Test Bank for Fundamental Accounting Principles 24th Edition By Wild A+

Test Bank for Fundamental Accounting Principles 24th Edition By Wild A+ Fundamental Accounting Principles, 24e (Wild) Chapter 1 Accounting in Business 1) Accounting is an information and measurement system that identifies, records, and communicates an organization's business activities. Answer: TRUE Difficulty: 1 Easy Topic: Importance of Accounting Learning Objective: 01-C1 Explain the purpose and importance of accounting. Bloom's: Remember AACSB/Accessibility: Communication / Keyboard Navigation AICPA: BB Critical Thinking; FN Decision Making 2) Recordkeeping, or bookkeeping, is the recording of transactions and events, either manually or electronically. This is just one part of accounting. Answer: TRUE Difficulty: 1 Easy Topic: Importance of Accounting Learning Objective: 01-C1 Explain the purpose and importance of accounting. Bloom's: Remember AACSB/Accessibility: Communication / Keyboard Navigation AICPA: BB Critical Thinking; FN Decision Making 3) An accounting system captures relevant data about transactions and then classifies, records, and reports data. Answer: TRUE Difficulty: 1 Easy Topic: Importance of Accounting Learning Objective: 01-C1 Explain the purpose and importance of accounting. Bloom's: Remember AACSB/Accessibility: Communication / Keyboard Navigation AICPA: BB Critical Thinking; FN Decision Making 4) Financial accounting is the area of accounting aimed at serving external users by providing them with general-purpose financial statements. Answer: TRUE Difficulty: 1 Easy Topic: Users of Accounting Information Learning Objective: 01-C2 Identify users and uses of, and opportunities in, accounting. Bloom's: Remember AACSB/Accessibility: Communication / Keyboard Navigation AICPA: BB Critical Thinking; FN Decision Making 1 Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 5) Internal users of accounting information do not directly run the organization and have limited access to its accounting information. Answer: FALSE Difficulty: 1 Easy Topic: Users of Accounting Information Learning Objective: 01-C2 Identify users and uses of, and opportunities in, accounting. Bloom's: Remember AACSB/Accessibility: Communication / Keyboard Navigation AICPA: BB Critical Thinking; FN Decision Making 6) Auditors verify the effectiveness of internal controls. Answer: TRUE Difficulty: 1 Easy Topic: Users of Accounting Information Learning Objective: 01-C2 Identify users and uses of, and opportunities in, accounting. Bloom's: Remember AACSB/Accessibility: Communication / Keyboard Navigation AICPA: BB Critical Thinking; FN Decision Making 7) External auditors examine financial statements to verify that they are prepared according to generally accepted accounting principles. Answer: TRUE Difficulty: 1 Easy Topic: Users of Accounting Information Learning Objective: 01-C2 Identify users and uses of, and opportunities in, accounting. Bloom's: Remember AACSB/Accessibility: Communication / Keyboard Navigation AICPA: BB Critical Thinking; FN Decision Making 8) External users include lenders, shareholders, customers, and regulators. Answer: TRUE Difficulty: 2 Medium Topic: Users of Accounting Information Learning Objective: 01-C2 Identify users and uses of, and opportunities in, accounting. Bloom's: Understand AACSB/Accessibility: Communication / Keyboard Navigation AICPA: BB Critical Thinking; FN Decision Making 2 Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 9) Regulators often have legal authority over certain activities of organizations. Answer: TRUE Difficulty: 1 Easy Topic: Users of Accounting Information Learning Objective: 01-C2 Identify users and uses of, and opportunities in, accounting. Bloom's: Remember AACSB/Accessibility: Communication / Keyboard Navigation AICPA: BB Legal; FN Decision Making 10) Internal users include lenders, shareholders, brokers and nonexecutive employees. Answer: FALSE Difficulty: 2 Medium Topic: Users of Accounting Information Learning Objective: 01-C2 Identify users and uses of, and opportunities in, accounting. Bloom's: Understand AACSB/Accessibility: Communication / Keyboard Navigation AICPA: BB Industry; FN Decision Making 11) Opportunities in accounting include auditing, consulting, market research, and tax planning. Answer: TRUE Difficulty: 2 Medium Topic: Users of Accounting Information Learning Objective: 01-C2 Identify users and uses of, and opportunities in, accounting. Bloom's: Understand AACSB/Accessibility: Communication / Keyboard Navigation AICPA: BB Industry; FN Decision Making 12) Ethics is defined as maximizing personal wealth, regardless the cost. Answer: FALSE Difficulty: 2 Medium Topic: Ethics Learning Objective: 01-C3 Explain why ethics are crucial to accounting. Bloom's: Understand AACSB/Accessibility: Ethics / Keyboard Navigation AICPA: BB Industry; FN Decision Making 3 Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 13) The Sarbanes-Oxley Act (SOX) requires documentation and verification of internal controls. It also emphasizes effective internal controls. Answer: TRUE Difficulty: 1 Easy Topic: Ethics Learning Objective: 01-C3 Explain why ethics are crucial to accounting. Bloom's: Remember AACSB/Accessibility: Ethics / Keyboard Navigation AICPA: BB Legal; FN Reporting 14) The fraud triangle asserts that the three factors that must exist for a person to commit fraud are opportunity, pressure, and rationalization. Answer: TRUE Difficulty: 2 Medium Topic: Ethics Learning Objective: 01-C3 Explain why ethics are crucial to accounting. Bloom's: Understand AACSB/Accessibility: Ethics / Keyboard Navigation AICPA: BB Industry; BB Legal; FN Decision Making 15) Management is not responsible for implementing internal controls and does not need to issue a report on internal controls. Answer: FALSE Difficulty: 2 