Accounting for Decision Makers (Western Governors University)
1. What does accounting focus on?: The impact a business's activities have on
its overall financial performance
2. Which report summarizes cash collections and cash expenditures from
operating, investing, and financing activities over a period of time?: Statement
of cash flows
3. Which users would have a primary concern with an organization's ability to
provide healthcare benefits?: Employees
4. Which benefit does a corporation gain by following Generally Accepted Ac-
counting Principles (GAPP)?: An increase in its compatibility to other companies
5. Which body regulates a certified public accounting firm's audit practices
when the firm is auditing a large publicly traded company?: The Public Com-
pany Accounting Oversight Board (PACOB)
6. What has had the most significant impact on Accounting practices?: Infor-
mation technology
7. What two items of information are revealed on the balance sheet?: Owner-
ship and Debt
8. Which term is defined as the residual in the net assets of a company?: Own-
ers equity
9. Which situation should result in revenue recognition on the income state-
ment for the year ending 12/31/14 if the firm is using accrual accounting?: In
2014, a company provides services to a customer for which cash will be collected
the next year (2015).
10. Which category on the statement of cash flows summarizes cash receipts
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,and payments to owners and creditors of the company?: Cash from financing
activities
11. Where would an investor find a summary of a company's significant ac-
counting policies?: In the notes to financial statements
12. Which assurance does an external audit report provide for its readers?: -
The company's financial statements fairly reflect its financial position
13. Information that can be verified: Reliable
14. Information having to do with the matter at hand: Relevant
15. Information that is important enough to make a difference: Material
16. Information related to recognizing losses as they occur: Conservatism
17. What is consistent with a continual decline in gross profit if the firm's cost
of goods sold remains the same?: Continual decrease in sales
18. Which form of debt should be reported in the long-term liability category?-
: Notes payable expected to be paid in 18 months
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, 19. Which values affect the measurement of net income?: Operating expenses
&
Ordinary gains and losses
20. Which items' subtotals are included in a multi-step income statement?: -
Gross profit &
Income from operations
21. What is a common category in a statement of cash flows?: Cash from
investing activities
22. Which cash flow category would include "cash received from investors"?-
: Cash from financing activities
23. Which item is an investing activity?: Cash payments for purchase of plant
assets
24. What impact does the sale of equipment have on the statement of cash
flows?: Increase in cash from investing activities
25. What is known about the direct and indirect methods of preparing state-
ments of cash flow?: The indirect method is more popular among large U.S.
companies
26. Which internal control is intended to ensure that a company does not
mistakenly pay a supplier for an invoice that includes more items than were ac-
tually received?: The inventory department counts and inspects items as received
and forwards the receiving record to accounts payable.
27. What are common reasons for managers to manipulate reported earn-
ings?: Pressure to meet internal sales goals &
Preparing to qualify for a bank loan
28. Which requirements must accounting firms that audit public companies
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1. What does accounting focus on?: The impact a business's activities have on
its overall financial performance
2. Which report summarizes cash collections and cash expenditures from
operating, investing, and financing activities over a period of time?: Statement
of cash flows
3. Which users would have a primary concern with an organization's ability to
provide healthcare benefits?: Employees
4. Which benefit does a corporation gain by following Generally Accepted Ac-
counting Principles (GAPP)?: An increase in its compatibility to other companies
5. Which body regulates a certified public accounting firm's audit practices
when the firm is auditing a large publicly traded company?: The Public Com-
pany Accounting Oversight Board (PACOB)
6. What has had the most significant impact on Accounting practices?: Infor-
mation technology
7. What two items of information are revealed on the balance sheet?: Owner-
ship and Debt
8. Which term is defined as the residual in the net assets of a company?: Own-
ers equity
9. Which situation should result in revenue recognition on the income state-
ment for the year ending 12/31/14 if the firm is using accrual accounting?: In
2014, a company provides services to a customer for which cash will be collected
the next year (2015).
10. Which category on the statement of cash flows summarizes cash receipts
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,and payments to owners and creditors of the company?: Cash from financing
activities
11. Where would an investor find a summary of a company's significant ac-
counting policies?: In the notes to financial statements
12. Which assurance does an external audit report provide for its readers?: -
The company's financial statements fairly reflect its financial position
13. Information that can be verified: Reliable
14. Information having to do with the matter at hand: Relevant
15. Information that is important enough to make a difference: Material
16. Information related to recognizing losses as they occur: Conservatism
17. What is consistent with a continual decline in gross profit if the firm's cost
of goods sold remains the same?: Continual decrease in sales
18. Which form of debt should be reported in the long-term liability category?-
: Notes payable expected to be paid in 18 months
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, 19. Which values affect the measurement of net income?: Operating expenses
&
Ordinary gains and losses
20. Which items' subtotals are included in a multi-step income statement?: -
Gross profit &
Income from operations
21. What is a common category in a statement of cash flows?: Cash from
investing activities
22. Which cash flow category would include "cash received from investors"?-
: Cash from financing activities
23. Which item is an investing activity?: Cash payments for purchase of plant
assets
24. What impact does the sale of equipment have on the statement of cash
flows?: Increase in cash from investing activities
25. What is known about the direct and indirect methods of preparing state-
ments of cash flow?: The indirect method is more popular among large U.S.
companies
26. Which internal control is intended to ensure that a company does not
mistakenly pay a supplier for an invoice that includes more items than were ac-
tually received?: The inventory department counts and inspects items as received
and forwards the receiving record to accounts payable.
27. What are common reasons for managers to manipulate reported earn-
ings?: Pressure to meet internal sales goals &
Preparing to qualify for a bank loan
28. Which requirements must accounting firms that audit public companies
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