Accounting: Business Reporting for

Testbank For

Accounting: Business Reporting for

Decision Making 5e Jacqueline Birt, Keryn Chalmers, Suzanne Maloney, Albie Brooks & Judy Oliver Prepared by Penny Janson 1 / 4

Chapter 1: Introduction to accounting

© John Wiley and Sons Australia, Ltd 2014 1.1 Chapter 1 – Introduction to Accounting

LEARNING OBJECTIVES

1.Explain the process of accounting and the differences between accounting and bookkeeping

Q1, Q2, Q3, Q4, Q51, Q52

2.Outline the role of accounting in decision making by various users

Q5, Q6, Q7, Q8, Q9, Q10

3.Explain the differences between financial accounting and management accounting

Q11, Q12, Q13, Q14, Q53, Q54

4.Discuss the globalisation of financial reporting

Q15, Q16, Q17, Q18, Q55

5.Identify the sources of company regulation in Australia

Q19, Q20, Q21, Q22, Q23, Q56

6.Explain the current standard setting framework and the role of the professional accounting associations in the standard-setting process

Q24, Q25, Q26, Q27, Q28, Q57, Q58

7.Evaluate the role of the Conceptual Framework and illustrate the qualitative characteristics of financial statements

Q29, Q30, Q31, Q32, Q33, Q34, Q35, Q36, Q37, Q38, Q39, Q40, Q41, Q59, Q60,

Q61, Q62

8.Give examples of the limitations of accounting information

Q42, Q43, Q44, Q45, Q63, Q64

9.Provide examples of new and exciting opportunities in the accounting discipline.

Q46, Q47, Q48, Q49, Q50, Q65 2 / 4

Testbank to accompany Accounting: business reporting for decision making 5e

© John Wiley and Sons Australia, Ltd 2014 1.2 Multiple-choice questions

• Which of the following is not a business transaction?

• Incurring interest on a business loan.
• Purchasing office supplies.
• Receiving fees for services.

*d. Offering a job to a new employee.

Correct answer: d

Learning Objective 1.1 ~ Explain the process of accounting and the differences between accounting and bookkeeping

• Which of the following is not an accounting report?

• Statement of cash flows
• Balance sheet

*c. Statement of employee job satisfaction

• Income statement

Correct answer: c

Learning Objective 1.1 ~ Explain the process of accounting and the differences between accounting and bookkeeping

3. The steps in the process of accounting take place in the following order:

• Measuring, identifying, decision making, communicating.
• Identifying, communicating, measuring, decision making.

*c. Identifying, measuring, communicating, decision making.

• Identifying, decision making, measuring, communicating.

Correct answer: c

Learning Objective 1.1 ~ Explain the process of accounting and the differences between accounting and bookkeeping

• Which of these is not likely to be the responsibility of a bookkeeper?

• Calculating and paying wages.
• Checking a customer’s credit rating.
• Preparing the bank reconciliations.

*d. Selecting an accounting package to be used by the entity.

Correct answer: d

Learning Objective 1.1 ~ Explain the process of accounting and the differences between accounting and bookkeeping

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Chapter 1: Introduction to accounting

© John Wiley and Sons Australia, Ltd 2014 1.3

• The information about a customer that would be of most interest to a supplier is:

*a. the ability to pay off debts as they fall due.

• annual dividends.
• taxable income.
• compliance with accounting standards.

Correct answer: a

Learning Objective 1.2 ~ Outline the role of accounting in decision making by various users

• The information that would be of most interest to an organisation’s production manager

is:

• the ability to pay off debts as they fall due.

*b. continuity of orders for the factory.

• annual dividends.
• taxable income.

Correct answer: b

Learning Objective 1.2 ~ Outline the role of accounting in decision making by various users

7. An external user of accounting information is the:

• purchasing officer.
• director of research and development.
• inventory clerk.

*d. customer.

Correct answer: d

Learning Objective 1.2 ~ Outline the role of accounting in decision making by various users

8. The internal user of accounting information is the:

*a. office manager.

• supplier.
• environmental lobby group.
• auditor from the Australian Tax Office.

Correct answer: a

Learning Objective 1.2 ~ Outline the role of accounting in decision making by various users

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