Financial Accounting: Information for Decisions (11th Edition) Test Bank | John Wild | 9781264127269

TEST BANK

FINANCIAL ACCOUNTING INFORMATION FOR DECISIONS
11TH EDITION

CHAPTER NO. 01: INTRODUCING FINANCIAL STATEMENTS

TRUE / FALSE

1) Accounting is an information and measurement system that identifies, records, and
communicates an organization's business activities.
⊚ true
⊚ false


ANSWER: TRUE


2) Accounting includes the analysis and interpretation of information.
⊚ true
⊚ false


ANSWER: TRUE


3) Financial accounting focuses on the needs of external users, who get accounting
information from general-purpose financial statements.
⊚ true
⊚ false


ANSWER: TRUE

,4) Internal users of accounting information do not directly manage the organization and
have limited access to its accounting information.
⊚ true
⊚ false


ANSWER: FALSE


5) Auditors verify the effectiveness of internal controls.
⊚ true
⊚ false


ANSWER: TRUE


6) External auditors examine financial statements to verify that they are prepared
according to generally accepted accounting principles.
⊚ true
⊚ false


ANSWER: TRUE


7) External users include lenders, shareholders, customers, and regulators.
⊚ true
⊚ false


ANSWER: TRUE


8) Internal users include lenders, shareholders, brokers and nonexecutive employees.
⊚ true
⊚ false


ANSWER: TRUE

,9) Opportunities in accounting include auditing, consulting, market research, and tax
planning.
⊚ true
⊚ false


ANSWER: TRUE


10) The fraud triangle shows that three factors that push a person to commit fraud are
opportunity, pressure, and rationalization.
⊚ true
⊚ false


ANSWER: TRUE


11) Internal controls are procedures to protect assets, ensure reliable accounting,
promote efficiency, and uphold company policies.
⊚ true
⊚ false


ANSWER: TRUE


12) A partnership is a business owned by two or more people.
⊚ true
⊚ false


ANSWER: TRUE


13) Owners of a corporation are called shareholders or stockholders.
⊚ true
⊚ false


ANSWER: TRUE

, 14) In a partnership, the owners are called stockholders.
⊚ true
⊚ false


ANSWER: FALSE


15) The balance sheet shows a company's net income or loss over a period of time.
⊚ true
⊚ false


ANSWER: FALSE


16) The Financial Accounting Standards Board (FASB) is given the task of setting
generally accepted accounting principles (GAAP) from the Securities and Exchange
Commission.
⊚ true
⊚ false


ANSWER: TRUE


17) The business entity assumption means that accounting information presumes that
the business will continue operating instead of being closed or sold.
⊚ true
⊚ false


ANSWER: FALSE


18) GAAP wants information to have relevance and faithful representation.
⊚ true
⊚ false


ANSWER: TRUE