Test Bank for Financial Accounting 11th Edition by Albrecht

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(1)Test Bank for Financial Accounting 11th Edition by Albrecht Which of the following is NOT typically true of accounting information? 1. The information is quantitative in nature. 2. The information relates to future time periods. 3. The information relates to specific accounting entities. 4. The information is primarily financial in nature. Which of the following is true about the double-entry system of bookkeeping? 1. It was developed in the 1300s-1400s in France. 2. It was developed in the 1800s in Italy. 3. It was developed in the 1300s-1400s in Italy. 4. It was developed in the 1800s in the United States.

(2) Businesses use accounting systems to 1. Analyze transactions 2. Handle routine bookkeeping tasks 3. Evaluate the performance and health of the business 4. All of these are correct Which of the following is the most correct definition of accounting? 1. A system for providing quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions. 2. An entity without a profit objective, oriented toward providing services efficiently and effectively. 3. The preservation of a systematic, quantitative record of an activity. 4. The procedures and processes used by a company to analyze transactions and handle routine bookkeeping tasks. Which of the following is NOT a function of accounting? 1. Accumulating economic information about organizations 2. Measuring economic information about organizations 3. Executing sales transactions for organizations 4. Communicating economic information about organizations Which of the following is NOT a key component of the definition of accounting? 1. Financial 2. Qualitative 3. Useful 4. Decision-oriented Which of the following is NOT a step in the decision making process? 1. Identify the issue. 2. Identify alternatives. 3. Select the option that will result in the greatest financial increase. 4. Gather information. Accounting can be best described as a 1. Manufacturing activity

(3) 2. Service activity 3. Retailing activity 4. All of these are correct Which of the following is NOT a typical source of monetary resources for a business enterprise? 1. Investors 2. Creditors 3. Business earnings 4. Employees Accountants typically perform what action related to the financial results of business activities? 1. Report the results of business activities 2. Advise on how to structure business activities 3. Both report the results of and advise on how to structure business activities 4. None of these are correct The accounting cycle includes all of the following, EXCEPT: 1. Recording 2. Summarizing 3. Analyzing 4. Interpreting The emphasis in financial accounting is on which of the following external user groups? 1. Management 2. Certified public accountants 3. Investors and creditors 4. Educators The primary internal group that uses accounting information is 1. Government agencies 2. Investors 3. Management 4. Competitors

(4) Internal reports are generally used by 1. Management 2. Suppliers 3. Lenders 4. Employees Which of the following is NOT an important aspect of management accounting? 1. Planning 2. Product design 3. Implementing plans 4. Controlling costs The area of accounting that is concerned with providing information for external users is referred to as 1. Financial accounting 2. Governmental accounting 3. Management accounting 4. Not-for-profit accounting Which of the following is NOT one of the three primary financial statements? 1. Statement of cash flows 2. Income statement 3. Statement of retained earnings 4. Balance sheet Which of the following financial statements reports a company's resources, obligations, and owner's equity? 1. Balance sheet 2. Income statement 3. Statement of retained earnings 4. Statement of cash flows Which of the following financial statements reports the excess of a company's revenues over its expenses? 1. Balance sheet

(5) 2. Income statement 3. Statement of retained earnings 4. Statement of cash flows Which of the following financial statements reports the amount of cash collected and paid out by a company? 1. Balance sheet 2. Income statement 3. Statement of retained earnings 4. Statement of cash flows Which of the following is NOT an external user of financial information? 1. Competitors 2. Employees 3. Management 4. Suppliers Which of the following is NOT one of the factors that influences the accounting environment? 1. International business 2. Technology 3. The development of generally accepted accounting principles (GAAP) 4. Investors Which of the following is NOT true of the Financial Accounting Standards Board (FASB)? 1. It consists of five full-time members 2. It is a government agency 3. It seeks consistency for its proposed standards 4. It has no legal power to enforce the standards it sets Generally accepted accounting principles are 1. Natural laws 2. Based on scientific proofs 3. Developed by accounting rule makers 4. None of these are correct

(6) The initials GAAP stand for 1. General Accounting Administration Practices 2. Generally Applied Accounting Procedures 3. Generally Accepted Accounting Principles 4. Generally Accepted Accounting Practices The current standard-setting board for accounting in the private sector is the 1. Financial Accounting Standards Board (FASB) 2. Securities and Exchange Commission (SEC) 3. International Accounting Standards Board (IASB) 4. American Accounting Association (AAA) Which of the following organizations has specific legal authority to establish accounting standards for publicly held companies? 1. Financial Accounting Standards Board (FASB) 2. Securities and Exchange Commission (SEC) 3. Internal Revenue Service (IRS) 4. American Institute of Certified Public Accountants (AICPA) The Sarbanes-Oxley Act created the 1. Financial Accounting Standards Board 2. Public Company Accounting Oversight Board 3. American Institute of Certified Public Accountants 4. Enron-WorldCom Fraud Committee The initials CPA stand for 1. Certified Professional Appraiser 2. Certified Professional Accountant 3. Certified Public Accountant 4. Certified Public Auditor Which of the following is NOT a service typically provided by large public accounting firms? 1. Performing audits 2. Making management decisions

(7) 3. Redesigning operating procedures 4. Establishing accounting systems Which of the following is the government agency that stipulates the rules and regulations that govern the collection of taxes in the United States? 1. Securities and Exchange Commission 2. Federal Accounting Standards Board 3. Internal Revenue Service 4. American Institute of Certified Public Accountants Accountants are MOST concerned with 1. Foreign companies operating in the US 2. U.S. companies with domestic customers 3. U.S. companies with foreign customers 4. All of these are correct The organization that develops worldwide accounting standards is the 1. International Committee on Accounting Standards (ICAS) 2. International Accounting Standards Board (IASB) 3. International Board of Accounting Standards (IBAS) 4. International Accounting Standards Committee (IASC) Standards established by the International Accounting Standards Board are referred to as 1. Generally Accepted Accounting Standards 2. International Auditing Standards 3. International Financial Reporting Standards 4. International Financial Accounting Standards In 2008, the SEC began to 1. Allow U.S. companies trading on the U.S. stock exchange to issue their financial reports using IASB standards 2. Require U.S. companies trading on the U.S. stock exchange to issue their financial reports using IASB standards 3. Require non-U.S. companies trading on the U.S. stock exchange to issue their financial reports using IASB standards

(8) 4. Allow non-U.S. companies trading on the U.S. stock exchange to issue their financial reports using IASB standards Ethics are especially important in accounting because 1. Independent accountants represent the public interest 2. Accountants can steal money more easily than other employees 3. Accountants have historically committed more company thefts than other employees 4. The accounting profession does not have a code of professional conduct Which of the following is NOT one of the ways that technology has changed the way accounting is done? 1. Technology easily allows companies to collect large amounts of data about transactions 2. Technology allows greater access to a company's financial statements and other financial information 3. Technology is able to perform the mechanics of accounting therefore, people are not required to understand the mechanics 4. Technology allows for large amounts of data to be compiled quickly and accurately Which of the following is a reason that you may need to understand accounting information in the future? 1. To evaluate an employer's short and long-term potential 2. To perform a personal budget 3. To perform responsibilities in future employment 4. All of these are reasons to study accounting

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