fm 116 ch 8

In the context of an independent auditor's report, which of the following is a difference between an unqualified opinion and a qualified opinion?

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.

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

he major responsibilities involved in financial accounting are the preparation of the:

Balance sheet, income statement, and statement of cash flows

The _____ is a financial budget and shows how a firm's operations, investing, and financing activities are expected to affect all of the asset, liability, and owners' equity accounts.

Budgeted 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 United States, the Securities and Exchange Commission (SEC) has delegated the responsibility for developing accounting standards to a private organization called the _____.

Financial Accounting Standards Board

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

_____ are costs that are the result of a firm's general operations and are not tied to any specific cost object.

Indirect costs

In the context of the approaches to budget preparation, which of the following statements is true of participatory budgeting?

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

Which of the following is a difference between managerial accounting and financial accounting?

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

_____ are budgets that identify projected sales and production goals and the various costs the firm will incur to meet these goals.

Operating Budget

In the United States, the ultimate legal authority to set and enforce accounting standards lies with the _____.

Securties and exchange commission

Financial accounting:

addresses the needs of stockholders, creditors, and government regulators.

In the context of an independent auditor's report, _____ indicates that the auditor believes the financial statements are seriously flawed and that they may be misleading and unreliable.

an adverse opinion

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 _____.

budget slack

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

can be used to check if the owners' equity has increased.

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

form of business ownership

The opportunity cost that arises when a firm uses owner-supplied resources is known as a(n) _____.

implicit costs

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

In the context of budget preparation, the cash budget is a financial budget document that identifies:

short-term fluctuations in cash flow

_____ refers to the claims owners have against their firm's assets.

stockholders equity