ACCOUNTING IN BUSINESS

Chapter 1

ACCOUNTING IN BUSINESS

True / False Questions 1.Accounting is an information and measurement system that identifies, records, and communicates relevant, reliable, and comparable information about an organization’s business activities.

Answer: True

Blooms: Remember

AACSB: Communication

AICPA BB: Industry

AICPA FN: Decision Making

Difficulty: 1 Easy

Learning Objective: 01-C1

Topic: Importance of Accounting

2.Bookkeeping is the recording of transactions and events and is only part of accounting.

Answer: True

Blooms: Remember

AACSB: Communication

AICPA BB: Industry

AICPA FN: Decision Making

Difficulty: 1 Easy

Learning Objective: 01-C1

Topic: Importance of Accounting

3.An accounting information system communicates data to help users make better decisions.

Answer: True

Blooms: Remember

AACSB: Communication

AICPA BB: Industry

AICPA FN: Decision Making

Difficulty: 1 Easy

Learning Objective: 01-C1

Topic: Importance of Accounting

Financial and Managerial Accounting Information for Decisions 6e John Wild, Ken Shaw, Barbara Chiappetta (Test Bank All Chapters, 100% Original Verified, A+ Grade) . All rights reserved. No reproduction or distribution without the prior written consent of .

1-1 1 / 4

• Financial accounting is the area of accounting that provides internal reports to assist the

decision making needs of internal users.

Answer: False

Blooms: Remember

AACSB: Communication

AICPA BB: Industry

AICPA FN: Decision Making

Difficulty: 1 Easy

Learning Objective: 01-C2

Topic: Users of Accounting Information

• Internal operating activities include research and development, distribution, and human

resources.

Answer: True

Blooms: Remember

AACSB: Communication

AICPA BB: Industry

AICPA FN: Decision Making

Difficulty: 1 Easy

Learning Objective: 01-C2

Topic: Users of Accounting Information

• The primary objective of managerial accounting is to provide general purpose financial

statements to help external users analyze and interpret an organization’s activities.

Answer: False

Blooms: Remember

AACSB: Communication

AICPA BB: Industry

AICPA FN: Decision Making

Difficulty: 1 Easy

Learning Objective: 01-C2

Topic: Users of Accounting Information

• External auditors examine financial statements to verify that they are prepared according to

generally accepted accounting principles.

Answer: True

Blooms: Remember

AACSB: Communication

AICPA BB: Industry

AICPA FN: Decision Making

Difficulty: 1 Easy

Learning Objective: 01-C2

Topic: Users of Accounting Information

. All rights reserved. No reproduction or distribution without the prior written consent of .

1-2 2 / 4

• External users include lenders, shareholders, customers, and regulators.

Answer: True

Blooms: Understand

AACSB: Communication

AICPA BB: Industry

AICPA FN: Decision Making

Difficulty: 2 Medium

Learning Objective: 01-C2

Topic: Users of Accounting Information

• Regulators often have legal authority over certain activities of organizations.

Answer: True

Blooms: Remember

AACSB: Communication

AICPA BB: Legal

AICPA FN: Decision Making

Difficulty: 1 Easy

Learning Objective: 01-C2

Topic: Users of Accounting Information

• Internal users include lenders, shareholders, brokers and managers.

Answer: False

Blooms: Understand

AACSB: Communication

AICPA BB: Industry

AICPA FN: Decision Making

Difficulty: 2 Medium

Learning Objective: 01-C2

Topic: Users of Accounting Information

• Opportunities in accounting include auditing, consulting, market research, and tax

planning.

Answer: True

Blooms: Understand

AACSB: Communication

AICPA BB: Industry

AICPA FN: Decision Making

Difficulty: 2 Medium

Learning Objective: 01-C2

Topic: Users of Accounting Information

. All rights reserved. No reproduction or distribution without the prior written consent of .

1-3 3 / 4

• Identifying the proper ethical path is usually easy.

Answer: False

Blooms: Understand

AACSB: Ethics

AICPA BB: Industry

AICPA FN: Decision Making

Difficulty: 2 Medium

Learning Objective: 01-C3

Topic: Ethics

• The Sarbanes-Oxley Act (SOX) requires each issuer of securities to disclose whether it

has adopted a code of ethics for its senior financial officers and the contents of that code.

Answer: True

Blooms: Remember

AACSB: Ethics

AICPA BB: Legal

AICPA FN: Reporting

Difficulty: 1 Easy

Learning Objective: 01-C3

Topic: Ethics

• The fraud triangle asserts that the three factors that must exist for a person to commit

fraud are opportunity, pressure, and rationalization.

Answer: True

Blooms: Understand

AACSB: Ethics

AICPA BB: Industry

AICPA BB: Legal

AICPA FN: Decision Making

Difficulty: 2 Medium

Learning Objective: 01-C3

Topic: Ethics

• The Sarbanes-Oxley Act (SOX) does not require public companies to apply both

accounting oversight and stringent internal controls.

Answer: False

Blooms: Understand

AACSB: Ethics

AICPA BB: Legal

AICPA FN: Reporting

Difficulty: 2 Medium

Learning Objective: 01-C4

Topic: Generally Accepted Accounting Principles

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