BA 220 FINAL STUDY GUIDE PEPPERDINE

One of the most important reasons for having a system of internal control is to:

A) improve the effectiveness and efficiency of the operations of the organization.

1) A credit entry will:

A) increase an asset account.

To be relevant, accounting information must cross a threshold of

A) materiality

1) A key difference between management accounting and financial accounting reports is that management accounting reports tend to .

A) more forward looking

1) The three main components of the fraud triangle are:

A) motive, opportunity, and rationalization.

1) The revenue principle requires that a business records revenue when the business:

A) performs a service or delivers a product and not before.

1) As a management accountant you would be primarily concerned with .

A) preparing plans and forecasts for the future activities of the business

The revenue principle deals with the following:

A) when to record revenue and the amount of revenue to record.

A company borrowed $15,000 from the bank by signing a long-term note. How does this transaction affect the accounting equation?

Add $15,000 to Cash and add $15,000 to Notes Payable

For a new business, the beginning balance of retained earnings equals:

zero.

The bookkeeper recorded a deposit of $100 as $10. On the bank reconciliation, this will be a(n):

addition of $90 to the balance per books

Expenditures capitalized as long-lived assets generally include those expenditures that:

are material in amount and that have an economic benefit to the entity that extends beyond the current year

Fraudulent financial reporting is also called:

cooking the books.

1) A debit entry will:

decrease a liability account.

The Two Types of Accounting are:

financial and managerial

1) Newman Co. purchased CNC router cutting and engraving machinery at a cost of $320,000 in January 2019. The company's estimated useful life of this high tech equipment is 5 years, and the estimated salvage value is $48,000. Using the straight-line method, the depreciation expense to be recognized for 2019, the first year of the machinery's life, would be:

320,000/5 64,000

Moped, Inc. purchased machinery at a cost of $44,000 on January 1, 2020. The expected useful life is 5 years and the asset is expected to have salvage value of $4,000. Moped depreciates its assets using the straight line depreciation method.

44,000/5 $8,800

1) Which of the following items on a bank reconciliation would require an adjusting entry on the company's books?

A deposit in transit

For which of the following reconciling items would an adjusting entry be necessary on the company's books?

A) An error by the bank.

The balance sheet equation can be represented by:

A) Assets = Liabilities + Stockholders' Equity B) Assets - Liabilities = Stockholders' Equity C) Net Assets = Stockholders' Equity D) All of the answers are correct.

1) For which of the following errors should the appropriate amount be added to the balance per bank on a bank reconciliation?

A) Deposit of $600 recorded by the bank as $60.

Which of the following is an objective of financial reporting by business enterprises?

A) Financial reporting should provide assurance that all liabilities of business enterprises will be paid.

Which Statement is False?

A) International Financial Reporting Standards are used by most countries around the world. B) U.S. Generally Accepted Accounting Principles are used by many countries around the world. C) The most commonly used accounting practices are essentially the same under both U.S. Generally Accepted Accounting Principles and International Financial Reporting Standards. D) For many years, U.S. Generally Accepted Accounting Principles were considered to be the strongest single set of accounting standards in the world. B. U.S. Generally Accepted Accounting Principles are used by many countries around the world

Which of the following is not a principal form of business organization?

A) Limited unregistered business.

Which one of the following is an internal user of financial information?

A) Management

Accounting:

A) Measures Business Activities B) Processes data into reports and communicates the data to decision makers C) Is often called the language of business D) Is all of the above D. ALL OF THE ABOVE

Which of the following items is not a differentiator between financial and management accounting?

A) One form of accounting is almost exclusively concerned with historic data and performance, the other uses data to consider past, present and future performance.

The owner of ______ is personally liable for all the business's debts?

A) PROPRIETORSHIP

1) Which of the following is not an internal control procedure for cash?

A) Payments should be made with cash.

Stockholders' equity refers to which of the following?

A) The ownership right of the stockholder(s) of the entity.

1) A check written by the company for $167 is incorrectly recorded by a company as $176. On the bank reconciliation, the $9 error should be

A) added to the balance per books.

The principle of full disclosure means that the reporting entity must fully disclose:

A) all necessary information to prevent a reasonably astute user of financial statements from being misled.

The principal reason for reconciling the cash balance per books with the balance shown on the bank statement is to:

A) determine the amount of cash in the account actually available to the entity.

1) The two most common types of fraud impacting the financial statements are:

A) fraudulent financial reporting and misappropriation of assets.

1) A construction company paid $81,000 cash for land used in the business. At the time of purchase, the land had a list price of $88,000. When the balance sheet was prepared, the fair value of the land was $84,000. At what amount should the land be reported on the balance sheet of the company?

A. 81,000

Information must be sufficiently transparent so that it makes sense to reasonably informed users of the financial statements, such as creditors. This qualitative characteristic of information is called:

Faithful Representation

Which of the following have unlimited liability for a company's debts?

General Partner in a limited liability partnership

The principle stating that assets acquired by the business should be recorded at their actual cost on the date of purchase is:

Historical Cost

In the buyer's records, the purchase of supplies on account would:

Increase Assets and Increase liabilities

1) The calculation of operating profit may include three of the following four expenses. Which is the one that is not included?

Loan Interest

is the element in the fraud triangle that results from weak internal controls.

Opportunity

To be useful, accounting information must have the fundamental qualitative characteristics of:

Relevance and Faithful representation

The components of internal control do NOT include:

Safeguard Assets

If a company prepares its financial statements three years after the end of its accounting period, it has violated the qualitative characteristic of:

Timeliness

Verifiability means that the accounting information:

must be capable of being checked for accuracy, completeness and reliability.

The purpose of the income statement is to show the:

net income or net loss for the period covered by the statement.

An organization's system of internal control is designed primarily to:

provide an operating framework for all employees as they work to achieve the organization's goals.

One way the risk of not collecting receivables can be managed is:

separate cash-handling duties from record-keeping duties.