31.A bank that loans money to a company is called
a.a supplier.
b.a creditor.
c.an equity investor.
d.a shareholder.
32.Which one of the following is an equity investor?
a.A supplier of inventory waiting for payment
b.A person who purchases common stock of a corporation
c.A bank that loans money to a firm
d. A person who has a savings account in a bank
e. An employee that plans on investing in the company 10 years from now
33.As used in accounting, SEC is an abbreviation for
a. Securities and Exchange Commission.
b. South Eccentric Commissioners.
c. Shareholders’ Equity Commission.
d. Southeastern Conference.
34.The independence of the auditor is subject to question when the
a. auditor is paid by the management of the company being audited.
b.auditor is independent.
c.audit firm is also responsible for preparing the tax return.
d. auditor is paid 1% of the company’s profits for the audit services provided.
35.Which of the following statements is true?
a. Shopping for favorable audit opinions is permitted by the SEC.
b. No formal reporting of auditor switches is required by the SEC.
c.The SEC has enacted rules to help ensure financial literacy among audit committee members.
d.Since management constructs the financial statements, auditors have no legal liability to those who rely upon these reports.
36.The advantage to the user of financial accounting statements that are audited by independent certified public accountants is assurance that the
a. statements are produced in accordance with generally accepted accounting principles.
b. company will be solvent for at least one more year.
c. company cannot remain profitable for more than 2 to 3 years.
d. company pays its fair share of income taxes.
37.GAAP is an acronym for
a. General Asset Accounting Procedures.
b. Government Agency Accounting Procedures.
c. Generally Accepted Accounting Principles.
d. Global Accounting Activity Principles.
38.Debt investments
a.require payments to the shareholders for periodic dividends.
b.are found on a company’s income statement.
c.may be secured with collateral.
d.return payments at the discretion of the board of directors.
39.Annual reports of public companies
a.are published once per year.
b.include financial statements adjusted for inflation.
c.are also known as Form 10-K.
d.are published by companies 4 times per year.
40.Equity investments are bought and sold
a.only on the first day of each year.
b.in stock exchanges such as the NASDAQ.
c.by a company’s independent auditors.
d.from and to the SEC.