CHp 8 pre-lecture quiz
_____ is a branch of accounting that addresses the needs of external stakeholders, including stockholders, creditors, and government regulators. a. Managerial accounting b. Financial accounting c. Investigative accounting d. Forensic accounting
b. Financial accounting
Sebastian is an employee of Power Trans Inc. His duties include preparing reports and analyzing company accounting data. He also appraises financial performances, verifies the accuracy and validity of the company's internal records and accounting procedures. Sebastian's role is that of a _____. a. government auditor b. management accountant c. certified fraud examiner d. forensic accountant
b. management accountant
Matt is asked by Clint Publishers to carry out an external audit of its books. He is also asked to prepare the tax returns for another client, Mrs. Zhirkov. Matt is a _____. a. government accountant b. public accountant c. management accountant d. cost
b. public accountant
A(n) _____ opinion is issued if an external auditor does not find any problems with the way a firm prepares and presents its financial statements. a. corrective b. unqualified c. quality d. adverse
b. unqualified
A firm's operating budget represents a firm's overall plan of action for a specified time period(T/F)
False
A flexible budget: a. differentiates the budgeted cost for each sales level b. can not be used for evaluating real-world sales situations. c. is based on a single assumed level of sales. d. is the budget that is prepared before a static budget.
a. differentiates the budgeted cost for each sales level
Managerial accounting: a. is the branch of accounting that adheres most strictly to the generally accepted accounting principles. b. provides managers information about a firm's financial situation on a predetermined schedule. c. provides reports and analysis to external stakeholders to show them the current business state. d. provides reports and analysis to managers to help them make informed business decisions.
d. provides reports and analysis to managers to help them make informed business decisions.
Accounting systems are utilized by companies for several reasons, but they have little value when it comes to making economic decisions.(T/F)
False
Liabilities do not include bank loans and current payments owed to suppliers(T/F)
False
The members of the Financial Accounting Standards Board (FASB) are appointed by the Securities and Exchange Commission. (T/F)
False
Since it deals strictly with numbers, the practice of accounting is free from ethical obligations(T/F)
False
Since it deals strictly with numbers, the practice of accounting is free from ethical obligations.(T/F)
False
The CFO of SpotLight Production Company requests his accountant Felipe to prepare a customized report of the cost overruns at the company's production facility in L.A. Felipe is a managerial accountant.(T/F)
False
Felix runs Green Zone Inc., a nursery and landscaping venture. His business flourishes during spring and early summer, but he made most of his inventory purchases during winter of theyear before. Hence, he needs to be extremely careful about cash flow fluctuations. In this case, the capital expenditure budget would be the most beneficial option for Felix.(T/F)
False
Government accountants primarily use accounting information to meet the reporting needs of federal and state agencies. (T/F)
True
John and Elizabeth are evaluating three telecommunication companies to determine the best company to invest in. Horizontal analysis will enable them to make comparisons of financial statements of the three companies over the past several years and help determine the increase in their profits.(T/F)
True
Alexis decides to check with his accountant how much money his company owes to the raw materials supplier. To determine that, Alexis needs to ask his accountant to provide him with the company's balance sheet.(T/F)
True
Betty ' s job entails detecting problems such as embezzlement, waste, mismanagement, and employee theft at her organization. In this case, Betty is a(n) _____. a. internal auditor b. government accountant c. management consultant d. certified public accountant
a. internal auditor
Which of the following is a disadvantage of participatory budgeting? a. It can lead to budgetary slack. b. It results in inadequate representation of the issues facing individual departments. c. It fails to motivate middle and first-line managers. d. It fails to identify the resources needed to achieve goals.
a. It can lead to budgetary slack.
Which of the following statements is true of the Financial Accounting Standards Board (FASB)? a. Its members can be reappointed to serve one additional term. b. Its authority comes from the Internal Revenue Service. c. It consists of five members appointed by the Federal Trade Commission (FTC). d. Its members can retain ties with firms in which they were previously employed
a. Its members can be reappointed to serve one additional term.
