Accounting

Fayette Company includes in its accounting records only transaction data that can be expressed in terms of money.

Correct -- Monetary unit assumption

Congress passed the Sarbanes-Oxley Act to ensure that investors invest only in companies that will be profitable.

False

Managerial accounting provides reports to help investors and creditors evaluate a company.

False

The economic entity assumption applies to corporations but not proprietorships or partnerships. (T/F?)

False

The primary accounting standard-setting body in the United States is the Securities and Exchange Commission (SEC).

False

The standards of conduct by which actions are judged as loyal or disloyal are ethics.

False

The standards developed by the International Accounting Standards Board are referred to as International Financial Recording Standards.

False - International Financial Reporting Standards.

Large international public companies are required to comply with Sarbanes-Oxley.

False - not required

U.S. standards are referred to as

GAAP

GAAP stands for

Generally Accepted Accounting Principles

International standards are referred to as

IFRS

Tina Company owns buildings that are worth substantially more than they originally cost. In an effort to provide more relevant information, Tina reports the buildings at fair value in its accounting reports.

Incorrect -- Cost Principle

Omar Shariff, president of Omar's Oasis, records his personal living costs as expenses of Oasis.

Incorrect -- Economic entity assumption

Internal users include human resources managers.

True

The accounting process includes the bookkeeping function

True

The historical cost principle dictates that companies record assets at their cost and continue to report them at their cost over the time the asset is held.

True

The monetary unit assumption requires that companies record only transactions that can be measured in money terms.

True

The three most common forms of business organization, proprietorship, partnership, and corporation, are used in countries that use IFRS.

True

The historical cost principle states that

assets should be recorded at their cost

In order to increase comparability, in recent years, the FASB and IASB have made efforts to reduce the differences between U.S.GAAP and IFRS through a process known as

convergence

Ethics are the standards of conduct by which one's actions are judged as

honest or dishonest, right or wrong, and fair or unfair

The three steps in the accounting process are

identification, recording, and examination

The United States and the international standard-setting environment are primarily driven by meeting the needs of

investors and creditors

The two most common types of external users are

investors and creditors

The three types of business entities are

proprietorships, partnerships, and corporations

The intent of the Sarbanes Oxley Act of 2002 is to

reduce unethical corporate behavior, decrease likelihood of future corporate scandals, and increase severity of penalties for fraudulent financial activity.

Generally Accepted Accounting Principles are

standards that indicate how to report economic events

Accountants refer to an economic event that affects a company's financial statements as a

transaction