics are beliefs that distinguish right from wrong. |
| | A) | True |
| | B) | False |
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| 25 | |
The purpose of an audit is to determine whether the financial statements fairly reflect the company's financial position and operating results in accordance with generally accepted accounting principles (GAAP); and to add credibility to the information in the statements. |
| | A) | True |
| | B) | False |
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| 26 | |
The largest percentage of accounting jobs occurs in the private accounting field. |
| | A) | True |
| | B) | False |
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| 27 | |
Return on investment is calculated by dividing the net income for the period by the average total assets of the period. |
| | A) | True |
| | B) | False |
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| 28 | |
Financial statements include the balance sheet, income statement, statement of owner's equity, and the statement of cash flows. |
| | A) | True |
| | B) | False |
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| 29 | |
Expenses are outflows or the using up of assets as a result of the major or central operations of a business. |
| | A) | True |
| | B) | False |
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| 30 | |
Another term used for net assets is equity. |
| | A) | True |
| | B) | False |
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