Accounting Final

Which organization best serves the professional needs of a CPA?

AICPA.

Generally accepted accounting principles are intended to assist accountants in preparing financial statements that:

Are relevant, verifiable, comparable, and understandable.

The accounting systems of most business organizations:

Are tailored to meet the organization's needs for accounting information and the resources available for operating the system.

The basic purpose of an audit is to:

Assure financial statements are in conformity with GAAP.

It is the function of management accounting to perform the following activities, except:

Audited financial statements.

Which of the following has the least impact upon the integrity of financial statements issued by publicly owned corporations?

Audits of the financial statements by the Internal Revenue Service.

In comparison with a financial statement prepared in conformity with generally accepted accounting principles, a management accounting report is more likely to:

Be tailored to the specific needs of an individual decision maker.

Investors and creditors are interested in the probability that their original investment or loan will eventually be returned, and that they will receive a reasonable return while their funds are invested or borrowed. These expectations are collectively referred to as:

Cash flow prospects.

A strong internal control structure:

Contributes to the accuracy and verifiability of the accounting records.

Financial accounting information is:

Designed to assist investors and creditors

The primary function of external auditors is to:

Express an opinion on the fairness of the company's financial statements.

Which of the following is generally not considered an external user of accounting information?

Factory managers.

What are the two primary organizations in the U.S. that are responsible for setting standards related to the preparation of accounting information?

Financial Accounting Standards Board (FASB) The Securities and Exchange Commission (SEC)

Generally accepted accounting principles are the "ground rules" used in the preparation of:

Financial statements.

The general purpose financial statements prepared annually by a corporation would not include the:

Income tax return.

Investors may be described as:

Individuals and enterprises that own a reporting entity business.

Objectives of financial reporting to external investors and creditors include preparing information about all of the following except:

Information used to determine which products to produce.

Internal users of financial accounting information include all of the following except:

Investors.

Characteristics of internal accounting information include all of the following except:

It is audited by a CPA.

The basic purpose of generally accepted accounting principles is to:

Provide a framework for financial reporting that is understood by both the preparers and the users of financial statements.

The financial statements of a business entity:

Provide information about the cash flow prospects of the company.

Financial statements are designed primarily to:

Provide people outside the business organization with information about the company's financial position and operating results.

The basic purpose of audited financial statements is to:

Provide users of the financial statements with assurance that the statements are verifiable and are presented in conformity with generally accepted accounting principles.

Which of the following is not recognized as a source of generally accepted accounting principles?

Statements of the Committee of Sponsoring Organizations (COSO).

The designation of CPA is given by:

States.

State whether the following statement is true or false. "Accounting relies on inexact or approximate measures because many accounts in financial statements are dependent on judgment about future events and on an assessment of management intent."

TRUE

The Accounting Standards Codification was developed by:

The Financial Accounting Standards Board.

The American Institute of Certified Public Accountants has a code of professional conduct that expresses the accounting profession's recognition of its responsibilities to all of the following except:

The IRS.

The Sarbanes-Oxley Act of 2002 created:

The Public Company Accounting Oversight Board.

The field of accounting may best be described as:

The art of interpreting, measuring, and describing economic activity.

Which financial statement is primarily concerned with reporting the financial position of a business at a particular time?

The balance sheet.

The measures used by an organization to provide reasonable assurance that the organization produces reliable financial reports, complies with applicable laws and regulations, and conducts its operations in an efficient and effective manner are collectively referred to as:

The internal control structure.

The auditor's report on the published financial statements of a large corporation should be viewed as:

The opinion of independent experts as to the overall fairness of the statements.

The best definition of an accounting system is:

The personnel, procedures, devices, and records used by an entity to develop accounting information and communicate this information to decision makers.

In the phrase "generally accepted accounting principles," the words accounting principles refers to:

The standards, assumptions, and concepts that serve as "ground rules" for financial reporting.

Which of the following is not a basic function of an accounting system?

To ensure that a business organization will be managed profitably.

The procedural aspect of accounting that involves keeping detailed records of business transactions, much of which is done today by computers.

bookkeeping

Policies and procedures put in place by management to address the risks identified during the risk assessment process.

control activities

The foundation for all the other elements of internal control, setting the overall tone for the organization.

control environment

external users of accounting info

customers, creditors, investors, regulators

The area of accounting that refers to providing information to support external investment and credit decisions.

financial accounting

A broad term that describes all information provided to external users, including but not limited to financial statements.

financial reporting

Statement of financial position (balance sheet), income statement, statement of cash flows.

financial statements

The fact that the same information is provided to various external users, including investors and creditors.

general purpose assumption

The process of capturing and communicating operational, financial, and compliance-related information.

information and communication

An important quality of accounting information that allows investors, creditors, management, and other users to rely on the information.

integrity

Procedures and processes within an organization that ensure the integrity of accounting information.

internal control

The area of accounting that refers to providing information to support internal management decisions.

management accounting

A process, involving both ongoing activities and separate evaluations, that enables an organization to evaluate the effectiveness of its system of internal control over time.

monitoring activites

The segment of the accounting profession that relates to providing audit, tax, and consulting services to clients.

public accounting

Identifying, analyzing, and managing those risks that pose a threat to the achievement of the organization's objectives.

risk assessment