Chapter 1

Financial accounting information is:

Based primarily on past transactions and events.

The Financial Accounting Standards Board (FASB) _____ reorganized divergent sources of U.S. generally accepted accounting principles (GAAP) in a more accessible and researchable format.

Codification

The results of operations for an entity are reported for a _______ of time.

Period

Which of the following are primary users of a firm's accounting information? (Check all that apply). Customers Regulatory agencies Management Employees Competitors Investors

Regulatory agencies Management Employees Investors

The statutory authority to establish accounting principles for companies whose securities are publicly traded in the United States rests with _____ the and _____Commission.

Securities, Exchange

Which statement is correct about the role of an internal auditor? The qualifications of an internal auditor are similar to those of any other professional accountant. An internal auditor is usually responsible for both the financial and managerial accounting functions. The scale of work of an internal auditor is larger than the scale of work of an external auditor. An internal auditor acts as a chief accounting officer of a corporation.

The qualifications of an internal auditor are similar to those of any other professional accountant.

The consulting practices of several large auditing firms have been split off into separate entities in an effort to help achieve (profitability/independence/control/liquidity) in fact and appearance.

independence

A report by management on the effectiveness of the company's internal control over financial reporting is required for all Securities and Exchange Commission-regulated companies under:

section 404 of the Sarbanes-Oxley Act of 2002.

An unqualified, or "clean" independent auditor's opinion:

states that the auditor's work requires the application of generally accepted auditing standards (GAAS).

Financial statements are primarily oriented toward: internal users and are based on transactions and events that are expected to happen in the future internal users and are based on transactions and events that have happened in the past individuals who are aware of the day-to-day financial and operating activities of the entity external users and are based on transactions and events that have happened in the past

External users and are based on transactions and events that have happened in the past

The authoritative accounting standard-setting body for companies whose securities are publicly traded in the United States since 1973 has been the

FASB

The process that results in the preparation and reporting of financial statements for an entity is referred to as ______ (financial/managerial/tax) accounting.

Financial

Which of the following best describe Luca Pacioli? (Check all that apply.) He was a Franciscan monk. He was a mathematics professor. He was a famous violinist. He was the author of "method of Venice" system. He was a German scientist.

He was a Franciscan monk. He was a mathematics professor. He was the author of "method of Venice" system.

The goal of the _______ (IASB/IASC/IFRS) is to develop a single set of high-quality, understandable, enforceable, and globally accepted financial reporting standards.

IASB (International Accounting Standards Committee)

Accounting information is required by governmental units at which of the following levels? (Check all that apply). Municipal State Federal Regional

Municipal State Federal There are no regional governments

Accounting is the process of______ , _______, and _______ economic information about an organization for the purpose of making decisions and informed judgments.

Identifying, Measuring, and Communicating

Accounting information is required by which entities? (Check all that apply). Not-for-profit entities, such as hospitals and voluntary health and welfare organizations Only for-profit entities, such as colleges and universities Not-for-profit entities, such as trade associations and country clubs Only for-profit entities, such as libraries and museums

Not-for-profit entities, such as hospitals and voluntary health and welfare organizations Not-for-profit entities, such as trade associations and country clubs

The ____ (IASB/IASC/IFRS) is an accounting standard issued by the ____ (IASB/IASC/IFRS)

IFRS, IASB

Managerial accounting and cost accounting when compared to financial accounting: have primarily an external orientation and always require to use all the data generated by the financial accounting process have primarily an external orientation and are based primarily on future estimates are oriented toward the creditors and always require to use all the data used in the financial accounting process have primarily an internal orientation, and the data are more likely to be used in a future-oriented way

have primarily an internal orientation, and the data are more likely to be used in a future-oriented way

An internal auditor is responsible for which of the following? Performing functions much like those performed by an independent (external) auditor, but perhaps on a smaller scale Analyzing the operating efficiency of one of the company's divisions Expressing an opinion about the fairness of the company's financial statements Preparation and and fair presentation of the company's financial statements

Performing functions much like those performed by an independent (external) auditor, but perhaps on a smaller scale Analyzing the operating efficiency of one of the company's divisions NOT responsible for: Expressing an opinion about the fairness of the company's financial statements; This is the role of the external (independent) auditors (i.e., the company's CPA firm). Preparation and and fair presentation of the company's financial statements; Although internal auditors may be involved in this process, the company's (top) management is responsible for the financial statements.

An unqualified, or, clean, independent auditor's opinion does which of the following? (Check all that apply.) Explains that the audit was conducted in accordance with the standards of the GAAP (United States) Explains that the financial statements are the responsibility of the company's internal auditors States that the financial statements are free of any errors or irregularities States that it is the independent auditor's responsibility to express an opinion about the financial statements States that the named financial statements "present fairly, in all material respects" the entity's cash flows for the period

Explains that the audit was conducted in accordance with the standards of the GAAP (United States) States that it is the independent auditor's responsibility to express an opinion about the financial statements States that the named financial statements "present fairly, in all material respects" the entity's cash flows for the period

Which of the following statements are true about the Cost Accounting Standards Board (CASB)? (Check all that apply). CASB is responsible for ensuring full disclosure to investors about companies and their securities that are traded in interstate commerce. CASB is authorized by the U.S. Congress to establish cost accounting standards for government contractors. CASB operated as a governmental body to establish standards applicable to government contracts during the 1970-1980 period. CASB was established in 2002 with the authority to set and enforce auditing and ethics standards for public companies.

CASB is authorized by the U.S. Congress to establish cost accounting standards for government contractors. CASB operated as a governmental body to establish standards applicable to government contracts during the 1970-1980 period.