Multiple Choice Questions

1-1 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Chapter 01 Accounting-Present and Past Multiple Choice Questions 1.Which of the following entities would not require accounting information pertaining to their economic activities?

• Social clubs.
• Not-for-profit entities.
• State governments.
• All of the above require accounting information.
• None of the above requires accounting information.

2.The authoritative financial accounting standards-setting body in the United States is

presently the:

• Securities and Exchange Commission (SEC)
• International Accounting Standards Board (IASB)
• Public Company Accounting Oversights Board (PCAOB)
• Financial Accounting Standards Board (FASB)
• Accounting Principles Board (APB)

Accounting What the Numbers Mean 11e David Marshall Wayne McManus Daniel Viele (Test Bank All Chapters, 100% Original Verified, A+ Grade) Answers At The End Of Each Chapter 1 / 4

1-2 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

3.Which of the following statements about the Financial Accounting Standards Board is correct?

• The FASB is an agency of the Federal government.
• The FASB has the authority to fine a noncompliant firm.
• The FASB follows a due process procedure that permits input from interested parties

before a standard is issued.

• The FASB is controlled by the American Institute of CPA's.
• None of the above statements is correct.

4.Major classifications of accounting activity would not include:

• financial accounting, internal auditing, public accounting.
• internal auditing, governmental accounting, managerial accounting.
• financial accounting, national accounting, cost accounting.
• auditing, income tax accounting, governmental accounting.

5.Which of the following is not an example of a decision or informed judgment that a potential investor would make from accounting information?

• Future profitability based on past profitability.
• Probability of success of a new product development.
• A forecast of dividends.
• Assessment of risk that a company may have more debt than it can repay if the economy

enters a recession.

6.Which of the following is not an example of a decision or informed judgment that a potential employee could make from accounting information?

• Personnel turnover statistics (i.e., hiring and terminations).
• Probability of the company's ability to make profit sharing plan contributions in the future.
• Assessment of the risk that the company may become bankrupt in the near future.
• The extent of the company's commitment to a research program. 2 / 4

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• Which of the following are qualified to express an auditor's opinion about an entity's financial

statements?

• A Comptroller.

• A Certified Management Accountant.

• A Certified Internal Auditor.

• A Certified Public Accountant.

• None of the above.

• Which classification of accounting is most concerned with the use of economic and financial

information to plan and control many of the activities of the entity?

• Financial accounting.

• Auditing-Public accounting.

• Managerial accounting.

• Income tax accounting.

9. An unqualified auditors' opinion about an entity's financial statements:

• is a clean bill of health.

• means that all of the entity's transactions during the audited period were checked out.

• guarantees that the entity was not involved in or the victim of any fraudulent activities

during the audited period.

• states that they are presented in conformance with U.S. generally accepted accounting

principles.

• Cost accounting is a subset of which of the following?

• Internal auditing.

• Public auditing.

• Cost analysis.

• Managerial accounting.

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1-4 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

• The officer of a corporation responsible for the firm's published financial statements would

be most concerned about pronouncements of the:

A. FASB.

B. AICPA.

C. GASB.

D. SEC.

E. IRS.

• Which of the following is not a characteristic or limitation of the kind of information that

financial reporting by business enterprises can provide?

• The information results in approximate, rather than exact, measures.

• The information largely reflects the financial effects of transactions that have already

happened.

• The information is provided and used at a cost.

• All of the above are characteristics or limitations of the kind of information that financial

reporting by business enterprises can provide.

13. The ethical concept of independence means that an accountant employed:

• by a corporation cannot prepare financial statements for use by the company's bank.

• by one company cannot work part-time for another company.

• by an auditing firm cannot own any stock in the company being audited.

• by one company cannot accept a job with another company in the same industry.

14. The objectives of financial reporting for nonbusiness enterprises:

• are exactly the same as those for business enterprises.

• focus on providing information for resource providers, rather than investors.

• have more of an internal utilization rather than external reporting focus.

• do not give consideration to the cost of providing information.

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