31. The Sarbanes-Oxley Act of 2002 created:
A. The Security and Exchange Commission
B. The Financial Accounting Standards Board
C. The Public Company Accounting Oversight Board
D. The Income Tax Return Overview Board
32. Which of the following would not be considered a user of financial information?
A. A large pension fund
B. A real estate investor
C. Company management
D. All the above are considered interested in financial information.
33. The field of accounting may best be described as:
A. Recording the financial transactions of an economic entity.
B. Developing information in conformity with generally accepted accounting principles.
C. The art of interpreting, measuring, and describing economic activity.
D. Developing the information required for the preparation of income tax returns.
34. The basic purpose of bookkeeping is to:
A. Provide financial information about an economic entity.
B. Develop the types of information best-suited to specific managerial decisions.
C. Record the financial transactions of an economic entity.
D. Determine the taxable income of individuals and business entities.
35. Which of the following is not characteristic of financial accounting?
A. Information used in financial statements is prepared in conformity with generally accepted accounting principles.
B. The information is confidential and is intended for use only by company management.
C. The information is used in a wide variety of business decisions.
D. The information is developed primarily by "private accountants" that is, accountants employed by business organizations.
36. Financial statements are prepared:
A. Only for publicly owned business organizations.
B. For corporations, but not for sole proprietorships or partnerships.
C. Primarily for the benefit of persons outside of the business organization.
D. In either monetary or nonmonetary terms, depending upon the need of the decision maker.
37. It is the function of management accounting to perform the following activities, except:
A. Financial forecasts
B. Cost accounting
C. Internal audits
D. Audited financial statements
38. The basic purpose of an audit is to:
A. Assure financial statements are in conformity with GAAP.
B. Provide as much useful information to decision makers as possible, regardless of cost.
C. Record changes in the financial position of an organization by applying the concepts of double entry accounting.
D. Meet an organization's need for accounting information as efficiently as possible.
39. The accounting systems of most business organizations:
A. Are tailored to meet the organization's needs for accounting information and the resources available for operating the system.
B. Are similar in design to the journals, ledgers, and worksheets illustrated in this text.
C. Utilize data bases, rather than ledger accounts.
D. Are designed by the CPA firm that performs the annual financial audit.
40. Which of the following is not a basic function of an accounting system?
A. To interpret and record the effects of business transactions.
B. To classify the effects of similar transactions in a manner that permits determination of various totals and subtotals useful to management.
C. To ensure that a business organization will be managed profitably.
D. To summarize and communicate information to decision makers.