Test bank Mid

Question 1

Correct order in which the steps in the decision making process occur?

Answer 1

Establish goal
Gather available info
Evaluate consequences
Choose actions

Question 2

Accounting process

Answer 2

Identifying: transaction
Measuring: quantification in money terms
Recording: record, classify and summarize
Communicating: by accounting report & analysis & interpret

Question 3

Events that are the economic activities of an entity

Answer 3

transaction

Question 4

The winding up of the affairs of a company

Answer 4

liquidation

Question 5

Accounting that deals with the cost of a product or service

Answer 5

cost accounting

Question 6

A choice made

Answer 6

decision

Question 7

An independent professional review service

Answer 7

assurance

Question 8

Traded scarce resources

Answer 8

economic

Question 9

Ongoing investigation of compliance with procedures and polices of an entity:
__________ audit

Answer 9

internal

Question 10

Reports designed to meet the information needs of a wide range of users

Answer 10

general purpose report

Question 11

An independent examination of the accounts by an accountant

Answer 11

audit

Question 12

A __________ accounting system provides information to internal users

Answer 12

management

Question 13

A plan for the future operating activities of a business

Answer 13

budgeting

Question 14

Provides information to external users: __________ accounting

Answer 14

financial

Question 15

Unable to pay debts as they fall due

Answer 15

insolvent/insolvency

Question 16

Which of the following is not one of the four main questions to be followed in
making a decision?
(a) What are we trying to achieve?
(b) What information do we need?
(c) How long will it take?
(d) Which course of action will we choose?

Answer 16

(c)

Question 17

Apart from the monetary impact, factors of decision making include:

(a) personal taste
(b) social factors
(c) environmental factors
(d) all of the above.

Answer 17

d

Question 18

The retail market is where:

(a) the consumer buys groceries, clothes or home electrical goods
(b) retailers buy their supplies for on-selling in their different outlets
(c) individuals and business entities buy and sell shares
(d) people meet to swap, buy and sell hand-crafted and second-hand goods.

Answer 18

a

Question 19

If accounting information is to be useful, it must be expressed in terms of:

(a) non-monetary units
(b) monetary and non-monetary units
(c) units of consumer demand
(d) a common denominator

Answer 19

d

Question 20

An example of an internal transaction is when an entity:

(a) purchases merchandise from a supplier
(b) borrows money from a bank
(c) sells goods to a customer
(d) recognises the use over time of machinery and equipment.

Answer 20

d

Question 21

An example of an external transaction is when an entity:

(a) pays an employee his/her fortnightly wages
(b) transfers merchandise from the stores department to the sales department
(c) recognises the use over time of machinery and equipment
(d) uses the maintenance department to service machinery and equipment.

Answer 21

a

Question 22

. Questions raised by external users of accounting information include:

(a) Will the entity be able to repay its loans?
(b) What is the entity’s earning potential?
(c) Is the business in a financially sound position?
(d) All of the above.

Answer 22

d

Question 23

For the purpose of decision making:
(a) accounting information provides information about future events
(b) accounting information provides information about the outcomes of past
decisions
(c) the future is used as a guide to past estimates
(d) the accountant never becomes involved in the budgeting process.

Answer 23

b

Question 24

The rules of professional conduct set down by the joint Code of Professional
Conduct (CPC) are:
(a) to be used as a behavioural guide only
(b) unenforceable by the professional bodies
(c) mandatory for all members
(d) the concerns of public practitioners only.

Answer 24

c

Question 25

The management accountant working in the commercial field will typically be
involved in:
(a) independent auditing
(b) taxation services
(c) management advisory services
(d) cost accounting.

Answer 25

d

Question 26

overseer and advisory body to the AASB-appoints members, monitors their overall direction/ set plans and budget:

(a) Australian accounting standard board (AASB)
(b) Australian securities and investment commission (ASIC)
(c) Financial Reporting council (FRC)
(d) Australian Stock Exchange (ASX)

Answer 26

c

Question 27

Develop Aus accounting standards that comply with the international accounting standards (IAS), adopted conceptual framework, issue additional accounting standards

(a) Australian accounting standard board (AASB)
(b) Australian securities and investment commission (ASIC)
(c) Financial Reporting council (FRC)
(d) Australian Stock Exchange (ASX)

Answer 27

a

Question 28

uses listings & rules to monitor company, improve disclosure of info

(a) Australian accounting standard board (AASB)
(b) Australian securities and investment commission (ASIC)
(c) Financial Reporting council (FRC)
(d) Australian Stock Exchange (ASX)

Answer 28

d

Question 29

administer corporations law & protect the interest of investors, creditors and consumers

(a) Australian accounting standard board (AASB)
(b) Australian securities and investment commission (ASIC)
(c) Financial Reporting council (FRC)
(d) Australian Stock Exchange (ASX)

Answer 29

b