C213 Accounting Review Questions & Answers

C213 Accounting Review Questions & Answers 1. What is IASB? a. International Accounting Standards Board (based in London). 2. What does the IASB do? a. Create and regulate the accounting rules around the world (except US). 3. Who creates and regulates the accounting rules for the US? a. Financial Accounting Standards Board (FASB) *(based in NY) 4. How does management accounting differ from financial accounting? a. Management accounting is used primarily for internal planning, control, and evaluation. 5. What is the SEC? a. Securities and Exchange Commission 6. What does the SEC do? a. Ensures financial (external) statement users are provided with reliable information b. U.S government agency c. Legal authority to set financial accounting rules 7. What is the AICPA? a. American Institute of Certified Public Accountants 8. What is a CPA? Downloaded by Austine Wanjala () lOMoARcPSD| a. Certified Public Accountant 9. What can ONLY a CPA do? a. Sign audit report 10. What is SOX? a. Sarbanes – Oxley Act 11. What is PCAOB? a. Public Company Accounting Oversight Board 12. What does the PCAOB do? a. Inspections, Investigations, Government standard for audits; Under the SEC, it appoints members and approves actions. 13. What does management accounting provide? a. The insight that management needs so that the business can perform more effectively. b. The detailed data that managers need to make decisions that will give the business a competitive edge. 14. Which of the following is NOT one of the three primary financial statements? a. Statement of Retained Earnings 15. Which of the following financial statements reports a company’s resources, obligations, and owner’s equity? a. Balance Sheet 16. Which of the following financial statements reports the excess of a company’s revenues over its expense? Downloaded by Austine Wanjala () lOMoARcPSD| a. Statement of Cash Flows c. Statement of Retained Earnings b. Income Statement d. Balance Sheet 17. Which of the following financial statements reports the amount of cash collected and paid out by a company? a. Statement of Cash Flows c. Statement of Retained Earnings b. Income Statement d. Balance Sheet 18. What is GAAP? a. Generally Accepted Accounting Principles 19. A corporation has total liabilities of $300 million, total owner’s equity of $100 million, and current assets of $50 million. What is the value of long – term assets? a. $350 million 20. Which term is defined as the residual interest in the net assets of a company? a. Owner’s Equity 21. What two items of information are revealed on the balance sheet? (Choose 2). a. Ownership & Debt 22. Which account is seen on the balance sheet of a manufacturing company but not on a balance sheet of a service – oriented company? a. Inventory Downloaded by Austine Wanjala () lOMoARcPSD| 23. What is a cost that will change in the future based upon the decision made? a. Differential Cost 24. Which two examples are period costs? a. Administrative Expenses b. Selling Expenses 25. A company manufactures custom – built wooden bookshelves. Which two costs would company classify as period costs? a. Salary Cost of Receptionist b. Advertising Cost 26. What role do ethical standards have in management accounting? a. To guide the resolution to possible ethical dilemmas that the managerial accountant may encounter. 27. Which two costs are included when calculating inventory costs? a. Direct Labor b. Overhead 28. The organization that develops worldwide accounting standards is the: a. International Accounting Standards Board (IASB). 29. Standards established by the International Accounting Standards Board are referred to as: a. International Financial Reporting Standards Downloaded by Austine Wanjala () lOMoARcPSD| 30. Which of the following is NOT a service typically provided by large public accounting firms? a. Making Management Decisions 31. CPA stands for: a. Certified Public Accountant 32. Which of the following is the government agency that stipulates the rules and regulations that govern the collection of taxes in the US? a. Internal Revenue Service (IRS) 33. Which organization has specific legal authority to establish accounting standards for publicly held companies? a. Securities and Exchange Commission (SEC) 34. Standards established by the International Accounting Standards Board are referred to as: a. International Financial Reporting Standards 35. The organization that develops worldwide accounting standards is: a. International Accounting Standards Board (IASB). 36. True/False? The International Accounting Standards Board (IASB) is charged with developing worldwide accounting practices. a. True 37. Revenues cause: a. An increase in Net Assets 38. What will increase from the sale of goods or services? Downloaded by Austine Wanjala () lOMoARcPSD| a. Revenues 39. Which of the following is NOT a reason for the integration of worldwide accounting standards? a. Theoretical necessity of a common set of accounting standards 40. True/False? With current state of information technology, investors outside a company are now allowed access to a company’s internal database of financial information and do their own customized analysis of a firm’s performance. a. False 41. Increased federal oversight of the audit process resulted from the passage of this act of Congress: a. The Sarbanes – Oxley Act (SOX act) 42. Which is NOT true of Financial Accounting Standards Board (FASB)? a. It is a government agency 43. Generally Accepted Accounting Principles (GAAP) are: a. Developed by accounting rule makers 44. The current standard setting board for accounting in the private sector is: a. Financial Accounting Standards Board (FASB) 45. The emphasis in financial accounting is on which of the following external user groups? a. Investors & Creditors