Medium Topic: Generally Accepted Accounting Principles Learning Objective: 01-C4 Explain generally accepted accounting principles and define and apply several accounting principles. Bloom's: Understand AACSB/Accessibility: Ethics / Keyboard Navigation AICPA: BB Legal; FN Reporting 16) A partnership is a business owned by two or more people. Answer: TRUE Difficulty: 1 Easy Topic: Generally Accepted Accounting Principles Learning Objective: 01-C4 Explain generally accepted accounting principles and define and apply several accounting principles. Bloom's: Remember AACSB/Accessibility: Communication / Keyboard Navigation AICPA: BB Legal; FN Decision Making 4 Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 17) Owners of a corporation are called shareholders or stockholders. Answer: TRUE Difficulty: 1 Easy Topic: Generally Accepted Accounting Principles Learning Objective: 01-C4 Explain generally accepted accounting principles and define and apply several accounting principles. Bloom's: Remember AACSB/Accessibility: Communication / Keyboard Navigation AICPA: BB Legal; FN Decision Making 18) In the partnership form of business, the owners are called stockholders. Answer: FALSE Difficulty: 1 Easy Topic: Generally Accepted Accounting Principles Learning Objective: 01-C4 Explain generally accepted accounting principles and define and apply several accounting principles. Bloom's: Remember AACSB/Accessibility: Communication / Keyboard Navigation AICPA: BB Legal; FN Decision Making 19) The balance sheet shows a company's net income or loss over a period of time. Answer: FALSE Difficulty: 2 Medium Topic: Financial Statements Learning Objective: 01-P2 Identify and prepare basic financial statements and explain how they interrelate. Bloom's: Understand AACSB/Accessibility: Communication / Keyboard Navigation AICPA: BB Industry; FN Reporting 20) The Financial Accounting Standards Board (FASB) is a group tasked with setting generally accepted account principles (GAAP). Answer: TRUE Difficulty: 2 Medium Topic: Generally Accepted Accounting Principles Learning Objective: 01-C4 Explain generally accepted accounting principles and define and apply several accounting principles. Bloom's: Understand AACSB/Accessibility: Communication / Keyboard Navigation AICPA: BB Legal; FN Reporting 5 Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 21) The business entity principle means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold. Answer: FALSE Difficulty: 2 Medium Topic: Generally Accepted Accounting Principles Learning Objective: 01-C4 Explain generally accepted accounting principles and define and apply several accounting principles. Bloom's: Remember AACSB/Accessibility: Communication / Keyboard Navigation AICPA: BB Industry; FN Decision Making 22) GAAP aims to make information relevant, reliable, and comparable. Answer: TRUE Difficulty: 1 Easy Topic: Generally Accepted Accounting Principles Learning Objective: 01-C4 Explain generally accepted accounting principles and define and apply several accounting principles. Bloom's: Remember AACSB/Accessibility: Communication / Keyboard Navigation AICPA: BB Industry; FN Decision Making 23) The business entity assumption means that a business is accounted for separately from other business entities, including its owner or owners. Answer: TRUE Difficulty: 1 Easy Topic: Generally Accepted Accounting Principles Learning Objective: 01-C4 Explain generally accepted accounting principles and define and apply several accounting principles. Bloom's: Remember AACSB/Accessibility: Communication / Keyboard Navigation AICPA: BB Industry; FN Measurement 24) As a general rule, revenues should not be recognized in the accounting records when earned, but rather when cash is received. Answer: FALSE Difficulty: 2 Medium Topic: Generally Accepted Accounting Principles Learning Objective: 01-C4 Explain generally accepted accounting principles and define and apply several accounting principles. Bloom's: Understand AACSB/Accessibility: Communication / Keyboard Navigation AICPA: BB Industry; FN Measurement 6 Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 25) Specific accounting principles are basic assumptions, concepts, and guidelines for preparing financial statements and arise out of long-used accounting practice. Answer: FALSE Difficulty: 2 Medium Topic: Generally Accepted Accounting Principles Learning Objective: 01-C4 Explain generally accepted accounting principles and define and apply several accounting principles. Bloom's: Remember AACSB/Accessibility: Communication / Keyboard Navigation AICPA: BB Industry; FN Measurement 26) Limited liability and indefinite business life are characteristics of a corporation. Answer: TRUE Difficulty: 2 Medium Topic: Generally Accepted Accounting Principles Learning Objective: 01-C4 Explain generally accepted accounting principles and define and apply several accounting principles. Bloom's: Understand AACSB/Accessibility: Communication / Keyboard Navigation AICPA: BB Legal; FN Decision Making 27) A sole proprietorship is a business with multiple owners. Answer: FALSE Difficulty: 1 Easy Topic: Generally Accepted Accounting Principles Learning Objective: 01-C4 Explain generally accepted accounting principles and define and apply several accounting principles. Bloom's: Remember AACSB/Accessibility: Communication / Keyboard Navigation AICPA: BB Legal; FN Decision Making 28) Unlimited liability and separate taxation of the business are advantages of a sole proprietorship. Answer: FALSE Difficulty: 2 Medium Topic: Generally Accepted Accounting Principles Learning Objective: 01-C4 Explain generally accepted accounting principles and define and apply several accounting principles. Bloom's: Understand AACSB/Accessibility: Communication / Keyboard Navigation AICPA: BB Legal; FN Decision Making