,Accounting - What the Numbers Mean, 12e (Marshall) Chapter
t t t t t t t t
1 Accounting—Present and Past
t t t t
1) Which of the following entities would not require accounting information pertaining to their
t t t t t t t t t t t t
economic activities?
t t
A) Social clubs. t
B) Not-for-profit entities. t
C) State governments.
t
D) All of these entities require accounting information.
t t t t t t
Answer: D t
Difficulty: 1 Easy
t t t
Topic: What Is Accounting?
t t t
Learning Objective: 01-02 Identify who the users of accounting information are and explain why
t t t t t t t t t t t t t
they find accounting information useful.
t t t t t
Bloom's: Remember t
tAACSB: Analytical t
Thinking
t
Accessibility: Keyboard Navigation t t
2) The authoritative financial accounting standards-setting body in the United States is presently
t t t t t t t t t t t
the:
t
A) Securities and Exchange Commission (SEC) t t t t
B) International Accounting Standards Board (IASB) t t t t
C) Public Company Accounting Oversights Board (PCAOB)
t t t t t
D) Financial Accounting Standards Board (FASB) t t t t
E) Accounting Principles Board (APB) t t t
Answer: D t
Difficulty: 1 Easy
t t t
Topic: How Has Accounting Developed?
t t t t
Learning Objective: 01-05 Explain the role that the FASB plays in the development of financial
t t t t t t t t t t t t t t
accounting standards.
t t
Bloom's: Remember t
AACSB: Analytical
t t
Thinking
t
Accessibility: Keyboard Navigation t t
1
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
,3) Which of the following statements about the Financial Accounting Standards Board is
t t t t t t t t t t t
correct?
t
A) The FASB is an agency of the Federal government.
t t t t t t t t
B) The FASB has the authority to fine a noncompliant firm.
t t t t t t t t t
C) The FASB follows a due process procedure that permits input from interested parties before an
t t t t t t t t t t t t t t
Accounting Standards Update (ASU) is issued.
t t t t t t
D) The FASB is controlled by the American Institute of CPAs.
t t t t t t t t t
Answer: C t
Difficulty: 2 Medium
t t t
Topic: How Has Accounting Developed?
t t t t
Learning Objective: 01-05 Explain the role that the FASB plays in the development of financial
t t t t t t t t t t t t t t
accounting standards.
t t
Bloom's: Understand t
AACSB: Analytical Thinking
t t t
Accessibility: Keyboard Navigation t t
4) Major classifications of accounting activity would not include:
t t t t t t t
A) financial accounting, internal auditing, public accounting.
t t t t t
B) internal auditing, governmental accounting, managerial accounting.
t t t t t
C) financial accounting, national accounting, cost accounting.
t t t t t
D) auditing, income tax accounting, governmental accounting.
t t t t t
Answer: C t
Difficulty: 1 Easy
t t t
Topic: What Is Accounting?
t t t
Learning Objective: 01-03 Identify the variety of professional services that accountants provide.
t t t t t t t t t t t
Bloom's: Remember
t t
AACSB: Analytical Thinking t t
Accessibility: Keyboard Navigation
t t t
5) Which of the following is not an example of a decision or informed judgment that a potential
t t t t t t t t t t t t t t t t
investor would make from accounting information?
t t t t t t
A) Future profitability based on past profitability.
t t t t t
B) Probability of success of a new product development. t t t t t t t
C) A forecast of dividends.
t t t
D) Assessment of risk that a company may have more debt than it can repay if the economy
t t t t t t t t t t t t t t t t
enters a recession.
t t t
Answer: B t
Difficulty: 2 Medium
t t t
Topic: What Is Accounting?
t t t
Learning Objective: 01-02 Identify who the users of accounting information are and explain why
t t t t t t t t t t t t t
they find accounting information useful.
t t t t t
Bloom's: Understand t
AACSB: Reflective Thinking
t t t
2
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
, Accessibility: Keyboard Navigation t t
6) Which of the following is not an example of a decision or informed judgment that a potential
t t t t t t t t t t t t t t t t
employee could make from accounting information?
