Chapter One Questions

Question 1

Why is Accounting important?

Answer 1

Accounting information impacts us all

Question 2

Preparing and entering a list of checks issued…

Answer 2

Recording

Question 3

Using a cash register to enter sales…

Answer 3

Recording

Question 4

Entering a list of the sales invoices, including the prices and quantities, for the company’s record keeper….

Answer 4

Identifying

Question 5

Interpreting information from financial reports.

Answer 5

communicating

Question 6

Preparing financial statements for creditors.

Answer 6

communicating

Question 7

The recording of transactions and events only, either manually or electronically…

Answer 7

Recording-keeping

Question 8

An information and measurement system that identifies, records, and communicates relevant, reliable, and comparable information about an organization’s business activities.

Answer 8

Accounting

Question 9

Customers

Answer 9

External Information User

Question 10

Purchasing manager

Answer 10

Internal Information User

Question 11

Marketing Manager

Answer 11

Internal Information User

Question 12

Suppliers

Answer 12

External Information User

Question 13

Labor Union

Answer 13

External Information User

Question 14

_________ includes opportunities in general accounting, cost accounting and internal auditing.

Answer 14

Managerial accounting

Question 15

The majority of accounting opportunities are in _____ accounting.

Answer 15

private

Question 16

Accounting certifications include: IFRS, CPA , GAAP
SEC

Answer 16

CPA

Question 17

In the fraud triangle, when a person feels an incentive to commit fraud, this is referred to as _______.

Answer 17

pressure

Question 18

A company records the expenses incurred to generate the revenue reported…

Answer 18

Expense recognition principle

Question 19

Revenue is recognized when goods are provided to the customer at the amount expected to be received…

Answer 19

Revenue recognition principle

Question 20

A company reports the details behind financial statements that would impact user’s decisions…

Answer 20

Full-disclosure principle

Question 21

Accounting information is based on actual cost…

Answer 21

Measurement principle

Question 22

Presumes that the business will continue operating in the future…

Answer 22

Going-concern assumption

Question 23

A business is accounted for separately from other business entities and its owner…

Answer 23

Business entity assumption

Question 24

The life of the company can be divided into specific time periods…

Answer 24

Time period assumption

Question 25

The four basic financial statements are:

Answer 25

Income Statement, Statement of retained earnings, Balance sheet, and Statement of cash flows

Question 26

Identify which items belong on the income statement...

Answer 26

Revenue, expenses and net income

Question 27

Identify which items belong on the statement of retained earnings.

Answer 27

Dividends, beginning retained earnings, ending retained earnings.

Question 28

Identify which items belong on the balance sheet.

Answer 28

Cash, accounts receivable, and common stock

Question 29

Identify which items belong on the statement of cash flows

Answer 29

Cash flows from investing, operating and financing activities

Question 30

Analyzing and interpreting reports.

Answer 30

Communicating

Question 31

Acquiring knowledge of revenue transactions.

Answer 31

Identifying

Question 32

Reporting debt owed to lenders.

Answer 32

Communicating

Question 33

Maintaining a log of sales transactions.

Answer 33

Recording

Question 34

Measuring revenue from a holiday sale.

Answer 34

Recording

Question 35

Measuring the costs of a product.

Answer 35

Recording

Question 36

Reporting the profitability of a product line.

Answer 36

Communicating

Question 37

Preparing financial statements.

Answer 37

Communicating

Question 38

Should we buy, hold, or sell a company's stock?

Answer 38

External user

Question 39

What are the costs of our service to customers?

Answer 39

Internal user

Question 40

What are the costs of our service to customers?

Answer 40

Internal user

Question 41

Will we earn enough revenue from developing this new product?

Answer 41

Internal user

Question 42

Should we make a five-year loan to that business?

Answer 42

External user

Question 43

How well has our new salesperson performed?

Answer 43

Internal user

Question 44

Should we spend additional money for redesign of our product?

Answer 44

Internal user

Question 45

Business press

Answer 45

Internal User

Question 46

Politician

Answer 46

External User

Question 47

SEC regulator

Answer 47

External User

Question 47

Creditor

Answer 47

External User

Question 48

External auditors

Answer 48

External Users

Question 49

Labor boss

Answer 49

External User

Question 50

Customer

Answer 50

External User

Question 51

Planning transactions to minimize taxes

Answer 51

Tax accounting

Question 52

Analyzing external financial reports

Answer 52

Financial accounting

Question 53

Internal auditing

Answer 53

Managerial accounting

Question 54

Managerial accounting

Answer 54

Managerial accounting

Question 55

Cost accounting

Answer 55

Managerial accounting

Question 56

Reviewing financial statements for criminal investigations

Answer 56

Financial accounting

Question 57

External auditing

Answer 57

Financial accounting

Question 58

Budgeting

Answer 58

Managerial accounting

Question 59

A more effective way to stop fraud than detection.

Answer 59

Prevention

Question 60

Beliefs that distinguish right from wrong

Answer 60

Ethics

Question 61

Procedures to reduce fraud—examples are independent reviews, physical controls, and good records.

Answer 61

Internal controls

Question 62

Examines whether financial statements are prepared using GAAP.

Answer 62

Audit

Question 63

Three factors push a person to commit fraud: opportunity, pressure, and rationalization.

Answer 63

Fraud triangle

Question 64

AJ Company pays a business income tax and has two owners.

Answer 64

Corporation

Question 65

Ownership of Zander Company is divided into 1,000 shares of stock. The company pays a business income tax.

Answer 65

Corporation

Question 66

Russell is the sole owner of Wilson Sports. The business is not a separate legal entity from Russell and the business ends with his death.

Answer 66

Sole proprietorship

Question 67

Trent Company is owned by Trent Malone, who is personally liable for the company's debts.

Answer 67

Sole proprietorship

Question 68

Micah and Nancy own Financial Services, which pays a business income tax. Micah and Nancy do not have personal responsibility for the debts of Financial Services

Answer 68

Corporation

Question 69

Vera is the sole owner of Tech Solutions. The business is a separate legal entity and does not pay an additional business income tax.

Answer 69

Limited liability company

Question 70

IBC Services does not have separate legal existence apart from the one person who owns it.

Answer 70

Sole proprietorship

Question 71

Harvey and Louis own NYC Law. Harvey and Louis are jointly liable for partnership debts.

Answer 71

Partnership