MBA 601 Mod 2 Quizzes | Questions and Answers | 2025 Update | 100% Correct.
Question 1 pts
Businesses earn profits by converting financial, physical, and labor resources
into goods and services that satisfy consumer demands. This statement is
True
False
Businesses add value by converting financial, physical, and labor
resources into goods and services that consumers want. For example, a
homebuilder may borrow $150,000 from a bank and spend the money to
buy labor and materials to build a house. The house may sell for
$180,000 because a completed house is more valuable than
unconverted labor and materials. In this case, the profit is $30,000
($180,000 sales price of the house minus $150,000 cost of labor and
materials).
Question 2 pts
Resource owners want to provide resources to businesses with high profit
potential because those businesses will pay higher taxes. This statement is
True
False
When business must pay taxes, there is less profit available to share
with the resource owners. Thus, resource owners want to avoid the
consequences of taxation. The reason resource owners are willing to
provide resources to companies with high profits is because those
businesses have more profits to share with owners, are able to pay
more interest to creditors, and are in a better position to pay higher
prices for physical resources and wages. Ask yourself, would you want
to work for a company that paid low wages because it had to pay high
taxes.
,Question 3 pts
Accounting provides a service to society by gathering and reporting information
about a company's profit potential. This statement is
True
False
Businesses that efficiently produce products customers want are
rewarded with high profits. For example, the invention and production of
the IPhone generated billions of dollars of profit for Apple Inc. Resource
owners prefer to provide resources to businesses with high earnings
potential because such companies are better able to compensate them.
Accounting provides a valuable service to society because it provides
information that investors, creditors, owners of physical resources, and
workers rely on to evaluate which businesses are worthy of receiving
their resources.
Question 4 pts
The primary purpose of managerial accounting is to prepare financial
statements in accordance with a reporting framework (e.g. GAAP).
True
False
, The primary purpose of managerial accounting is to assist mangers
within the Company in determining how much it costs to acquire
resources and convert them into saleable goods and services. There
are no official rules for managerial accounting; the type and quantity of
information collected and used by management is at their discretion. In
contrast, financial accounting information is prepared in accordance with
a reporting framework (e.g. G.A.A.P.) and primarily utilized by investors
and creditors that are external to the Company. These parties rely on
financial information to assist them in deciding whether to provide
resources to the Company.
Question 5 pts
Generally Accepted Accounting Principles (GAAP) are designed to provide
guidance for
financial accounting.
managerial accounting.
tax accounting.
auditing service accounting.
, Financial accounting reports are prepared for external users. Since the
users operate outside the confines of a company they are not privy to
the way management chooses to report accounting events. For
example, suppose a company provides a service to a customer in year
one but does not collect cash from its customer until year two. One
company may decide to report revenue when the company earned it
while another company may decide it is better to wait until the company
receives the cash in year two. An external user would need to know how
each company chooses to report its earnings in order to make
comparisons between the companies. This is just one example of many
alternative reporting methods that may be used to report on a variety of
accounting transactions. To promote comparisons between companies,
users need a standardized set of reporting rules. The rules that have
evolved over time are called Generally Accepted Accounting Principles
(GAAP). Since internal users are familiar with their company’s reporting
practices, there is no need to establish a set of rules for reporting
managerial accounting practices. Tax rules are established by laws not
GAAP and audit rules cover audit practice not financial reporting.
Question 6 pts
Which of the following types of businesses require financial information to
operate effectively?
For profit businesses
Governmental entities
Non-profit businesses
All of these businesses require financial information
Financial information is required for all types of businesses.
Governmental and non-profit business types differ from a for-profit
business in regards to their profit motives. However, all business entities
require financial information to monitor the cost of acquiring resources
and converting them into saleable goods or services.
Question 1 pts
Businesses earn profits by converting financial, physical, and labor resources
into goods and services that satisfy consumer demands. This statement is
True
False
Businesses add value by converting financial, physical, and labor
resources into goods and services that consumers want. For example, a
homebuilder may borrow $150,000 from a bank and spend the money to
buy labor and materials to build a house. The house may sell for
$180,000 because a completed house is more valuable than
unconverted labor and materials. In this case, the profit is $30,000
($180,000 sales price of the house minus $150,000 cost of labor and
materials).
Question 2 pts
Resource owners want to provide resources to businesses with high profit
potential because those businesses will pay higher taxes. This statement is
True
False
When business must pay taxes, there is less profit available to share
with the resource owners. Thus, resource owners want to avoid the
consequences of taxation. The reason resource owners are willing to
provide resources to companies with high profits is because those
businesses have more profits to share with owners, are able to pay
more interest to creditors, and are in a better position to pay higher
prices for physical resources and wages. Ask yourself, would you want
to work for a company that paid low wages because it had to pay high
taxes.
,Question 3 pts
Accounting provides a service to society by gathering and reporting information
about a company's profit potential. This statement is
True
False
Businesses that efficiently produce products customers want are
rewarded with high profits. For example, the invention and production of
the IPhone generated billions of dollars of profit for Apple Inc. Resource
owners prefer to provide resources to businesses with high earnings
potential because such companies are better able to compensate them.
Accounting provides a valuable service to society because it provides
information that investors, creditors, owners of physical resources, and
workers rely on to evaluate which businesses are worthy of receiving
their resources.
Question 4 pts
The primary purpose of managerial accounting is to prepare financial
statements in accordance with a reporting framework (e.g. GAAP).
True
False
, The primary purpose of managerial accounting is to assist mangers
within the Company in determining how much it costs to acquire
resources and convert them into saleable goods and services. There
are no official rules for managerial accounting; the type and quantity of
information collected and used by management is at their discretion. In
contrast, financial accounting information is prepared in accordance with
a reporting framework (e.g. G.A.A.P.) and primarily utilized by investors
and creditors that are external to the Company. These parties rely on
financial information to assist them in deciding whether to provide
resources to the Company.
Question 5 pts
Generally Accepted Accounting Principles (GAAP) are designed to provide
guidance for
financial accounting.
managerial accounting.
tax accounting.
auditing service accounting.
, Financial accounting reports are prepared for external users. Since the
users operate outside the confines of a company they are not privy to
the way management chooses to report accounting events. For
example, suppose a company provides a service to a customer in year
one but does not collect cash from its customer until year two. One
company may decide to report revenue when the company earned it
while another company may decide it is better to wait until the company
receives the cash in year two. An external user would need to know how
each company chooses to report its earnings in order to make
comparisons between the companies. This is just one example of many
alternative reporting methods that may be used to report on a variety of
accounting transactions. To promote comparisons between companies,
users need a standardized set of reporting rules. The rules that have
evolved over time are called Generally Accepted Accounting Principles
(GAAP). Since internal users are familiar with their company’s reporting
practices, there is no need to establish a set of rules for reporting
managerial accounting practices. Tax rules are established by laws not
GAAP and audit rules cover audit practice not financial reporting.
Question 6 pts
Which of the following types of businesses require financial information to
operate effectively?
For profit businesses
Governmental entities
Non-profit businesses
All of these businesses require financial information
Financial information is required for all types of businesses.
Governmental and non-profit business types differ from a for-profit
business in regards to their profit motives. However, all business entities
require financial information to monitor the cost of acquiring resources
and converting them into saleable goods or services.