t t t t t t
A) Personnel turnover statistics (i.e., hiring and terminations).
t t t t t t
B) Probability of the company's ability to make profit sharing plan contributions in the future.
t t t t t t t t t t t t t
C) Assessment of the risk that the company may become bankrupt in the near future.
t t t t t t t t t t t t t
D) The extent of the company's commitment to a research program.
t t t t t t t t t
Answer: A t
Difficulty: 2 Medium
t t t
Topic: What Is Accounting?
t t t
Learning Objective: 01-02 Identify who the users of accounting information are and explain why
t t t t t t t t t t t t t
they find accounting information useful.
t t t t t
Bloom's: Understand t
AACSB: Reflective Thinking
t t t
Accessibility: Keyboard Navigation t t
7) Which of the following are qualified to express an auditor's opinion about an entity's financial
t t t t t t t t t t t t t t
statements?
t
A) A Comptroller.
t
B) A Certified Management Accountant.
t t t
C) A Certified Internal Auditor.
t t t
D) A Certified Public Accountant.
t t t
Answer: D t
Difficulty: 2 Medium
t t t
Topic: What Is Accounting?
t t t
Learning Objective: 01-03 Identify the variety of professional services that accountants provide.
t t t t t t t t t t t
Bloom's: Understand
t t
AACSB: Communication t
Accessibility: Keyboard Navigation
t t t
8) Which classification of accounting is most concerned with the use of economic and financial
t t t t t t t t t t t t t
information to plan and control many of the activities of the entity?
t t t t t t t t t t t t
A) Financial accounting. t
B) Auditing / Public accounting. t t t
C) Managerial accounting. t
D) Income tax accounting. t t
Answer: C t
Difficulty: 1 Easy
t t t
Topic: What Is Accounting?
t t t
Learning Objective: 01-03 Identify the variety of professional services that accountants provide.
t t t t t t t t t t t
Bloom's: Remember
t t
AACSB: Analytical Thinking t t
3
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
t t t t t t t t
1 Accounting—Present and Past
t t t t
1) Which of the following entities would not require accounting information pertaining to their
t t t t t t t t t t t t
economic activities?
t t
A) Social clubs. t
B) Not-for-profit entities. t
C) State governments.
t
D) All of these entities require accounting information.
t t t t t t
Answer: D t
Difficulty: 1 Easy
t t t
Topic: What Is Accounting?
t t t
Learning Objective: 01-02 Identify who the users of accounting information are and explain why
t t t t t t t t t t t t t
they find accounting information useful.
t t t t t
Bloom's: Remember t
tAACSB: Analytical t
Thinking
t
Accessibility: Keyboard Navigation t t
2) The authoritative financial accounting standards-setting body in the United States is presently
t t t t t t t t t t t
the:
t
A) Securities and Exchange Commission (SEC) t t t t
B) International Accounting Standards Board (IASB) t t t t
C) Public Company Accounting Oversights Board (PCAOB)
t t t t t
D) Financial Accounting Standards Board (FASB) t t t t
E) Accounting Principles Board (APB) t t t
Answer: D t
Difficulty: 1 Easy
t t t
Topic: How Has Accounting Developed?
t t t t
Learning Objective: 01-05 Explain the role that the FASB plays in the development of financial
t t t t t t t t t t t t t t
accounting standards.
t t
Bloom's: Remember t
AACSB: Analytical
t t
Thinking
t
Accessibility: Keyboard Navigation t t
1
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
,3) Which of the following statements about the Financial Accounting Standards Board is
t t t t t t t t t t t
correct?
t
A) The FASB is an agency of the Federal government.
t t t t t t t t
B) The FASB has the authority to fine a noncompliant firm.
t t t t t t t t t
C) The FASB follows a due process procedure that permits input from interested parties before an
t t t t t t t t t t t t t t
Accounting Standards Update (ASU) is issued.
t t t t t t
D) The FASB is controlled by the American Institute of CPAs.
