College Accounting 16th Edition

1) What is the “language of business?” List three groups who use this financial information. Question Details Difficulty : 1 Easy Learning Objective : 01-01 Define accounting. Topic : What is Accounting? Bloom's : Remember AACSB : Analytical Thinking AICPA : BB Industry AICPA : FN Decision Making Accessibility : Keyboard Navigation Type : Static Learning Objective : 01-03 Identify the users of financial information. Gradable : manual Accessibility : Screen Reader Compatible 2) Cullen Company of country X and Shaw Industries of country Y have issued financial statements in compliance with the accounting principles of their respective countries. They would like to work together on a project and need to compare their current financial statements prior to starting the project. However, the accounting principles of the two countries differ. What organization might they turn to regarding this issue? (Give both the full name of the organization and its acronym.) What is the function of this organization? 3 Question Details AACSB : Analytical Thinking AICPA : BB Industry AICPA : FN Decision Making Accessibility : Keyboard Navigation Type : Static Learning Objective : 01-05 Describe the process used to develop generally accepted accounting princip Topic : Generally Accepted Accounting Principles Difficulty : 2 Medium Bloom's : Understand AICPA : BB Global Gradable : manual Accessibility : Screen Reader Compatible 3) You have just entered college and decide to pursue a career as a certified bookkeeper. What three requirements must you satisfy to receive this designation? Question Details Difficulty : 1 Easy Topic : What is Accounting? Bloom's : Remember AACSB : Analytical Thinking AICPA : BB Industry AICPA : FN Decision Making Accessibility : Keyboard Navigation Type : Static Learning Objective : 01-02 Identify and discuss career opportunities in accounting. Gradable : manual Accessibility : Screen Reader Compatible 4) There are three general services public accountants offer. List and briefly describe each. 4 Question Details Topic : What is Accounting? AACSB : Analytical Thinking AICPA : BB Industry AICPA : FN Decision Making Accessibility : Keyboard Navigation Type : Static Learning Objective : 01-02 Identify and discuss career opportunities in accounting. Difficulty : 2 Medium Bloom's : Understand Gradable : manual Accessibility : Screen Reader Compatible 5) List at least five activities performed by managerial accountants. Question Details Difficulty : 1 Easy Topic : What is Accounting? Bloom's : Remember AACSB : Analytical Thinking AICPA : BB Industry AICPA : FN Decision Making Accessibility : Keyboard Navigation Type : Static Learning Objective : 01-02 Identify and discuss career opportunities in accounting. Gradable : manual Accessibility : Screen Reader Compatible 5 6) Having enjoyed multiple accounting courses in college, you have decided to pursue a certified public accountant license. What requirements must you fulfill to achieve this certification? Question Details Difficulty : 1 Easy Topic : What is Accounting? Bloom's : Remember AACSB : Analytical Thinking AICPA : BB Industry AICPA : FN Decision Making Accessibility : Keyboard Navigation Type : Static Learning Objective : 01-02 Identify and discuss career opportunities in accounting. Gradable : manual Accessibility : Screen Reader Compatible 7) How do sole proprietorships, partnerships, and corporations differ? Question Details AACSB : Analytical Thinking AICPA : BB Industry AICPA : FN Decision Making Accessibility : Keyboard Navigation Type : Static Learning Objective : 01-04 Compare and contrast the three types of business entities. Topic : Types of Business Entities AICPA : BB Legal Difficulty : 2 Medium Bloom's : Understand Gradable : manual Accessibility : Screen Reader Compatible 6 8) List three individuals or groups who use financial information to make decisions about a firm. For each listed, give an example of why they would need the information. Question Details Topic : What is Accounting? AACSB : Analytical Thinking AICPA : BB Industry AICPA : FN Decision Making Accessibility : Keyboard Navigation Type : Static Learning Objective : 01-03 Identify the users of financial information. Difficulty : 2 Medium Bloom's : Understand Gradable : manual Accessibility : Screen Reader Compatible 9) List the “Big Four” public accounting firms in the United States. 