David Harvey Test - Atrill, Eddie McLaney, David Harvey (Test Bank...

Accoun�ng for Non- Specialists 7e Peter Atrill, Eddie McLaney, David Harvey (Test Bank All Chapters, 100% Original Verified, A+ Grade) 1 / 4

Copyright © 2018 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781488612589/Atrill/Accounting for Non-Specialists 7/e Chapter 1 Introduction to accounting

Choose the one alternative that best completes the statement or answers the question.1) Which of the following is the most important function of an accounting system?

• provide information for decision-making, planning and control.
• keep employees from embezzling funds.
• prepare accounting reports
• collect and record data.

Answer: A

Difficulty: Moderate

Learning Objective 1.1: Explain the nature and role of accounting

Topic: Nature and role of accounting

AACSB: 8 – Application of knowledge

2) The best description of the primary purpose of providing accounting information is:

• to allow the preparation of a taxation return.
• to assist users in making informed decisions.
• to calculate the bank account balance.
• to enable the financial statements to be prepared.

Answer: B

Difficulty: Basic

Learning Objective 1.1: Explain the nature and role of accounting

Topic: Nature and role of accounting

AACSB: 8 – Application of knowledge

3) The stages of an accounting system are:

• evaluation, processing, output.
• identification, recording, analysis, reporting.
• setting objectives, planning, analysis.
• none of the above.

Answer: B

Difficulty: Complex

Learning Objective 1.1: Explain the nature and role of accounting

Topic: Nature and role of accounting

AACSB: 3 – Analytical thinking

4) What are the four key qualities of accounting information? 2 / 4

Copyright © 2018 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781488612589/Atrill/Accounting for Non-Specialists 7/e

• relevance, reliability, comparability, and understandability.
• identification, analysis, reliability, and timeliness.
• planning, control, comparability and analysis
• understandability, identification, analysis, and relevance.

Answer: A

Difficulty: Complex

Learning Objective 1.1: Explain the nature and role of accounting

Topic: Nature and role of accounting

AACSB: 8 – Application of knowledge

5) The best explanation of relevance is:

• ensuring the benefit of the information is greater than the cost of providing it.
• ensuring that information is expressed as clearly as possible.
• ensuring that information is useful for decision-making.
• ensuring that information is free from bias.

Answer: C

Difficulty: Moderate

Learning Objective 1.1: Explain the nature and role of accounting

Topic: Nature and role of accounting

AACSB: 8 – Application of knowledge

6) The quality of accounting information that requires items that are basically the same to be treated in the

same manner is:

• relevance.
• timeliness.
• understandability.
• comparability.

Answer: D

Difficulty: Moderate

Learning Objective 1.1: Explain the nature and role of accounting

Topic: Nature and role of accounting

AACSB: 8 – Application of knowledge

7) When accounting information has the potential to change decision-making it is said to be:

• consistent.
• understandable.
• material.
• comparable.

Answer: C

Difficulty: Moderate 3 / 4

Copyright © 2018 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781488612589/Atrill/Accounting for Non-Specialists 7/e

Learning Objective 1.1: Explain the nature and role of accounting

Topic: Nature and role of accounting

AACSB: 3 – Analytical thinking

8) Which of these is a reason why achieving the maximum possible profit in a particular year may not be in the best interests of a business?

• Concentrating on the short-term may have detrimental effects in the long-term.
• It may be achieved by causing environmental problems, which give the business a bad reputation.
• If it is achieved with high-risk strategies, such as excessive reliance on borrowings, it could lead to

disaster in the longer term.

• All of the above.

Answer: D

Difficulty: Moderate

Learning Objective 1.1: Explain the nature and role of accounting

Topic: Nature and role of accounting

AACSB: 3 – Analytical thinking

9) Which test determines if an item of accounting information is worthwhile collecting?

• cost test.
• cost/benefit test.
• worthwhile test.
• validation test.

Answer: B

Difficulty: Moderate

Learning Objective 1.1: Explain the nature and role of accounting

Topic: Nature and role of accounting

AACSB: 3 – Analytical thinking

10) The characteristic of accounting information that requires financial reports to be expressed as clearly as possible and to be capable of being understood by those they are addressed to, is known as:

• understandability.
• reliability.
• cost versus benefit test.
• relevance.

Answer: A

Difficulty: Moderate

Learning Objective 1.1: Explain the nature and role of accounting

Topic: Nature and role of accounting

AACSB: 1 – Written and oral communication

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