Chapter 8 Assignment

In the context of an independent auditor's report, which of the following is a difference between an unqualified opinion and a qualified opinion? a. An unqualified opinion is given if the independent auditor does not find any problems with the way a firm's financial statements were prepared and presented, whereas a qualified opinion is given if the independent auditor identifies minor concerns but believes that on balance the firm's statements are a fair representation of the company's financial position. b. An unqualified opinion is given if the independent auditor discovers widespread and serious problems with a firm's statements, whereas a qualified opinion is given if the independent auditor does not find problems with the way the firm's financial statements were prepared and presented. c. An unqualified opinion is given if the independent auditor identifies minor concerns but believes that on balance a firm's statements are a fair representation of the company's financial position, whereas a qualified opinion is given if the independent auditor discovers widespread and serious problems with the firm's statements. d. An unqualified opinion is given if the independent auditor identifies minor concerns but believes that on balance a firm's statements are a fair representation of the company's financial position, whereas a qualified opinion is given if the independent auditor does not find any problems with the way the firm's financial statements were prepared and presented.

a. An unqualified opinion is given if the independent auditor does not find any problems with the way a firm's financial statements were prepared and presented, whereas a qualified opinion is given if the independent auditor identifies minor concerns but believes that on balance the firm's statements are a fair representation of the company's financial position.

Which of the following statements is true of the Financial Accounting Standards Board (FASB)? a. It is a private organization responsible for developing accounting rules. b. Its members are encouraged to form ties with private firms for the ease of communication. c. It is a 12-member team that is appointed by the Internal Revenue Service. d. It led to the establishment of the Securities and Exchange Commission.

a. It is a private organization responsible for developing accounting rules.

Financial accounting:

addresses the needs of stockholders, creditors, and government regulators

Which of the following is a difference between a statement of retained earnings and a stockholders' equity statement? a. Preparing a stockholders' equity statement is mandatory for a firm, whereas preparing a statement of retained earnings is optional. b. A statement of retained earnings only shows how net income and dividends affect retained earnings, whereas a stockholders' equity statement also shows changes in stockholders' equity that arise from the issuance of additional shares of stock. c. A stockholders' equity statement only shows changes in stockholders' equity that arise from the issuance of additional shares of stock, whereas a statement of retained earnings also shows how net income and dividends affect retained earnings. d. Preparing a statement of retained earnings is mandatory for a firm, whereas preparing a stockholders' equity statement is optional.

b. A statement of retained earnings only shows how net income and dividends affect retained earnings, whereas a stockholders' equity statement also shows changes in stockholders' equity that arise from the issuance of additional shares of stock

Which of the following statements is true of managerial accounting? a. Its practices are subject to the generally accepted accounting principles. b. It involves presenting customized information on request. c. It is intended for external stakeholders. d. It focuses exclusively on financial information.

b. It involves presenting customized information on request.

In the context of the approaches to budget preparation, which of the following statements is true of participatory budgeting? a. It is less time consuming than the top-down approach. b. It is more resource intensive than the top-down approach. c. It demotivates the middle and first-line managers. d. It includes entry-level employees in the budgeting process.

b. It is more resource intensive than the top-down approach

Which of the following statements is true of management accountants? a. They ensure that all government projects meet accounting regulations. b. They assist their superiors in preparing financial statements. c. They work with multiple clients on a fee basis. d. They provide accounting information exclusively to the government.

b. They assist their superiors in preparing financial statements

Frank is a loan officer who approves loans for small businesses. One factor he looks at carefully when making loan decisions is the amount of outstanding debt a firm already has—an information that he can find in the firm's:

balance sheet

The top managers of Promedium Inc. are creating a master budget for the company. They require a statement of the budget goals from each of its departments to be able to make an appropriate master budget. Karren, the manager of the sales department, overstates her needs in the budget and presents the statement to the top managers. The outcome of Karren's actions is known as _____.

budgetary slack

In the context of budget preparation, the document created in the final stage of an operating budget is referred to as a _____.

budgeted income statement

In the context of comparative financial statements, comparative balance sheets:

can be used to check if the owners' equity had increased

Which of the following is a difference between managerial accounting and financial accounting? a. Managerial accounting prepares a standard set of investment statements, whereas financial accounting prepares customized reports to deal with specific problems or issues. b. Managerial accounting presents financial statements on a predetermined schedule, whereas financial accounting creates reports upon request by management. c. Managerial accounting summarizes the past performance of a company, whereas financial accounting provides reports on past performance and makes projections about the future. d. Managerial accounting is intended to provide information to internal stakeholders, whereas financial accounting is primarily intended to provide information to external stakeholders.

d. Managerial accounting is intended to provide information to internal stakeholders, whereas financial accounting is primarily intended to provide information to external stakeholders.

In the context of financial statements, which of the following statements is true of long-term liabilities? a. They are debts that come due within a year of the date of the financial audit. b. They are debts that come due within a year of the date on the balance sheet. c. They are debts that don't come due until more than a year after the date of the financial audit. d. They are debts that don't come due until more than a year after the date on the balance sheet.

d. They are debts that don't come due until more than a year after the date on the balance sheet.

The accountants at Gamone Phones, a cell phone manufacturing company, discover that the firm has performed poorly over the last two quarters, leading to negative financial implications. Instead of stating the actual figures, the managers decide to wrongly present the firm's debts and overstate its earnings. The aspect of financial accounting that should be emphasized to avoid such incidents of accounting fraud is:

ethics in accounting

In the context of financial statements, the specific accounts listed in the stockholders' equity section of a balance sheet depend on the:

form of business ownership

Nusreen, a financial manager in a company, compares the operating budgets from the past three years to identify trends in the cost of materials purchased and to learn whether the company's net expenses have increased or decreased over the time span. Nusreen is using _____ to compare the financial statements.

horizontal analysis

Lecona, a start-up company, failed to acquire any major funding from potential investors. Therefore, the owners of the company set up their office in an unoccupied apartment owned by one of them. In this scenario, the company most likely incurred a(n) _____.

implicit cost

The _____ of a firm organizes the operating and financial budgets into a unified whole, representing the firm's overall plan of action for a specified time period.

master budget

Companies that are not publicly traded:

obtain external audits at their own discretion

In the context of managerial accounting, _____ are usually easy to measure because they involve actual expenditures of money or other resources.

out-of-pocket costs

Mark, an accountant, is given the task to lead an external auditing project for a multinational company. In his spare time, Mark also acts as a consultant for Mayfair Hut Inc., a local company. In this scenario, Mark is a:

public accountant

Lance signs a contract with Gerove Corp. to perform an external audit for the company. In his audit, he finds certain minor issues in the firm's financial statements but is of the view that the statements are, nevertheless, an accurate representation of the firm's financial status. In this scenario, Lance is most likely to issue a(n) _____ opinion.

qualified

As a shareholder of Syder Corporation, Carl wants to know whether the company had earned a profit over the last financial year. He begins by looking into the net income of the company to know if it has sufficient amount of money to pay off the workers and suppliers and also the amount of money remaining with the owners. In this scenario, Carl is looking at Syder Corporation's _____.

statement of cash flows

If a firm's assets equal $18,000 and its liabilities equal $7,500, then the owners' equity is _____.

$10,500