Choose the best answer for each of the following questions and insert the identifying letter in the space provided.
1Which of the following does
not
describe accounting?
aLanguage of business.
bIs an end rather than a means to an end.
cUseful for decision-making.
dUsed by businesses, governments, non-profit organizations, and individuals.
2To understand and use accounting information in making economic decisions, you must understand:
aThe nature of economic activities that accounting information describes.
bThe assumptions and measurement techniques involved in developing accounting information.
cWhich information is relevant for a particular type of decision that is being made.
dAll of the above.
3Purposes of an accounting system include all of the following
except:
aInterpret and record the effects of business transactions.
bClassify the effects of transactions to facilitate the preparation of reports.
cSummarize and communicate information to decision makers.
dDictate the specific types of business transactions that the enterprise may engage in.
4External users of financial accounting information include all of the following except:
aInvestors.
bLabor unions.
cLine managers.
dGeneral public.
5Objectives of financial reporting to external investors and creditors includes preparing information about all of the following
except:
aInformation used to determine which products to produce.
bInformation about economic resources, claims to those resources, and changes in both resources and claims.
cInformation that is useful in assessing the amount, timing, and uncertainty of future cash flows.
dInformation that is useful in making investment and credit decisions.
6Financial accounting information is characterized by all of the following
except:
aIt is historical in nature.
bIt results from inexact and approximate measures.
cIt is factual, so it does not require judgment to prepare.
dIt is enhanced by management’s explanation.
7Which of the following is
not
a user of management accounting information?
aStore manager.
bChief Executive Officer.
cCreditor.
dChief Financial Officer.
8Characteristics of management accounting information include all of the following except:
aIs audited by a CPA.
bIt must be timely.
cIt is oriented toward the future.
dIt measures efficiency and effectiveness.
9Which of the following are important factors in ensuring the integrity of accounting information?
aInstitutional factors, such as standards for preparing information.
bProfessional organizations, such as the American Institute of CPAs.
cCompetence, judgment and ethical behavior of individual accountants.
dAll of the above.
10The code of ethics of the American Institute of Certified Public Accountants includes requirements in which of the following areas?
aThe Public Interest.
bObjectivity.
cIndependence.
dAll of the above.