Accounting Chapter 1

Management advisory services are designed to help

Clients

An accounting system is designed to accumulate and classify data about a firm's financial affairs and summarize it in the general journal.

False

Anyone can invest in a closely held corporation.

False

Tax planning is any activity associated with the preparation of tax returns and the audit of those returns.

False

The SEC uses financial information to determine a company's tax base.

False

The owners and managers of a business are the only users of the Financial Information.

False

When a business is organized as a sole proprietorship, the owner may combine his/her personal financial information with the business financial information.

False

Which of the following is NOT a type of information communicated by the financial statements?

How long the business has been in operation

Which of the following is NOT part of the process of accounting for financial information?

Identifying

Which of the following is NOT an area in which accountants usually practice?

Industrial Accounting

Managerial accounting is

Private accounting

Accounting is defined as the process by which financial information about a business is recorded, classified, summarized, interpreted, and communicated to owners, managers, and other interested parties.

True

In a sole proprietorship, the owner is responsible for the debts of the business if the firm is unable to pay.

True

The death or withdrawal of one partner ends the partnership.

True

The financial statements and the auditor's report must 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

The area of accounting that involves the preparation of internal reports for a firm's executives and the analysis of the data in these reports to aid in decision making is known as

managerial accounting.

Tax accounting involves tax compliance and

tax planning.

The group of accounting educators who offer their opinions about proposed FASB statements, after research has been done to determine the possible effects on financial reporting and the economy, is

the AAA.

The government agency that has final authority over the financial reporting of publicly owned corporations is

the Securities and Exchange Commission.

The form of a business organization that is not affected by the withdrawal or death of an owner and can continue forever is

the corporation.