51.What encourages management to refrain from pressuring auditors too strongly?
a. Possible legal liability
b. Outside investors and creditors
c. Prospects of higher net income
d. Economic incentives from outsiders
52.Which of the following best describes the two perspectives of the financial reporting process that managers need to understand in investing decisions?
a. Economic consequences and user orientation.
b. Corporate governance and user orientation.
c. User orientation and debt covenants.
d. Economic consequences and corporate governance.
53.All of the following might be found in the auditor's report except:
a. A statement about conformity with GAAP.
b. A statement about the fair presentation of the financial conditions and operations of
the audited company.
c. A statement about the effectiveness of the company's internal control system.
d. A statement about the function of the company's board of directors.
54.Which of the following best describes assets paid to owners of a company as a return for their initial investment?
a. payables
b. compensation contracts
c. dividends
d. interest
55.Where would you most likely find a detailed explanation about estimates used in the financial statements of a company?
a. management letter
b. financial footnotes
c. debt restrictions
d. debt contracts
56.All of the following would likely be part of a loan contract except:
a. maturity date
b. earning power
c. collateral
d. annual interest
57.Which of the following statements is true?
a. Dividend payments are determined by management.
b. Dividend payments are specified by a contract.
c. Dividend payments are based on company collateral.
d. Dividend payments are paid at the board of director's discretion.
58.All of the following are functions of the board of directors except:
a. Attending quarterly meetings.
b. Conducting performance review for management.
c. Declaring dividends.
d. Firing staff personnel.
59.Which of the following is a measure of past profits that have been retained in a business?
a liabilities
b. common stock.
c. retained earnings.
d. assets
60.Which of the following is least likely to be a by-product of ethical business practices?
a. fewer lawsuits.
b. higher profits.
c. higher audit fees.
d. public trust.