College Accounting 16th Edition

1) What is the “language of business?” List three groups who use this financial information.
Question Details
Difficulty : 1 Easy
Learning Objective : 01-01 Define accounting.
Topic : What is Accounting?
Bloom's : Remember
AACSB : Analytical Thinking
AICPA : BB Industry
AICPA : FN Decision Making
Accessibility : Keyboard Navigation
Type : Static
Learning Objective : 01-03 Identify the users of financial information.
Gradable : manual
Accessibility : Screen Reader Compatible
2) Cullen Company of country X and Shaw Industries of country Y have issued financial
statements in compliance with the accounting principles of their respective countries. They
would like to work together on a project and need to compare their current financial statements
prior to starting the project. However, the accounting principles of the two countries differ. What
organization might they turn to regarding this issue? (Give both the full name of the organization
and its acronym.) What is the function of this organization?
3
Question Details
AACSB : Analytical Thinking
AICPA : BB Industry
AICPA : FN Decision Making
Accessibility : Keyboard Navigation
Type : Static
Learning Objective : 01-05 Describe the process used to develop generally accepted accounting princip
Topic : Generally Accepted Accounting Principles
Difficulty : 2 Medium
Bloom's : Understand
AICPA : BB Global
Gradable : manual
Accessibility : Screen Reader Compatible
3) You have just entered college and decide to pursue a career as a certified bookkeeper.
What three requirements must you satisfy to receive this designation?
Question Details
Difficulty : 1 Easy
Topic : What is Accounting?
Bloom's : Remember
AACSB : Analytical Thinking
AICPA : BB Industry
AICPA : FN Decision Making
Accessibility : Keyboard Navigation
Type : Static
Learning Objective : 01-02 Identify and discuss career opportunities in accounting.
Gradable : manual
Accessibility : Screen Reader Compatible
4) There are three general services public accountants offer. List and briefly describe each.
4
Question Details
Topic : What is Accounting?
AACSB : Analytical Thinking
AICPA : BB Industry
AICPA : FN Decision Making
Accessibility : Keyboard Navigation
Type : Static
Learning Objective : 01-02 Identify and discuss career opportunities in accounting.
Difficulty : 2 Medium
Bloom's : Understand
Gradable : manual
Accessibility : Screen Reader Compatible
5) List at least five activities performed by managerial accountants.
Question Details
Difficulty : 1 Easy
Topic : What is Accounting?
Bloom's : Remember
AACSB : Analytical Thinking
AICPA : BB Industry
AICPA : FN Decision Making
Accessibility : Keyboard Navigation
Type : Static
Learning Objective : 01-02 Identify and discuss career opportunities in accounting.
Gradable : manual
Accessibility : Screen Reader Compatible
5
6) Having enjoyed multiple accounting courses in college, you have decided to pursue a
certified public accountant license. What requirements must you fulfill to achieve this
certification?
Question Details
Difficulty : 1 Easy
Topic : What is Accounting?
Bloom's : Remember
AACSB : Analytical Thinking
AICPA : BB Industry
AICPA : FN Decision Making
Accessibility : Keyboard Navigation
Type : Static
Learning Objective : 01-02 Identify and discuss career opportunities in accounting.
Gradable : manual
Accessibility : Screen Reader Compatible
7) How do sole proprietorships, partnerships, and corporations differ?
Question Details
AACSB : Analytical Thinking
AICPA : BB Industry
AICPA : FN Decision Making
Accessibility : Keyboard Navigation
Type : Static
Learning Objective : 01-04 Compare and contrast the three types of business entities.
Topic : Types of Business Entities
AICPA : BB Legal
Difficulty : 2 Medium
Bloom's : Understand
Gradable : manual
Accessibility : Screen Reader Compatible
6
8) List three individuals or groups who use financial information to make decisions about a
firm. For each listed, give an example of why they would need the information.
Question Details
Topic : What is Accounting?
