Deck 8: Accounting: Decision Making by the Numbers

Question 1

Through the generally accepted accounting principles (GAAP), the Financial Accounting Standards Board (FASB)aims to ensure that financial statements are _____.

A)comprehensive, exhaustive, extensive, and independent
B)relevant, reliable, consistent, and comparable
C)cursory, intensive, unabridged, and superficial
D)circumstantial, inferential, presumptive, and provisional

Answer 1

B

Question 2

Which of the following bodies makes U.S. accounting practices more consistent with those in other nations along with the Financial Accounting Standards Board (FASB)?

A)The Financial Accounting Foundation (FAF)
B)The International Accounting Standards Board (IASB)
C)The U.S. Federal Reserve (Fed)
D)The Securities and Exchange Commission (SEC)

Answer 2

B

Question 3

Accounting systems are utilized by companies for several reasons, but they have little value when it comes to making economic decisions.

Answer 3

False

Question 4

Betty's job entails detecting problems such as embezzlement, waste, mismanagement, and employee theft at her organization. In this case, Betty is a(n)_____.

A)management consultant
B)government accountant
C)internal auditor
D)certified public accountant

Question 5

Which of the following is a key external user of a company's accounting information?

A)Competitors
B)Managers
C)Employees
D)Departmental managers

Question 6

Since it deals strictly with numbers, the practice of accounting is free from ethical obligations.

Question 7

Which of the following statements is true of the Financial Accounting Standards Board (FASB)?

A)Its authority comes from the Internal Revenue Service.
B)It consists of five members appointed by the Federal Trade Commission (FTC).
C)Its members can be reappointed to serve one additional term.
D)Its members can retain ties with firms in which they were previously employed.

Question 8

Liabilities do not include bank loans and current payments owed to suppliers.

Question 9

The CFO of SpotLight Production Company requests his accountant Felipe to prepare a customized report of the cost overruns at the company's production facility in L.A.Felipe is a managerial accountant.

Question 10

John and Elizabeth are evaluating three telecommunication companies to determine the best company to invest in. Horizontal analysis will enable them to make comparisons of financial statements of the three companies over the past several years and help determine the increase in their profits.

Question 11

A firm's operating budget represents a firm's overall plan of action for a specified time period.

Question 12

Alexis decides to check with his accountant how much money his company owes to the raw materials supplier. To determine that, Alexis needs to ask his accountant to provide him with the company's balance sheet.

Question 13

The heavy reliance on accounting information by business stakeholders has led to it sometimes being called the:

A)language of business.
B)cornerstone of business.
C)lifeblood of business.
D)standard of business.

Question 14

In order to preserve independence and impartiality, Financial Accounting Standards Board (FASB)members are required to:

A)serve the board for the rest of their lives once they are appointed.
B)sever all ties with any firms or institutions they served prior to joining the board.
C)sign a non-disclosure agreement and hand over all information of their previous companies to the board.
D)pass a rigorous two-day, four-part examination on major accounting concepts.

Question 15

The members of the Financial Accounting Standards Board (FASB)are appointed by the Securities and Exchange Commission.

Question 16

Matt is asked by Clint Publishers to carry out an external audit of its books. He is also asked to prepare the tax returns for another client, Mrs. Zhirkov. Matt is a _____.

A)public accountant
B)management accountant
C)government accountant
D)cost accountant

Question 17

Sebastian is an employee of Power Trans Inc.His duties include preparing reports and analyzing company accounting data.He also appraises financial performances, verifies the accuracy and validity of the company's internal records and accounting procedures. Sebastian's role is that of a _____.

A)forensic accountant
B)government auditor
C)certified fraud examiner
D)management accountant

Question 18

Felix runs Green Zone Inc., a nursery and landscaping venture. His business flourishes during spring and early summer, but he made most of his inventory purchases during winter of theyear before. Hence, he needs to be extremely careful about cash flow fluctuations. In this case, the capital expenditure budget would be the most beneficial option for Felix.

Question 19

_____ is a branch of accounting that addresses the needs of external stakeholders, including stockholders, creditors, and government regulators.

A)Forensic accounting
B)Investigative accounting
C)Managerial accounting
D)Financial accounting

Question 20

Government accountants primarily use accounting information to meet the reporting needs of federal and state agencies.

Question 21

A(n)_____ opinion is issued if an external auditor does not find any problems with the way a firm prepares and presents its financial statements.

A)quality
B)unqualified
C)adverse
D)corrective

Question 22

Assets refer exclusively to:

A)the taxes to be paid by a firm.
B)the wages payable by a firm to its employees.
C)the cash payable by a firm.
D)the resources owned by a firm.

Question 23

Which of the following best defines cost?

A)The value of equities a firm has at its disposal
B)The value of a received item in a monetary exchange
C)The value of expense inflows in an organization
D)The value of what is given up in exchange for something else

Question 24

Which of the following refers to the claims that stockholders have against their firm's assets?

A)Loans payable
B)Owners' equity
C)Liabilities
D)Explicit costs

Question 25

The balance sheet of Ranger Inc.shows its liabilities and owners' equity as $150,000 and $75,000, respectively. In this case, Ranger's _____.

A)total assets are $225,000
B)total income is $75,000
C)net income for the current year is $225,000
D)net cash flow for the current year is $75,000

Question 26

Annual reports include _____ that disclose additional information about a firm's operations and special circumstances that clarify and supplement the numbers reported on the financial statements.