t t t t t t t t t
Answer: C t
Difficulty: 2 Medium
t t t
Topic: How Has Accounting Developed?
t t t t
Learning Objective: 01-05 Explain the role that the FASB plays in the development of financial
t t t t t t t t t t t t t t
accounting standards.
t t
Bloom's: Understand t
AACSB: Analytical Thinking
t t t
Accessibility: Keyboard Navigation t t
4) Major classifications of accounting activity would not include:
t t t t t t t
A) financial accounting, internal auditing, public accounting.
t t t t t
B) internal auditing, governmental accounting, managerial accounting.
t t t t t
C) financial accounting, national accounting, cost accounting.
t t t t t
D) auditing, income tax accounting, governmental accounting.
t t t t t
Answer: C t
Difficulty: 1 Easy
t t t
Topic: What Is Accounting?
t t t
Learning Objective: 01-03 Identify the variety of professional services that accountants provide.
t t t t t t t t t t t
Bloom's: Remember
t t
AACSB: Analytical Thinking t t
Accessibility: Keyboard Navigation
t t t
5) Which of the following is not an example of a decision or informed judgment that a potential
t t t t t t t t t t t t t t t t
investor would make from accounting information?
t t t t t t
A) Future profitability based on past profitability.
t t t t t
B) Probability of success of a new product development. t t t t t t t
C) A forecast of dividends.
t t t
D) Assessment of risk that a company may have more debt than it can repay if the economy
t t t t t t t t t t t t t t t t
enters a recession.
t t t
Answer: B t
Difficulty: 2 Medium
t t t
Topic: What Is Accounting?
t t t
Learning Objective: 01-02 Identify who the users of accounting information are and explain why
t t t t t t t t t t t t t
they find accounting information useful.
t t t t t
Bloom's: Understand t
AACSB: Reflective Thinking
t t t
2
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
, Accessibility: Keyboard Navigation t t
6) Which of the following is not an example of a decision or informed judgment that a potential
t t t t t t t t t t t t t t t t
employee could make from accounting information?
t t t t t t
A) Personnel turnover statistics (i.e., hiring and terminations).
t t t t t t
B) Probability of the company's ability to make profit sharing plan contributions in the future.
t t t t t t t t t t t t t
C) Assessment of the risk that the company may become bankrupt in the near future.
t t t t t t t t t t t t t
D) The extent of the company's commitment to a research program.
t t t t t t t t t
Answer: A t
Difficulty: 2 Medium
t t t
Topic: What Is Accounting?
t t t
Learning Objective: 01-02 Identify who the users of accounting information are and explain why
t t t t t t t t t t t t t
they find accounting information useful.
t t t t t
Bloom's: Understand t
AACSB: Reflective Thinking
t t t
Accessibility: Keyboard Navigation t t
7) Which of the following are qualified to express an auditor's opinion about an entity's financial
t t t t t t t t t t t t t t
statements?
t
A) A Comptroller.
t
B) A Certified Management Accountant.
t t t
C) A Certified Internal Auditor.
t t t
D) A Certified Public Accountant.
t t t
Answer: D t
Difficulty: 2 Medium
t t t
Topic: What Is Accounting?
t t t
Learning Objective: 01-03 Identify the variety of professional services that accountants provide.
t t t t t t t t t t t
Bloom's: Understand
t t
AACSB: Communication t
Accessibility: Keyboard Navigation
t t t
8) Which classification of accounting is most concerned with the use of economic and financial
t t t t t t t t t t t t t
information to plan and control many of the activities of the entity?
t t t t t t t t t t t t
A) Financial accounting. t
B) Auditing / Public accounting. t t t
C) Managerial accounting. t
D) Income tax accounting. t t
Answer: C t
Difficulty: 1 Easy
t t t
Topic: What Is Accounting?
t t t
Learning Objective: 01-03 Identify the variety of professional services that accountants provide.
t t t t t t t t t t t
Bloom's: Remember
t t
AACSB: Analytical Thinking t t
3
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