AACSB : Analytical Thinking
AICPA : BB Industry
AICPA : FN Decision Making
Accessibility : Keyboard Navigation
Type : Static
Learning Objective : 01-03 Identify the users of financial information.
Difficulty : 2 Medium
Bloom's : Understand
Gradable : manual
Accessibility : Screen Reader Compatible
9) List the “Big Four” public accounting firms in the United States.
7
Question Details
Difficulty : 1 Easy
Topic : What is Accounting?
Bloom's : Remember
AACSB : Analytical Thinking
AICPA : BB Industry
AICPA : FN Decision Making
Accessibility : Keyboard Navigation
Type : Static
Learning Objective : 01-02 Identify and discuss career opportunities in accounting.
Gradable : manual
Accessibility : Screen Reader Compatible
10) Audited financial statements include an auditor’s report. What does this auditor’s report
contain?
Question Details
AACSB : Analytical Thinking
AICPA : BB Industry
AICPA : FN Decision Making
Accessibility : Keyboard Navigation
Type : Static
Learning Objective : 01-05 Describe the process used to develop generally accepted accounting princip
Topic : Generally Accepted Accounting Principles
Difficulty : 2 Medium
Bloom's : Understand
Gradable : manual
Accessibility : Screen Reader Compatible
Answer Key
Test name: Chapter 01 Test Bank
1) Accounting is the language of business. The groups who use this
information are owners and managers, suppliers, banks, tax authorities,
regulatory agencies and investors, customers, and employees and unions.
2) Organization: International Accounting Standards Board (IASB). The
function of the IASB is to deal with issues caused by the lack of uniform
accounting principles and make recommendations to enhance
comparability.
3) To become a Certified Bookkeeper you must pass the national
certified bookkeeper exam, sign a code of ethics, and submit evidence of
at least two years of full-time bookkeeping experience or 3,000 hours of
part-time or freelance experience.
4) Auditing: the review of financial statements to assess their fairness
and adherence to Generally Accepted Accounting Principles.
Tax accounting: tax compliance-dealing with the preparation of tax
returns and the audit of those returns, and tax planning. Also giving
advice to clients on how to structure their financial affairs in order to
reduce their tax liability.
Management advisory services: helping clients improve their
information systems or their business performance.
5) Establishing accounting policies, managing the accounting system,
preparing financial statements, interpreting financial information,
providing financial advice to management, preparing tax forms,
performing tax planning services, and preparing internal reports for
management.
54
6) To become a Certified Public Accountant (CPA) you must have
completed a certain number of college credits in accounting courses,
demonstrate good personal character, pass the Uniform certified public
accountant exam, and fulfill the experience requirements of the state of
practice.
7) Sole proprietorships-business entities owned by one person who is
responsible for the business debts and taxes. The business ends when the
owner dies. Partnerships-business entities owned by two or more
individuals who are individually, and as a group, responsible for the
partnership’s debts and taxes. A partnership ends when one or more
partners withdraw or die. Corporations-business entities with one or
more owners which can continue indefinitely unless bankruptcy occurs
or the stockholders vote to liquidate. Stockholders (owners) are not
personally responsible for the corporation’s debts and can only lose the
amount they invested.
8) Owners and managers-to evaluate results of operations or to make
decisions about the future. Suppliers-to assess the ability of the firm to
pay its bills and to set credit limits. Banks-to determine whether the firm
can repay the loan in a timely manner. Tax authorities-to determine the
tax base of the firm. Regulatory agencies and investors-to fulfill the
requirements of the law. Customers-to determine whether service on
purchases will continue into the future. Employees and unions-to
negotiate wages and benefits.
9) Deloitte & Touche, Ernst & Young, KPMG, and
PricewaterhouseCoopers
10) It contains the auditor’s opinion regarding the fair presentation of the
operating results and financial position of the business. The report also
confirms the financial information is prepared in conformity with
generally accepted accounting principles