Which of the following refers to the claims that stockholders have against their firm's assets? a. Owners' equity b. Explicit costs c. Liabilities d. Loans payable
a. Owners' equity
Horizontal analysis is the comparison of: a. account values reported on financial statements over two or more years. b. stakeholders' equity values for each owner in the same financial year. c. sales figures of different divisions of a firm over one financial quarter. d. reported account values of two different firms in the same financial year.
a. account values reported on financial statements over two or more years.
The _____ reports the financial position of a firm by identifying and reporting the value of the firm's assets, liabilities, and owners' equity. a. balance sheet b. profit and loss statement c. statement of cash flows d. statement of retained earnings
a. balance sheet
The heavy reliance on accounting information by business stakeholders has led to it sometimes being called the: a. language of business. b. standard of business. c. cornerstone of business. d. lifeblood of business.
a. language of business.
Kyra Inc. has applied for a business loan in the United Bank. In order to best assess the loan case, the loan officer at the bank, Sirigu, decides to look at the company's net income figure. Sirigu will find this information in Kyra's _____. : a. profit and loss statement b. statement of retained earnings c. stockholders' equity statement d. budgeted income statement
a. profit and loss statement
_____ is a branch of accounting that addresses the needs of external stakeholders, including stockholders, creditors, and government regulators. a. Managerial accounting b. Financial accounting c. Forensic accounting d. Investigative accounting
b. Financial accounting
Which of the following is a disadvantage of participatory budgeting? a. It fails to motivate middle and first-line managers. b. It can lead to budgetary slack. c. It fails to identify the resources needed to achieve goals. d. It results in inadequate representation of the issues facing individual departments.
b. It can lead to budgetary slack.
Which of the following bodies makes U.S. accounting practices more consistent with those in other nations along with the Financial Accounting Standards Board (FASB)? a. The U.S. Federal Reserve (Fed) b. The International Accounting Standards Board (IASB) c. The Securities and Exchange Commission (SEC) d. The Financial Accounting Foundation (FAF)
b. The International Accounting Standards Board (IASB)
Which of the following best defines cost? a. The value of equities a firm has at its disposal b. The value of what is given up in exchange for something else c. The value of expense inflows in an organization d. The value of a received item in a monetary exchange
b. The value of what is given up in exchange for something else
The _____ reports the financial position of a firm by identifying and reporting the value of the firm's assets, liabilities, and owners' equity. a. statement of cash flows b. balance sheet c. profit and loss statement d. statement of retained earnings
b. balance sheet
The capital expenditure budget: a. identifies short-term fluctuations in cash flows that display cash deficits and surpluses. b. identifies a firm's planned investments in major fixed assets and long-term projects. c. provides quarterly estimates of the number of units of each product a firm expects to sell. d. contains the budgets for direct labor, direct materials, and overhead costs
b. identifies a firm's planned investments in major fixed assets and long-term projects.
In activity-based costing, product costs are assigned based on links between activities that drive costs and the _____. a. pricing of specific goods b. resulting revenues c. production of specific goods d. liabilities of a firm
c. production of specific goods
Which of the following is an advantage of using bottom-up budgeting? a. It eliminates most forms of budgetary slack. b. Supervisory managers are likely to know the long-term strategic needs of a company. c. Middle managers are likely to be highly motivated to achieve budgetary goals. d. It is less time-consuming than the top-down approach.
c. Middle managers are likely to be highly motivated to achieve budgetary goals.
