Chapter 1

The following are all government agencies EXCEPT the a.) IRS b.) FBI c.) SEC d.) AICPA

AICPA

All financial statements submitted to the SEC by publicly owned corporations must included a.) An internal auditor. b.) An independent certified public account. c.) The firm's managerial accountant. d.) Anyone in the accounting department.

An independent certified public accountant

An independent accountant who is licensed by the state and provides accounting services to the public for a fee is a a.) CMA b.) CIA c.) CFE d.) CPA

CPA

Anyone can invest in closely held corporation

False

A company issues periodic reports called. a.) Audits b.) Financial Statements c.) Tax Returns d.) Summaries

Financial Statements

Owners and managers need financial information in order to a.) Grant loans b.) Collect taxes c.) Make decisions d.) Issue credit

Make decisions

Managerial accountants usually do which of the following? a.) Prepare and audit tax returns b.) Investigate companies for possible violations of law c.) Prepare internal reports for management d.) Audit financial statements

Prepare internal reports for management

A business partnership consists of two or more owners.

True

An example of an economic entity is a.) a Business b.) a Town c.) a Church d.) a Politician

a Business

Identify which of the following are considered OUTSIDE users of financial accounting information a.) Managers b.) Banks c.) Employees d.) Owners

Banks

The owners and managers of a business are the only users of the financial information.

False

Which statement below represents what GAAP stand for? a.) Generally Approved Accounting Practices. b.) General Accepted Accounting Principles. c.) Generally Anticipate Accounting. d.) Generally Accepted Accounting Policies.

General Accepted Accounting Principles

which of the following is NOT a type of information communicated by the financial statements? a.) Whether or not the business is profitable b.) How long the business has been in operation c.) How much the business owes others d.) What types of assets business owns

How long the business has been in operations

The financial activities of a business and the financial activities of the owners should be a.) Combined only if the owner wants them to be. b.) Kept totally and completely separate. c.) Combined in the firm's accounting records. d.) Report in different parts of the firm's accounting records.

Kept totally and completely separate

An act passed in response to the wave of corporate accounting scandals is the a.) Sorbine-Oxide Act b.) Sardonic-Oxone Act c.)Saxon-Ordanly Act d.) Sarbanes-Oxley Act

Sarbanes-Oxley Act

Which of the following is a TRUE statement in regards to the International Accounting Standards Boards? a.) The IASB develops all accounting principles to used in the United States b.) The IASB has the authority to audit financial statements of all US corporations c.) The IASB deals with issues caused by the lack of uniform accounting principles existing in different countries d.) The IASB was created by the American Accounting Association

The IASB deals with issues caused by the lack of uniform accounting principles existing in different countries

The Securities and Exchange Commission (SEC) requires that publicly owned corporations submit financial statements to it at least one time

True

Identify the form of business that is considered a separate legal entity a.) a Sole proprietorship b.) a Partnership c.) a Limited liability partnership d.) a Corporation

a Corporation

The review of financial statements to assess their fairness and adherence to GAAP is a.) Compliance b.) Preparation c.) Auditing d.) Accounting

Auditing

Owners are not personally responsible for the debts of the business if the form of business organization is a a.) Partnership b.) Nonprofit organization c.) Corporation d.) Sole proprietorship

Corporation

The form of a business organization that is not affected bu the withdrawal or death of an owner and can continue indefinitely is the a.) Sole proprietorship b.) Nonprofit organization c.) Corporation d.) Partnership

Corporation

The Financial Accounting Services Board is responsible for a.) Audit financial statements b.) Making recommendations to the Securities and Exchange Commission c.) Developing generally accepted accounting principles d.) Establishing accounting systems for business

Developing generally accepted accounting principles

An accounting system is designed to accumulate and classify data about a company's financial activities and summarize them in the general

False

In sole proprietorship, the owner is NOT responsible for the debts of the business if the company is unable to pay

False

Identify the advantages of forming a business as an S Corporation. a.) Owner is personally responsible for debts of the business and earnings are reported directly on owner's personal tax return b.) Treated as separate legal entity and owners avoid double taxation c.) Owner have limited liability and corporation's earnings are tax free d.) Owners avoid double taxation and owners have limited liability

Owner avoid double taxation and owners have limited liability

The corporations whose stock can be bought and sold on stock exchanges and in over-the-counter markets are referred to as a.) Publicly owned corporations. b.) Sole Proprietorships c.) Closely held corporations. d.) Privately owned corporations

Publicly owned corporations

The government agency that has final authority over the financial reporting of publicly owned corporations is the a.) Financial Accounting Standards Board b.) Internal Revenue Services c.) Federal Trade Commission d.) Securities and Exchange Commission

Securities and Exchange Commission

Which of the following is NOT a type of information communicated by the financial statements? a.) The types of products and services the business provides b.) The equity, or value, of the business c.) The amount of revenue earned by the business d.) The amount spent on costs (expenses) of he business

The types of product and services the business provides

Public accounting firms provide three major types of services: Auditing, tax accounting, and management advisory service

True

The financial statements and the auditor's report myst be made available to stockholders of publicly owned corporations

True

The purpose of accounting is to provide financial information about an economic or social entity.

True