Question 1

A ____________ is a certificate that represents a corporation's promise to repay a certain amount of money and interest in the future.

Accepted Answer

The answer of A ____________ is a certificate that represents...

Question 2

Which of the following organizations is responsible for setting auditing standards followed by public accounting firms in conducting independent audits of financial statements?
A)Financial Accounting Standards Board (FASB)
B)Securities and Exchange Commission (SEC)
C)Public Company Accounting Oversight Board (PCAOB)
D)International Accounting Standards Board (IASB)

Accepted Answer

The Public Company Accounting Oversight Board (PCAOB) is responsible for setting auditing standards followed by public accounting firms in conducting independent audits of financial statements. The Financial Accounting Standards Board (FASB) sets accounting standards, the Securities and Exchange Commission (SEC) oversees financial reporting for publicly traded companies, and the International Accounting Standards Board (IASB) sets standards for companies operating in different countries.

Question 3

Drew Mellow,owner of Mellow's Melodies,also owns a personal residence that costs $400,000.The market value of his residence is $600,000.During preparation of the financial statements for Mellow's Melodies,the accounting concept most relevant to the presentation of Drew's home is
A)monetary unit.
B)a going concern entity.
C)the economic entity concept.
D)the time period assumption.

Accepted Answer

The economic entity concept states that the personal affairs of the owner should be kept separate from those of the business. In this case, despite the fact that the owner Drew Mellow owns a personal residence, its presentation in the financial statements of Mellow's Melodies is not relevant since it is not a business asset. Therefore, the economic entity concept is the most relevant accounting concept in this scenario.

Question 4

Owners of corporations are called ____________________.

Accepted Answer

The answer of Owners of corporations are called ____________________....

Question 5

Domenico Enterprises purchased land for $2,000,000 in 2000.In 2017,an independent appraiser assessed the value at $4,400,000.What amount should appear on the financial statements in 2017 with respect to the land?
A)$2,400,000
B)$2,000,000
C)$4,400,000
D)Whatever amount the company believes is the best indicator of the true value of the land

Accepted Answer

Under generally accepted accounting principles (GAAP), land is recorded at its historical cost. Therefore, despite the appraisal value, the land should be reported at its purchase price of $2,000,000 on the financial statements.

Question 6

To which of the following entities must a company report if it sells its stock on the organized stock market?
A)American Institute of Certified Public Accountants (AICPA)
B)American Accounting Association (AAA)
C)International Accounting Standards Board (IASB)
D)Securities and Exchange Commission (SEC)

Accepted Answer

The Securities and Exchange Commission (SEC) is the regulating authority that oversees the organized stock market in the United States. Therefore, a company must report to the SEC if it sells its stock on the organized stock market. The American Institute of Certified Public Accountants (AICPA) and the American Accounting Association (AAA) are professional organizations for accountants and do not have regulatory authority over the stock market. The International Accounting Standards Board (IASB) sets global accounting standards but does not regulate stock markets.

Question 7

All of the following are important provisions of the Sarbanes-Oxley Act except
A)the establishment of a new Public Company Accounting Oversight Board.
B)the requirement to prepare both FASB and IASB financial statements.
C)a requirement that the external auditors report directly to the company's audit committee.
D)a clause to prohibit public accounting firms that audit a company from providing any other services that could impair their ability to act independently in the course of their audit.

Accepted Answer

The Sarbanes-Oxley Act does not require companies to prepare both FASB and IASB financial statements. Instead, it primarily focuses on improving corporate governance and financial disclosures to protect investors from accounting fraud and mismanagement.

Question 8

A ____________ is the type of accounting used by nonbusiness entities.

Accepted Answer

The answer of A ____________ is the type of accounting...

Question 9

The Securities and Exchange Commission (SEC)is concerned with
A)companies that issue securities to the general public.
B)all companies in the U.S.regardless of size.
C)accounting reports issued by government entities.
D)all domestic and international companies that issue accounting reports.

Accepted Answer

The Securities and Exchange Commission is primarily concerned with regulating companies that issue securities to the general public, such as stocks and bonds. While it has some oversight of accounting reports, its main focus is on ensuring that investors have access to accurate and timely information when making investment decisions. The SEC does not regulate all companies in the U.S., only those that issue securities. It also has limited jurisdiction over international companies that issue securities in the U.S.

Question 10

The second step in the ethical decision-making model is to
A)list alternatives and evaluate the impact of each on those affected.
B)select the best alternative.
C)recognize an ethical dilemma.
D)analyze the key elements in the situation.

Accepted Answer

The second step in the ethical decision-making model is to analyze the key elements in the situation after recognizing an ethical dilemma.

Question 11

Which organization,in addition to the Financial Accounting Standards Board (FASB),occasionally issues authoritative rules for financial statements?
A)The Accounting Profession
B)International Accounting Standards Board (IASB)
C)Securities and Exchange Commission (SEC)
D)Internal Revenue Service (IRS)

Accepted Answer

The Securities and Exchange Commission (SEC) occasionally issues authoritative rules for financial statements in addition to the Financial Accounting Standards Board (FASB). The International Accounting Standards Board (IASB) also issues international accounting standards, but they are not directly applicable in the United States unless adopted by the SEC or FASB. The Accounting Profession refers to the collective group of accountants and organizations that make up the accounting industry but does not issue authoritative rules for financial statements. The Internal Revenue Service (IRS) enforces tax law but does not issue authoritative rules for financial statements.

