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1 Copyright © 2018 McGraw-Hill Financial Accounting Fundamentals, 6e (Wild) Chapter 1 Accounting in Business 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
Difficulty: 1 Easy
Topic: Importance of Accounting
Learning Objective: 01-C1 Explain the purpose and importance of accounting.
Bloom's: Remember
AACSB: Communication
Accessible/AICPA: Keyboard Navigation
2) Recordkeeping, or bookkeeping, is the recording of transactions and events, either manually or electronically. This is just one part of accounting.
Answer: TRUE
Difficulty: 1 Easy
Topic: Importance of Accounting
Learning Objective: 01-C1 Explain the purpose and importance of accounting.
Bloom's: Remember
AACSB: Communication
Accessible/AICPA: Keyboard Navigation
3) An accounting system captures relevant data about transactions and then classifies, records, and reports data.
Answer: TRUE
Difficulty: 1 Easy
Topic: Importance of Accounting
Learning Objective: 01-C1 Explain the purpose and importance of accounting.
Bloom's: Remember
AACSB: Communication
Accessible/AICPA: Keyboard Navigation
4) Financial accounting is the area of accounting aimed at serving external users by providing them with general-purpose financial statements.
Answer: TRUE
Difficulty: 1 Easy
Topic: Users of Accounting Information
Learning Objective: 01-C2 Identify users and uses of, and opportunities in, accounting.
Bloom's: Remember
AACSB: Communication
Accessible/AICPA: Keyboard Navigation
Financial Accounting Fundamentals, 6e John J. Wild (Test Bank All Chapters, 100% Original Verified, A+ Grade) 1 / 4
2 Copyright © 2018 McGraw-Hill 5) Internal operating activities include research and development, distribution, and human resources.
Answer: TRUE
Difficulty: 1 Easy
Topic: Users of Accounting Information
Learning Objective: 01-C2 Identify users and uses of, and opportunities in, accounting.
Bloom's: Remember
AACSB: Communication
Accessible/AICPA: Keyboard Navigation
6) 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
Difficulty: 1 Easy
Topic: Users of Accounting Information
Learning Objective: 01-C2 Identify users and uses of, and opportunities in, accounting.
Bloom's: Remember
AACSB: Communication
Accessible/AICPA: Keyboard Navigation
7) External auditors examine financial statements to verify that they are prepared according to generally accepted accounting principles.
Answer: TRUE
Difficulty: 1 Easy
Topic: Users of Accounting Information
Learning Objective: 01-C2 Identify users and uses of, and opportunities in, accounting.
Bloom's: Remember
AACSB: Communication
Accessible/AICPA: Keyboard Navigation
8) External users include lenders, shareholders, customers, and regulators.
Answer: TRUE
Difficulty: 2 Medium
Topic: Users of Accounting Information
Learning Objective: 01-C2 Identify users and uses of, and opportunities in, accounting.
Bloom's: Understand
AACSB: Communication
Accessible/AICPA: Keyboard Navigation 2 / 4
3 Copyright © 2018 McGraw-Hill 9) Regulators often have legal authority over certain activities of organizations.
Answer: TRUE
Difficulty: 1 Easy
Topic: Users of Accounting Information
Learning Objective: 01-C2 Identify users and uses of, and opportunities in, accounting.
Bloom's: Remember
AACSB: Communication
Accessible/AICPA: Keyboard Navigation
10) Internal users include lenders, shareholders, brokers and nonexecutive employees.
Answer: FALSE
Difficulty: 2 Medium
Topic: Users of Accounting Information
Learning Objective: 01-C2 Identify users and uses of, and opportunities in, accounting.
Bloom's: Understand
AACSB: Communication
Accessible/AICPA: Keyboard Navigation
11) Opportunities in accounting include auditing, consulting, market research, and tax planning.
Answer: TRUE
Difficulty: 2 Medium
Topic: Users of Accounting Information
Learning Objective: 01-C2 Identify users and uses of, and opportunities in, accounting.
Bloom's: Understand
AACSB: Communication
Accessible/AICPA: Keyboard Navigation
12) Identifying the proper ethical path is usually easy.
Answer: FALSE
Difficulty: 2 Medium
Topic: Ethics
Learning Objective: 01-C3 Explain why ethics are crucial to accounting.
Bloom's: Understand
AACSB: Ethics
Accessible/AICPA: Keyboard Navigation
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4 Copyright © 2018 McGraw-Hill 13) 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
Difficulty: 1 Easy
Topic: Ethics
Learning Objective: 01-C3 Explain why ethics are crucial to accounting.
Bloom's: Remember
AACSB: Ethics
Accessible/AICPA: Keyboard Navigation
14) The fraud triangle asserts that the three factors that must exist for a person to commit fraud are opportunity, pressure, and rationalization.
Answer: TRUE
Difficulty: 2 Medium
Topic: Ethics
Learning Objective: 01-C3 Explain why ethics are crucial to accounting.
Bloom's: Understand
AACSB: Ethics
Accessible/AICPA: Keyboard Navigation
15) The Sarbanes-Oxley Act (SOX) does not require public companies to apply both accounting oversight and stringent internal controls.
Answer: FALSE
Difficulty: 2 Medium
Topic: Generally Accepted Accounting Principles
Learning Objective: 01-C4 Explain generally accepted accounting principles and define and apply several accounting principles.
Bloom's: Understand
AACSB: Ethics
Accessible/AICPA: Keyboard Navigation
16) A partnership is a business owned by two or more people.
Answer: TRUE
Difficulty: 1 Easy
Topic: Generally Accepted Accounting Principles
Learning Objective: 01-C4 Explain generally accepted accounting principles and define and apply several accounting principles.
Bloom's: Remember
AACSB: Communication
Accessible/AICPA: Keyboard Navigation
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