BUSN Ch.8 Exam Questions and Answers Fully Solved Latest Version 2025-2026
Stockholders typically want to view a firm's accounting information to: - Answersknow if management
has generated a strong-enough return on investment
_____ work within their organizations to detect problems such as waste, mismanagement,
embezzlement, and employee theft. - Answersinternal auditors
Generally accepted accounting principles (GAAP) are a set of accounting standards that is used in the: -
Answerspreparation of financial statements
In the United States, the ultimate legal authority to set and enforce accounting standards lies with the
_____. - Answerssecurities and exchange commission
In the United States, the Securities and Exchange Commission (SEC) has delegated the responsibility for
developing accounting standards to a private organization called the _____. - Answersfinancial
accounting standards board
The major responsibilities involved in financial accounting are the preparation of the: - Answersbalance
sheet, income statement, and statement of cash flows
In the context of financial statements, _____ are debts that come due within a year of the date on the
balance sheet. - Answerscurrent liabilities
_____ refers to the claims owners have against their firm's assets. - Answersstockholder's equity
In the context of the balance sheet, which of the following serves to be the rationale behind the
accounting equation? - AnswersA firm must finance the purchase of their assets, and the owners and
nonowners should contribute toward it.
Increases in a firm's assets that result from the sale of goods, provision of services, or other activities
intended to earn income are referred to as _____. - Answersrevenue
In the context of statement of cash flows, cash flows from investing activities: - Answersshow the
amount of cash received from the sale of fixed assets.
In the context of an independent auditor's report, _____ indicates that the auditor believes the financial
statements are seriously flawed and that they may be misleading and unreliable. - Answersan adverse
opinion
In the context of external audits of financial statements, which of the following statements is true of
CPA firms? - AnswersThey must be independent of the companies they are auditing.
The Securities and Exchange Commission requires publicly traded corporations to provide _____. -
Answerscomparative financial statements
, In the context of interpreting financial statements, using comparative statements to identify changes in
key account values over time is called _____. - Answershorizontal analysis
_____ are budgets that identify projected sales and production goals and the various costs the firm will
incur to meet these goals. - Answersoperating budgets
In the context of budget preparation, the cash budget is a financial budget document that identifies: -
Answersshort-term fluctuations in cash flow
The _____ is a financial budget and shows how a firm's operations, investing, and financing activities are
expected to affect all of the asset, liability, and owners' equity accounts. - Answersa budgeted balance
sheet
The opportunity cost that arises when a firm uses owner-supplied resources is known as a(n) _____. -
Answersimplicit cost
In the context of managerial accounting, _____ are costs that change directly with the level of
production. - Answersvariable costs
_____ are costs that are the result of a firm's general operations and are not tied to any specific cost
object. - Answersindirect costs
Mark, an accountant, is given task to lead an external auditing project for a multinational company. In
his spare time, Mark also acts as a consultant for Mayfiar Hut Inc., a local company. In this scenario.
Mark is - Answerspublic accountant
Which of the following statements is true of management accountants? - Answersthey assist their
superiors in preparing financial statements
Financial accounting: - Answersaddresses the needs of stockholders, creditors, and government
regulators
Which of the following statements is true of the Financial Accounting Standards Board (FASB)? -
AnswersIt is a private organization responsible for developing accounting rules.
The accountants at Gamone Phones, a cell phone manufacturing company, discover that the firm has
performed poorly over the last two quarters, leading to negative financial implications. Instead of
stating the actual figures, the managers decide to wrongly present the firm's debts and overstate its
earnings. The aspect of financial accounting that should be emphasized to avoid such incidents of
accounting fraud is: - Answersethics in accounting
Frank is a loan officer who approves loans for small businesses. One factor he looks at carefully when
making loan decisions is the amount of outstanding debt a firm already has—an information that he can
find in the firm's: - Answersbalance sheet
Stockholders typically want to view a firm's accounting information to: - Answersknow if management
has generated a strong-enough return on investment
_____ work within their organizations to detect problems such as waste, mismanagement,
embezzlement, and employee theft. - Answersinternal auditors
Generally accepted accounting principles (GAAP) are a set of accounting standards that is used in the: -
Answerspreparation of financial statements
In the United States, the ultimate legal authority to set and enforce accounting standards lies with the
_____. - Answerssecurities and exchange commission
In the United States, the Securities and Exchange Commission (SEC) has delegated the responsibility for
developing accounting standards to a private organization called the _____. - Answersfinancial
accounting standards board
The major responsibilities involved in financial accounting are the preparation of the: - Answersbalance
sheet, income statement, and statement of cash flows
In the context of financial statements, _____ are debts that come due within a year of the date on the
balance sheet. - Answerscurrent liabilities
_____ refers to the claims owners have against their firm's assets. - Answersstockholder's equity
In the context of the balance sheet, which of the following serves to be the rationale behind the
accounting equation? - AnswersA firm must finance the purchase of their assets, and the owners and
nonowners should contribute toward it.
Increases in a firm's assets that result from the sale of goods, provision of services, or other activities
intended to earn income are referred to as _____. - Answersrevenue
In the context of statement of cash flows, cash flows from investing activities: - Answersshow the
amount of cash received from the sale of fixed assets.
In the context of an independent auditor's report, _____ indicates that the auditor believes the financial
statements are seriously flawed and that they may be misleading and unreliable. - Answersan adverse
opinion
In the context of external audits of financial statements, which of the following statements is true of
CPA firms? - AnswersThey must be independent of the companies they are auditing.
The Securities and Exchange Commission requires publicly traded corporations to provide _____. -
Answerscomparative financial statements
, In the context of interpreting financial statements, using comparative statements to identify changes in
key account values over time is called _____. - Answershorizontal analysis
_____ are budgets that identify projected sales and production goals and the various costs the firm will
incur to meet these goals. - Answersoperating budgets
In the context of budget preparation, the cash budget is a financial budget document that identifies: -
Answersshort-term fluctuations in cash flow
The _____ is a financial budget and shows how a firm's operations, investing, and financing activities are
expected to affect all of the asset, liability, and owners' equity accounts. - Answersa budgeted balance
sheet
The opportunity cost that arises when a firm uses owner-supplied resources is known as a(n) _____. -
Answersimplicit cost
In the context of managerial accounting, _____ are costs that change directly with the level of
production. - Answersvariable costs
_____ are costs that are the result of a firm's general operations and are not tied to any specific cost
object. - Answersindirect costs
Mark, an accountant, is given task to lead an external auditing project for a multinational company. In
his spare time, Mark also acts as a consultant for Mayfiar Hut Inc., a local company. In this scenario.
Mark is - Answerspublic accountant
Which of the following statements is true of management accountants? - Answersthey assist their
superiors in preparing financial statements
Financial accounting: - Answersaddresses the needs of stockholders, creditors, and government
regulators
Which of the following statements is true of the Financial Accounting Standards Board (FASB)? -
AnswersIt is a private organization responsible for developing accounting rules.
The accountants at Gamone Phones, a cell phone manufacturing company, discover that the firm has
performed poorly over the last two quarters, leading to negative financial implications. Instead of
stating the actual figures, the managers decide to wrongly present the firm's debts and overstate its
earnings. The aspect of financial accounting that should be emphasized to avoid such incidents of
accounting fraud is: - Answersethics in accounting
Frank is a loan officer who approves loans for small businesses. One factor he looks at carefully when
making loan decisions is the amount of outstanding debt a firm already has—an information that he can
find in the firm's: - Answersbalance sheet
