BUSN 1003: Ch.8 Quiz

In the context of the balance sheet, which of the following serves to be the rationale behind the accounting equation?

A firm must finance the purchase of their assets, and the owners and nonowners should contribute toward it.

In the context of external audits of financial statements, which of the following statements is true of CPA firms?

They must be independent of the companies they are auditing.

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.

a budgeted balance sheet

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

balance sheet, income statement, and statement of cash flows

The Securities and Exchange Commission requires publicly traded corporations to provide _____.

comparative financial statements

In the context of financial statements, _____ are debts that come due within a year of the date on the balance sheet.

current liabilities

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

In the context of interpreting financial statements, using comparative statements to identify changes in key account values over time is called _____.

horizontal analysis

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

implicit cost

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

indirect costs

_____ work within their organizations to detect problems such as waste, mismanagement, embezzlement, and employee theft.

internal auditors

Stockholders typically want to view a firm's accounting information to:

know if management has generated a strong-enough return on investment

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

operating budgets

Generally accepted accounting principles (GAAP) are a set of accounting standards that is used in the:

preparation of financial statements

Increases in a firm's assets that result from the sale of goods, provision of services, or other activities intended to earn income are referred to as _____.

revenue

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

securities and exchange commission

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

short-term fluctuations in cash flow

In the context of statement of cash flows, cash flows from investing activities:

show the amount of cash received from the sale of fixed assets.

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

stockholder's equity

In the context of managerial accounting, _____ are costs that change directly with the level of production.

variable costs