,Chapter 1 – Introduction to accounting
TRUE/FALSE
1. An objective of accounting is to provide information to predict and evaluate the going concern of an
entity.
ANS: T PTS: 1 AACSB: Knowledge, Analytical
TOP: What is accounting
2. Accounting information is always quantitative and objective.
ANS: F PTS: 1 AACSB: Knowledge, Analytical
TOP: What is accounting
3. Stewardship is the term used to refer to management’s role in protecting an entity’s economic
resources from theft, fraud and wastage.
ANS: T PTS: 1 AACSB: Knowledge, Analytical
TOP: For what purpose is accounting used?
4. Management is an external user of accounting information.
ANS: F PTS: 1 AACSB: Knowledge, Analytical
TOP: Who uses accounting information?
5. The balance sheet is an example of a management accounting report.
ANS: F PTS: 1 AACSB: Knowledge, Analytical
TOP: Who uses accounting information?
6. The statement of comprehensive income is an example of a financial accounting report.
ANS: T PTS: 1 AACSB: Knowledge, Analytical
TOP: Who uses accounting information?
7. The difference between management accounting and financial accounting is that management
accounting focuses on external users whereas financial accounting focuses on internal users.
ANS: F PTS: 1 AACSB: Knowledge, Analytical
TOP: For what purpose is accounting used?
8. Management has the responsibility of selecting accounting policies.
ANS: T PTS: 1 AACSB: Knowledge, Analytical
TOP: Economic consequences of accounting information.
, 9. Where an Accounting Standard exists, accounting policies must comply with the Accounting Standard.
ANS: T PTS: 1 AACSB: Knowledge, Analytical
TOP: Economic consequences of accounting information.
10. The economic consequences of accounting information are limited to the compensation schemes paid
to managers.
ANS: F PTS: 1 AACSB: Knowledge, Analytical
TOP: Economic consequences of accounting information.
11. Political costs create incentives for managers to select accounting policies that increase reported
profits.
ANS: F PTS: 1 AACSB: Knowledge, Analytical
TOP: Economic consequences of accounting information.
12. Triple bottom line reporting confirms the maximisation of profit as the major objective of listed
companies.
ANS: F PTS: 1 AACSB: Knowledge, Analytical
TOP: Triple bottom line reporting
13. A triple bottom line report refers to the publication of economic, environmental and corporate
governance information in an integrated report.
ANS: F PTS: 1 AACSB: Knowledge
TOP: Triple bottom line reporting
14. Because triple bottom line reports are voluntary, the provision of an independent verification of the
reports should enhance the reliability of the information provided.
ANS: T PTS: 1 AACSB: Knowledge, Analytical
TOP: Triple bottom line reporting
15. The GRI indicators are established by the committee without any input from stakeholders.
ANS: F PTS: 1 AACSB: Knowledge, Analytical
TOP: Triple bottom line reporting
16. The audit of a triple bottom line report is normally completed by the financial auditor.
ANS: F PTS: 1 AACSB: Knowledge, Analytical
TOP: Triple bottom line reporting
, MULTIPLE CHOICE
1. Accounting information:
A. is helpful for financing decisions but not for marketing decisions.
B. is useful for profit-making entities but is not needed for not-for-profit entities.
C. must follow accounting principles provided by management.
D. is useful for all economic organisations.
ANS: D PTS: 1 AACSB: Knowledge, Analytical
TOP: What is accounting
TRUE/FALSE
1. An objective of accounting is to provide information to predict and evaluate the going concern of an
entity.
ANS: T PTS: 1 AACSB: Knowledge, Analytical
TOP: What is accounting
2. Accounting information is always quantitative and objective.
ANS: F PTS: 1 AACSB: Knowledge, Analytical
TOP: What is accounting
3. Stewardship is the term used to refer to management’s role in protecting an entity’s economic
resources from theft, fraud and wastage.
ANS: T PTS: 1 AACSB: Knowledge, Analytical
TOP: For what purpose is accounting used?
4. Management is an external user of accounting information.
ANS: F PTS: 1 AACSB: Knowledge, Analytical
TOP: Who uses accounting information?
5. The balance sheet is an example of a management accounting report.
ANS: F PTS: 1 AACSB: Knowledge, Analytical
TOP: Who uses accounting information?
6. The statement of comprehensive income is an example of a financial accounting report.
ANS: T PTS: 1 AACSB: Knowledge, Analytical
TOP: Who uses accounting information?
7. The difference between management accounting and financial accounting is that management
accounting focuses on external users whereas financial accounting focuses on internal users.
ANS: F PTS: 1 AACSB: Knowledge, Analytical
TOP: For what purpose is accounting used?
8. Management has the responsibility of selecting accounting policies.
ANS: T PTS: 1 AACSB: Knowledge, Analytical
TOP: Economic consequences of accounting information.
, 9. Where an Accounting Standard exists, accounting policies must comply with the Accounting Standard.
ANS: T PTS: 1 AACSB: Knowledge, Analytical
TOP: Economic consequences of accounting information.
10. The economic consequences of accounting information are limited to the compensation schemes paid
to managers.
ANS: F PTS: 1 AACSB: Knowledge, Analytical
TOP: Economic consequences of accounting information.
11. Political costs create incentives for managers to select accounting policies that increase reported
profits.
ANS: F PTS: 1 AACSB: Knowledge, Analytical
TOP: Economic consequences of accounting information.
12. Triple bottom line reporting confirms the maximisation of profit as the major objective of listed
companies.
ANS: F PTS: 1 AACSB: Knowledge, Analytical
TOP: Triple bottom line reporting
13. A triple bottom line report refers to the publication of economic, environmental and corporate
governance information in an integrated report.
ANS: F PTS: 1 AACSB: Knowledge
TOP: Triple bottom line reporting
14. Because triple bottom line reports are voluntary, the provision of an independent verification of the
reports should enhance the reliability of the information provided.
ANS: T PTS: 1 AACSB: Knowledge, Analytical
TOP: Triple bottom line reporting
15. The GRI indicators are established by the committee without any input from stakeholders.
ANS: F PTS: 1 AACSB: Knowledge, Analytical
TOP: Triple bottom line reporting
16. The audit of a triple bottom line report is normally completed by the financial auditor.
ANS: F PTS: 1 AACSB: Knowledge, Analytical
TOP: Triple bottom line reporting
, MULTIPLE CHOICE
1. Accounting information:
A. is helpful for financing decisions but not for marketing decisions.
B. is useful for profit-making entities but is not needed for not-for-profit entities.
C. must follow accounting principles provided by management.
D. is useful for all economic organisations.
ANS: D PTS: 1 AACSB: Knowledge, Analytical
TOP: What is accounting