Established by the Sarbanes-Oxley Act of 2002, it is the responsibility of the _____ to protect the interests of investors and further the public interest in the preparation of informative, fair, and independent audit reports. a. Private Company Accounting Oversight Board b. Private Enterprise Accounting Regulation Agency c. Public Company Accounting Oversight Board d. Public Enterprise Accounting Regulation Agency
c. Public Company Accounting Oversight Board
Which of the following best defines cost? a. The value of equities a firm has at its disposal b. The value of expense inflows in an organization c. The value of what is given up in exchange for something else d. The value of a received item in a monetary exchange
c. The value of what is given up in exchange for something else
In order to preserve independence and impartiality, Financial Accounting Standards Board (FASB) members are required to: a. serve the board for the rest of their lives once they are appointed. b. sign a non-disclosure agreement and hand over all information of their previous companies to the board. c. sever all ties with any firms or institutions they served prior to joining the board. d. pass a rigorous two-day, four-part examination on major accounting concepts.
c. sever all ties with any firms or institutions they served prior to joining the board.
The balance sheet of Ranger Inc. shows its liabilities and owners' equity as $150,000 and $75,000, respectively. In this case, Ranger's _____. a. total income is $75,000 b. net cash flow for the current year is $75,000 c. total assets are $225,000 d. net income for the current year is $225,000
c. total assets are $225,000
_____ is a management tool that explicitly shows how a firm will acquire and use the resources needed to achieve its goals over a specific time period. a. Trading b. Auditing c. Investing d. Budgeting
d. Budgeting
Which of the following is a key external user of a company's accounting information? a. Departmental managers b. Managers c. Employees d. Competitors
d. Competitors
_____ is a branch of accounting that addresses the needs of external stakeholders, including stockholders, creditors, and government regulators. : a. Managerial accounting b. Investigative accounting c. Forensic accounting d. Financial accounting
d. Financial accounting
Which of the following is a difference between financial accounting and managerial accounting? a. Financial accounting is designed to meet the needs of company managers, whereas managerial accounting provides stockholders with information about the overall financial performance of a firm. b. Financial accounting provides company accounting information for public consumption, whereas managerial accounting provides stockholders with information about the overall financial performance of a firm. c. Financial accounting provides accounting information exclusively to government agencies, whereas managerial accounting is designed to specially meet the needs of suppliers and creditors. d. Financial accounting provides stockholders with information about the overall financial performance of a firm, whereas managerial accounting is designed to meet the needs of company managers.
d. Financial accounting provides stockholders with information about the overall financial performance of a firm, whereas managerial accounting is designed to meet the needs of company managers.
Which of the following statements is true of activity-based costing? a. It assigns costs based on the "one size fits all" rule. b. It determines the direct cost per unit of production. c. It involves a three-stage process. d. It is more complex than the direct labor method.
d. It is more complex than the direct labor method.
Which of the following statements is true of the Financial Accounting Standards Board (FASB)? : a. Its authority comes from the Internal Revenue Service. b. Its members can retain ties with firms in which they were previously employed. c. It consists of five members appointed by the Federal Trade Commission (FTC). d. Its members can be reappointed to serve one additional term.
d. Its members can be reappointed to serve one
Benjamin works for a private firm that has been contracted to examine the books of accounts of the Luigi Corporation. After checking the figures and examining the company's accounting methods, he is required to prepare a report on his findings. The work that Benjamin is tasked with is the characteristic of a(n) _____. a. management accountant b. internal auditor c. risk analyst d. external auditor
d. external auditor
The capital expenditure budget: a. contains the budgets for direct labor, direct materials, and overhead costs. b. identifies short-term fluctuations in cash flows that display cash deficits and surpluses. c. provides quarterly estimates of the number of units of each product a firm expects to sell. d. identifies a firm's planned investments in major fixed assets and long-term projects.
d. identifies a firm's planned investments in major fixed assets and long-term projects.
Through the generally accepted accounting principles (GAAP), the Financial Accounting Standards Board (FASB) aims to ensure that financial statements are _____. a. cursory, intensive, unabridged, and superficial b. circumstantial, inferential, presumptive, and provisional c. comprehensive, exhaustive, extensive, and independent d. relevant, reliable, consistent, and comparable
d. relevant, reliable, consistent, and comparable
Assets refer exclusively to: a. the wages payable by a firm to its employees. b. the taxes to be paid by a firm. c. the cash payable by a firm. d. the resources owned by a firm.
d. the resources owned by a firm.
