Question 1

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

Accepted Answer

A)  Prepared by managers.
B)  Intended primarily for use by decision makers outside the business organization.
C)  Prepared in accordance with a set of accounting principles developed by the Institute of Certified Management Accountants.
D)  Oriented toward measuring solvency rather than profitability.E) B) and C)
F) All of the above

Question 2

Financial accounting information is characterized by all of the following except:

Accepted Answer

A)  It is historical in nature.
B)  It results from inexact and approximate measures.
C)  It is factual,so it does not require judgment to prepare.
D)  It is enhanced by management's explanation.E) A) and C)
F) B) and C)

Question 3

Objectives of financial reporting to external investors and creditors include preparing information about all of the following except:

Accepted Answer

A)  Information used to determine which products to produce.
B)  Information about economic resources,claims to those resources,and changes in both resources and claims.
C)  Information that is useful in assessing the amount,timing,and uncertainty of future cash flows.
D)  Information that is useful in making investment and credit decisions.E) B) and D)
F) None of the above

Question 4

Which of the following is generally not considered one of the general purpose financial statements issued by a corporation?

Accepted Answer

A)  Income statement forecast for the coming year.
B)  Balance sheet.
C)  Statement of financial position.
D)  Statement of cash flows.E) B) and C)
F) All of the above

Question 5

The designation of CPA is given by:

Accepted Answer

A)  Universities.
B)  States.
C)  The AICPA.
D)  The SEC.E) C) and D)
F) A) and B)

Question 6

Which of the following statements is considered a "snapshot" of the business in financial or dollar terms?

Accepted Answer

A)  Statement of financial position.
B)  Statement of cash flows.
C)  Income statement.
D)  The federal income tax return.E) B) and C)
F) A) and D)

Question 7

External users of accounting information have a financial interest in an entity but are not involved with the day-to-day operations of the enterprise.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is true?

Accepted Answer

A)  The existence of generally accepted accounting principles (GAAP) virtually eliminates the need for professional judgment except in very unusual circumstances.
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.
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.
D)  A professional accountant should resign his position rather than become involved in the distribution of financial statements indicating insolvency.E) A) and B)
F) A) and C)

Question 9

One of the principal functions of CPAs is to:

Accepted Answer

A)  Audit income tax returns to determine if taxpayers have underpaid their income taxes.
B)  Conduct audits to determine whether the employees of a business are performing their jobs honestly and efficiently.
C)  Advise individual investors on stock market investments.
D)  Perform audits to determine the fairness of a company's financial statements.E) None of the above
F) A) and B)

Question 10

Generally accepted accounting principles are intended to assist accountants in preparing financial statements that:

Accepted Answer

A)  Are relevant,verifiable,comparable,and understandable.
B)  Show the business to be both solvent and profitable.
C)  Comply with all income tax rules and regulations.
D)  Are ideally suited to the specific needs of each user of the financial statements.E) A) and B)
F) C) and D)

Question 11

Return on investment is the same as return of investment.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A)  Stockholders of a corporation.
B)  Bank lending officers.
C)  Financial analysts.
D)  Factory managers.E) C) and D)
F) B) and D)

Question 13

Public accounting is the segment of the profession where professionals offer audit,tax,and consulting services to clients.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A)  To minimize the amount of income taxes owed.
B)  To ensure that both preparers and users of financial statements understand the concepts and assumptions used in presenting information within these statements.
C)  To enhance the relevance and verifiability of information contained in financial statements.
D)  To increase the comparability of financial statements prepared by different companies.E) C) and D)
F) B) and C)

Question 15

Financial accounting information is:

Accepted Answer

A)  Designed to assist investors and creditors.
B)  Not used by managers and in income tax returns.
C)  Called "special-purpose" accounting information.
D)  Not applicable to individuals.E) A) and B)
F) A) and D)

Question 16

Which of the following does not describe accounting?

Accepted Answer

A)  It is commonly referred to as the language of business.
B)  It is an end rather than a means to an end.
C)  It is useful for decision-making.
D)  It is used by businesses,governments,non-profit organizations,and individuals.E) B) and D)
F) All of the above B

Question 17

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

Accepted Answer

A)  The balance sheet.
B)  The income statement.
C)  The statement of cash flows.
D)  All three statements are concerned with the financial position of a business at a particular time.E) B) and D)
F) B) and C) A

Question 18

Internal users of financial accounting information include all of the following except:

Accepted Answer

A)  Investors.
B)  Managers.
C)  Chief Financial Officer.
D)  Chief Executive Officer.E) None of the above
F) C) and D)

Question 19

Today,the most authoritative source of generally accepted accounting principles is the American Accounting Association.

Accepted Answer

A) True 
 B)False  False

Question 20

Provide a brief example to illustrate that externally reported financial accounting information must be based in part on estimates,judgments,and assumptions.

Accepted Answer

To account for the use of long...

Exam 1: Accounting: Information for Decision Making

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

Correct AnswerverifiedShow Answer

Financial accounting information is characterized by all of the following except:

Correct AnswerverifiedShow Answer

Objectives of financial reporting to external investors and creditors include preparing information about all of the following except:

Correct AnswerverifiedShow Answer

Which of the following is generally not considered one of the general purpose financial statements issued by a corporation?

Correct AnswerverifiedShow Answer

The designation of CPA is given by:

Correct AnswerverifiedShow Answer

Which of the following statements is considered a "snapshot" of the business in financial or dollar terms?

Correct AnswerverifiedShow Answer

External users of accounting information have a financial interest in an entity but are not involved with the day-to-day operations of the enterprise.

Correct AnswerverifiedShow Answer

Which of the following is true?

Correct AnswerverifiedShow Answer

One of the principal functions of CPAs is to:

Correct AnswerverifiedShow Answer

Generally accepted accounting principles are intended to assist accountants in preparing financial statements that:

Correct AnswerverifiedShow Answer

Return on investment is the same as return of investment.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Public accounting is the segment of the profession where professionals offer audit,tax,and consulting services to clients.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Financial accounting information is:

Correct AnswerverifiedShow Answer

Which of the following does not describe accounting?

Correct AnswerverifiedB

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

Correct AnswerverifiedA

Internal users of financial accounting information include all of the following except:

Correct AnswerverifiedShow Answer

Today,the most authoritative source of generally accepted accounting principles is the American Accounting Association.

Correct AnswerverifiedFalse

Provide a brief example to illustrate that externally reported financial accounting information must be based in part on estimates,judgments,and assumptions.

Correct AnswerverifiedTo account for the use of long...View AnswerShow Answer

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To account for the use of long...
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