7 Question Details Difficulty : 1 Easy Topic : What is Accounting? Bloom's : Remember AACSB : Analytical Thinking AICPA : BB Industry AICPA : FN Decision Making Accessibility : Keyboard Navigation Type : Static Learning Objective : 01-02 Identify and discuss career opportunities in accounting. Gradable : manual Accessibility : Screen Reader Compatible 10) Audited financial statements include an auditor’s report. What does this auditor’s report contain? Question Details AACSB : Analytical Thinking AICPA : BB Industry AICPA : FN Decision Making Accessibility : Keyboard Navigation Type : Static Learning Objective : 01-05 Describe the process used to develop generally accepted accounting princip Topic : Generally Accepted Accounting Principles Difficulty : 2 Medium Bloom's : Understand Gradable : manual Accessibility : Screen Reader Compatible 11) List at least three of the provisions of the Sarbanes-Oxley Act. 8 Question Details Difficulty : 1 Easy Topic : What is Accounting? Bloom's : Remember AACSB : Analytical Thinking AICPA : BB Industry AICPA : FN Decision Making Accessibility : Keyboard Navigation Type : Static AICPA : BB Legal Learning Objective : 01-03 Identify the users of financial information. Gradable : manual Accessibility : Screen Reader Compatible 12) What determines the independence of Certified Public Accountants (CPAs)? Question Details AACSB : Analytical Thinking AICPA : BB Industry AICPA : FN Decision Making Accessibility : Keyboard Navigation Type : Static AICPA : BB Legal Learning Objective : 01-05 Describe the process used to develop generally accepted accounting princip Topic : Generally Accepted Accounting Principles Difficulty : 2 Medium Bloom's : Understand Gradable : manual Accessibility : Screen Reader Compatible Answer Key Test name: Chapter 01 Test Bank 1) Accounting is the language of business. The groups who use this information are owners and managers, suppliers, banks, tax authorities, regulatory agencies and investors, customers, and employees and unions. 2) Organization: International Accounting Standards Board (IASB). The function of the IASB is to deal with issues caused by the lack of uniform accounting principles and make recommendations to enhance comparability. 3) To become a Certified Bookkeeper you must pass the national certified bookkeeper exam, sign a code of ethics, and submit evidence of at least two years of full-time bookkeeping experience or 3,000 hours of part-time or freelance experience. 4) Auditing: the review of financial statements to assess their fairness and adherence to Generally Accepted Accounting Principles. Tax accounting: tax compliance-dealing with the preparation of tax returns and the audit of those returns, and tax planning. Also giving advice to clients on how to structure their financial affairs in order to reduce their tax liability. Management advisory services: helping clients improve their information systems or their business performance. 5) Establishing accounting policies, managing the accounting system, preparing financial statements, interpreting financial information, providing financial advice to management, preparing tax forms, performing tax planning services, and preparing internal reports for management. 54 6) To become a Certified Public Accountant (CPA) you must have completed a certain number of college credits in accounting courses, demonstrate good personal character, pass the Uniform certified public accountant exam, and fulfill the experience requirements of the state of practice. 7) Sole proprietorships-business entities owned by one person who is responsible for the business debts and taxes. The business ends when the owner dies. Partnerships-business entities owned by two or more individuals who are individually, and as a group, responsible for the partnership’s debts and taxes. A partnership ends when one or more partners withdraw or die. Corporations-business entities with one or more owners which can continue indefinitely unless bankruptcy occurs or the stockholders vote to liquidate. Stockholders (owners) are not personally responsible for the corporation’s debts and can only lose the amount they invested. 8) Owners and managers-to evaluate results of operations or to make decisions about the future. Suppliers-to assess the ability of the firm to pay its bills and to set credit limits. Banks-to determine whether the firm can repay the loan in a timely manner. Tax authorities-to determine the tax base of the firm. Regulatory agencies and investors-to fulfill the requirements of the law. Customers-to determine whether service on purchases will continue into the future. Employees and unions-to negotiate wages and benefits. 9) Deloitte & Touche, Ernst & Young, KPMG, and PricewaterhouseCoopers 10) It contains the auditor’s opinion regarding the fair presentation of the operating results and financial position of the business. The report also confirms the financial information is prepared in conformity with generally accepted accounting principles. 55 11) The act tightens regulation of financial reporting by publicly held companies and their accountants and auditors; creates a five-member Public Company Accounting Oversight Board to oversee the accounting profession which in turn is overseen by the securities and exchange commission; includes rules on consulting services, auditor rotation, criminal penalties, corporate governance, and securities regulation; requires auditors to maintain all audit or review work papers for five years; requires chief executives and chief financial officers of publicly traded corporations to certify their financial statements; requires quicker disclosure of material changes in a firm’s financial position; provides protection for whistle blowers; and lengthens the time investors have to file lawsuits for securities fraud. 12) They are not employees of the companies they audit and they do not have a financial interest in those companies.