Question 12

Which of the following is a five-member body that has the authority from Congress to set standards for conducting audits?
A)FASB
B)SEC
C)PCAOB
D)AICPA

Accepted Answer

The Public Company Accounting Oversight Board (PCAOB) is a five-member body created by the Sarbanes-Oxley Act of 2002, with the authority from Congress to set standards for conducting audits of public companies. FASB (Financial Accounting Standards Board) is responsible for setting accounting standards for private and public companies, while the SEC (Securities and Exchange Commission) oversees and enforces securities laws and regulations. AICPA (American Institute of Certified Public Accountants) is a professional organization for accountants and does not have the authority to set auditing standards.

Question 13

Which one of the following best describes the external auditor's report?
A)The external auditor's report is an opinion.
B)The external auditor's report is a statement of fact.
C)The external auditor's report must comply with both FASB and IASB standards.
D)The firms that provide external audit reports are restricted to 20 partners,based on authoritative standards issued by the PCAOB.

Accepted Answer

The external auditor's report is an opinion that expresses the auditor's assessment of the fairness and accuracy of the financial statements. It is not a statement of fact, and while compliance with accounting standards is important, it is not the primary focus of the auditor's report. While the PCAOB does regulate the auditing profession, there is no restriction on the number of partners a firm can have.

Question 14

The reliability of the information in a company's financial statements is the responsibility of which of the following?
A)The Securities and Exchange Commission (SEC)
B)The Certified Public Accountant in charge of the audit of the company's financial statements
C)Clients
D)None of these choices

Accepted Answer

The reliability of the information in a company's financial statements is primarily the responsibility of the company's management. The SEC oversees and enforces securities laws, the CPA audits the financial statements to provide assurance on their reliability, and clients are users of the financial statements. None of the options directly bear the responsibility for the reliability of the information in the financial statements.

Question 15

Which one of the following statements is true concerning assets?
A)They are recorded at market value and then adjusted for inflation.
B)They are recorded at market value for financial reporting purposes as historical cost may be arbitrary.
C)Assets are used using the time-period approach.
D)Accountants use the term historical cost to refer to the original cost of an asset.

Accepted Answer

Accountants use the term historical cost to refer to the original cost of an asset. This means that assets are recorded at their original cost and not at market value. This is a conservative approach that helps to avoid overvaluing assets and inflating financial statements.

Question 16

In order for accounting information to be useful in making informed decisions,it must be
A)relevant.
B)reliable.
C)neither relevant nor reliable.
D)both relevant and reliable.

Accepted Answer

Accounting information must be both relevant and reliable to be useful in making informed decisions. Relevant information is information that is applicable to the specific decision being made, and reliable information is information that is accurate and trustworthy. If information is relevant but not reliable, it can still lead to incorrect decisions. Similarly, if information is reliable but not relevant, it may not be useful in making the specific decision at hand. Therefore, accounting information must meet both criteria to be useful.

Question 17

Which the following organizations is primarily responsible for establishing GAAP today?
A)IRS
B)Securities and Exchange Commission (SEC)
C)SEC
D)None of these choices

Accepted Answer

The Financial Accounting Standards Board (FASB) is primarily responsible for establishing GAAP, not any of the choices listed.

Question 18

When selecting between the best alternatives regarding an ethical dilemma in accounting,all of the following should be considered except
A)which alternative provides the most relevant information.
B)which alternative provides the most accurate information.
C)which alternative provides the most neutral information.
D)which alternative provides the most profitable information.

Accepted Answer

The profitability of the information should not be a consideration when making ethical decisions in accounting. Instead, the focus should be on providing accurate, relevant, and neutral information.

Question 19

Sawyer Corporation purchased land in 2009 for $490,000.In 2015,it purchased a nearly identical parcel of land for $660,000.In its 2015 balance sheet,Sawyer valued these two parcels of land at a combined value of $1,320,000.By reporting the land in this manner,Sawyer Corporation has violated which of the following?
A)Going concern assumption
B)Cost principle
C)Monetary unit measure
D)Time Period assumption

Accepted Answer

The cost principle states that assets should be recognized and reported at their historical cost. However, by valuing the two parcels of land at a combined value of $1,320,000, Sawyer Corporation has violated the cost principle because the reported value exceeds the historical cost of the land.

Question 20

______________________ consists of all activities necessary to provide the members of an economic system with goods and services.

Accepted Answer

The answer of ______________________ consists of all activities necessary to...

Quiz 1: Accounting As a Form of Communication

A ____________ is a certificate that represents a corporation's promise to repay a certain amount of money and interest in the future.

Which of the following organizations is responsible for setting auditing standards followed by public accounting firms in conducting independent audits of financial statements?

Drew Mellow,owner of Mellow's Melodies,also owns a personal residence that costs $400,000.The market value of his residence is $600,000.During preparation of the financial statements for Mellow's Melodies,the accounting concept most relevant to the presentation of Drew's home is

Owners of corporations are called ____________________.

Domenico Enterprises purchased land for $2,000,000 in 2000.In 2017,an independent appraiser assessed the value at $4,400,000.What amount should appear on the financial statements in 2017 with respect to the land?

To which of the following entities must a company report if it sells its stock on the organized stock market?

All of the following are important provisions of the Sarbanes-Oxley Act except

A ____________ is the type of accounting used by nonbusiness entities.

The Securities and Exchange Commission (SEC) is concerned with

The second step in the ethical decision-making model is to

Which organization,in addition to the Financial Accounting Standards Board (FASB) ,occasionally issues authoritative rules for financial statements?

Which of the following is a five-member body that has the authority from Congress to set standards for conducting audits?

Which one of the following best describes the external auditor's report?

The reliability of the information in a company's financial statements is the responsibility of which of the following?

Which one of the following statements is true concerning assets?

In order for accounting information to be useful in making informed decisions,it must be

Which the following organizations is primarily responsible for establishing GAAP today?

When selecting between the best alternatives regarding an ethical dilemma in accounting,all of the following should be considered except

______________________ consists of all activities necessary to provide the members of an economic system with goods and services.