A)subpoenas
B) testimonials​
C)notes
D)future projections

Question 27

Benjamin works for a private firm that has been contracted to examine the books of accounts of the Luigi Corporation. After checking the figures and examining the company's accounting methods, he is required to prepare a report on his findings. The work that Benjamin is tasked with is the characteristic of a(n)_____.

A)external auditor
B)management accountant
C)risk analyst
D)internal auditor

Question 28

Horizontal analysis is the comparison of:

A)stakeholders' equity values for each owner in the same financial year.
B)sales figures of different divisions of a firm over one financial quarter.
C)reported account values of two different firms in the same financial year.
D)account values reported on financial statements over two or more years.

Question 29

_____ is a management tool that explicitly shows how a firm will acquire and use the resources needed to achieve its goals over a specific time period.

A)Investing
B)Trading
C)Budgeting
D)Auditing

Question 30

A flexible budget:

A)is based on a single assumed level of sales.
B)differentiates the budgeted costs for each sales level.
C)is the budget that is prepared before a static budget.
D)cannot be used for evaluating real-world sales situations.

Question 31

In activity-based costing, product costs are assigned based on links between activities that drive costs and the _____.

A)liabilities of a firm
B)resulting revenues
C)production of specific goods
D)pricing of specific goods

Question 32

The _____ reports the financial position of a firm by identifying and reporting the value of the firm's assets, liabilities, and owners' equity.

A)balance sheet
B)profit and loss statement
C)statement of retained earnings
D)statement of cash flows

Question 33

Which of the following is a disadvantage of participatory budgeting?

A)It can lead to budgetary slack.
B)It fails to motivate middle and first-line managers.
C)It results in inadequate representation of the issues facing individual departments.
D)It fails to identify the resources needed to achieve goals.

Question 34

Which of the following is a difference between financial accounting and managerial accounting?

A)Financial accounting is designed to meet the needs of company managers, whereas managerial accounting provides stockholders with information about the overall financial performance of a firm.
B)Financial accounting provides accounting information exclusively to government agencies, whereas managerial accounting is designed to specially meet the needs of suppliers and creditors.
C)Financial accounting provides stockholders with information about the overall financial performance of a firm, whereas managerial accounting is designed to meet the needs of company managers.
D)Financial accounting provides company accounting information for public consumption, whereas managerial accounting provides stockholders with information about the overall financial performance of a firm.

Question 35

Which of the following statements is true of activity-based costing?

A)It determines the direct cost per unit of production.
B)It is more complex than the direct labor method.
C)It involves a three-stage process.
D)It assigns costs based on the "one size fits all" rule.

Question 36

Kyra Inc.has applied for a business loan in the United Bank. In order to best assess the loan case, the loan officer at the bank, Sirigu, decides to look at the company's net income figure. Sirigu will find this information in Kyra's _____.

A)profit and loss statement
B)budgeted income statement
C)stockholders' equity statement
D)statement of retained earnings

Question 37

Established by the Sarbanes-Oxley Act of 2002, it is the responsibility of the _____ to protect the interests of investors and further the public interest in the preparation of informative, fair, and independent audit reports.

A)Private Company Accounting Oversight Board
B)Public Company Accounting Oversight Board
C)Public Enterprise Accounting Regulation Agency​
D)Private Enterprise Accounting Regulation Agency

Question 38

Which of the following is an advantage of using bottom-up budgeting?

A)It is less time-consuming than the top-down approach.
B)It eliminates most forms of budgetary slack.
C)Middle managers are likely to be highly motivated to achieve budgetary goals.
D)Supervisory managers are likely to know the long-term strategic needs of a company.

Question 39

The capital expenditure budget:

A)provides quarterly estimates of the number of units of each product a firm expects to sell.
B)identifies a firm's planned investments in major fixed assets and long-term projects.
C)identifies short-term fluctuations in cash flows that display cash deficits and surpluses.
D)contains the budgets for direct labor, direct materials, and overhead costs.

Question 40

Managerial accounting:

A)provides reports and analysis to external stakeholders to show them the current business state.
B)is the branch of accounting that adheres most strictly to the generally accepted accounting principles.
C)provides managers information about a firm's financial situation on a predetermined schedule.
D)provides reports and analysis to managers to help them make informed business decisions.

Question 41

To make a forecast of the finances, Susan needs the debt, cost, and profit statistics of all branches of the PTree Corporation. Based on the information that she needs, Susan is a _________.

A)consumer advocate
B)financial manager
C)government accountant
D)financial creditor

Question 42

Describe the role of the Financial Accounting Standards Board (FASB).

Question 43

What does the adverse opinion of an auditor mean in terms of a firm's financial statement?

Question 44

Describe any three users of a firm's accounting information.

Question 45

What are operating budgets, financial budgets, and master budget?

Question 46

Accounts receivable is categorized as a(n)_________.

A)current liability
B)immovable asset
C)current asset
D)depreciated liability

Question 47

What is the accounting equation? Define each term in the equation.

Question 48

_________ are costs that are incurred as the result of some specific cost object.

A)Direct costs
B)Implicit costs
C)Indirect costs
D)Fixed costs

Question 49

_________ would be listed in the owners' equity section of a balance sheet.

A)Revenue
B)Expenses
C)Net income
D)Retained earnings

Question 50

Congress passed the _________ of 2002 to combat widespread accounting malpractice.

A)Sarbanes-Oxley Act
B)Securities Exchange Act
C)Glass-Steagall Act
D)McCain-Feingold Act