61. The measures used by an organization to provide reasonable assurance that the organization produces reliable financial reports, complies with applicable laws and regulations, and conducts its operations in an efficient and effective manner are collectively referred to as:
A. Generally accepted accounting principles.
B. Financial accounting standards.
C. Securities and exchange regulations.
D. The internal control structure.
62. A strong internal control structure:
A. Contributes to the accuracy and reliability of the accounting records.
B. Will prevent a business from operating at a loss.
C. Assures that a business will remain solvent.
D. Will prevent fraud, theft, and embezzlement.
63. Which of the following is considered a return "on" investment?
A. Dividends.
B. Repayment of a loan.
C. Both of the above.
D. None of the above.
64. The basic purpose of audited financial statements is to:
A. Provide the reporting company with assurance that all assets are protected from theft or embezzlement.
B. Prepare financial statements for companies that do not have their own accounting departments.
C. Provide users of the financial statements with assurance that the statements are reliable and are presented in conformity with generally accepted accounting principles.
D. Provide both the reporting company and the users of the statements with a written guarantee that the statements are error-free.
65. Audits of financial statements are performed by:
A. The controller of the reporting company.
B. The Financial Accounting Standards Board (FASB).
C. The management of the reporting company.
D. Independent certified public accountants (CPAs).
66. The auditor's report on the published financial statements of a large corporation should be viewed as:
A. The opinion of independent experts as to the overall fairness of the statements.
B. The opinion of the corporation's chief accountant as to the overall fairness of the statements.
C. A guarantee by a firm of certified public accountants that the statements are accurate.
D. A guarantee by the Financial Statements Insurance Board that the statements do not overstate assets or net income.
67. The set of standards, assumptions, and concepts that form the "ground rules" for financial reporting in the United States is termed:
A. The conceptual framework.
B. Generally accepted accounting principles.
C. Statements of Financial Accounting Concepts.
D. American standards for certified public accountants.
68. The basic purpose of generally accepted accounting principles is to:
A. Minimize the possibility of a business becoming insolvent.
B. Provide a framework for financial reporting that is understood by both the preparers and the users of financial statements.
C. Ensure that financial statements include the type of information that is best suited to every type of business decision.
D. Eliminate the need for professional judgment in preparing financial statements.
69. Generally accepted accounting principles are intended to assist accountants in preparing financial statements that:
A. Are relevant, reliable, comparable, and understandable.
B. Show the business to be both solvent and profitable.
C. Comply with all income tax rules and regulations.
D. Are ideally suited to the specific needs of each user of the financial statements.
70. Which of the following is
not
an objective of generally accepted accounting principles?
A. To minimize the amount of income taxes owed.
B. To ensure that both preparers and users of financial statements understand the concepts and assumptions used in presenting information within these statements.
C. To enhance the relevance and reliability of information contained in financial statements.
D. To increase the comparability of financial statements prepared by different companies.