Deck 15: Financial Management

Question 1

GAAP applies to managerial accounting but not financial accounting.

Answer 1

False

Question 2

For many years, bookkeeping was a manual function that was subject to recording errors and timeliness issues.

Answer 2

True

Question 3

If a manager allows a position to remain vacant, the payroll budget is affected positively.

Answer 3

True

Question 4

Cost-benefit analyses can be simple or highly complex, depending upon the significance of the activity/project/product being evaluated.

Question 5

Only managers, not the staff, need to understand budget concepts and know when budgets are created within their organization.

Question 6

Bond issuers who are facing financial problems often must pay very high interest rates as a means to attract purchasers.

Question 7

When an auditor submits her report, the organization hopes to receive a qualified report as this is the highest level and indicates that the auditors are satisfied with the organization's financial health and practices and its legal compliance.

Question 8

Audits are preventative work.

Question 9

Verification of the information recorded by an organization is performed using audit trails.

Question 10

An alternative to a request for proposal is a request for quotation.

Question 11

The employees in an organization play a direct role in managing an organizations's fiscal health and supporting its goals.

Question 12

Auditors are always employees of the organization as they have access to highly sensitive material.

Question 13

Capital may be raised through issuance of bonds and borrowing money.

Question 14

Audits focus on systemic weaknesses within an organization.

Question 15

The controller oversees the organization's assets and financial planning; obtains the organization's financing; and manages its cash, credit, and inventories.

Question 16

An account is the complete set of accounts established and maintained by the organization.

Question 17

Internal controls are detective work.

Question 18

Managerial accounting encompasses the design of the organization's bookkeeping system.

Question 19

Accounting is known as the language of finance.

Question 20

Accounting is a distinct discipline that has its own standards, practices, and language.

Question 21

A person chooses to follow the accrual accounting approach in their personal finances. Which of the following transactions best demonstrates this process?

A) buying some clothing on credit - making and recording the monthly payments on the credit card until the full amount is paid off
B) ordering a new magazine subscription and choosing the option for them to bill you later - making and recording the payment when the bill is received in the mail
C) Both of the scenarios demonstrate an accrual accounting approach.
D) Neither of the scenarios demonstrate an accrual accounting approach.

Question 22

If you are given a document that summarizes the revenue and expenses of an organization, which document do you have?

A) balance sheet
B) income statement
C) cash flow statement

Question 23

Which of the following statements is true regarding financial accounting?

A) It is the day-to-day assessment of an organization's financial health.
B) It serves as a basis for managerial accounting.
C) The information is displayed in reports called the balance sheet, income statement, and cash flow statement.
D) It is used only in for-profit organizations.

Question 24

The managers in an organization are responsible for which step of the financial cycle?

A) assessment
B) planning
C) execution

Question 25

Employees who are responsible for preparing the budget are involved in which step of the financial cycle?

A) assessment
B) planning
C) execution

Question 26

Managers give input to upper management regarding the master budget.

Question 27

If variances exist, managers must first examine the report to determine whether the data were reported correctly.

Question 28

A person chooses to follow the cash accounting approach in their personal finances. Which of the following transactions best demonstrates this process?

A) buying some clothing on credit - making and recording the monthly payments on the credit card until the full amount is paid off
B) ordering a new magazine subscription and choosing the option for them to bill you later - making and recording the payment when the bill is received in the mail
C) taking your colleagues out to lunch and paying cash - recording the payment
D) All the scenarios demonstrate a cash accounting approach.
E) None of the scenarios demonstrate a cash accounting approach.

Question 29

The income statement indicates what the organization earned and how much was spent over the interval of time covered by the statement.

Question 30

If you wish to review the true financial condition of an organization, which document should you request?

A) balance sheet
B) income statement
C) cash flow statement

Question 31

What type of budget focuses on an organization's major long-term projects?

A) expense budget
B) cash budget
C) capital expenditure budget
D) statistics budget

Question 32

If you wish to know how much money an organization has and how it has been spent, which document would you request?

A) balance sheet
B) income statement
C) cash flow statement

Question 33

An asset is something of value that can be used to serve an organization's needs.

Question 34

Which of the following is an example of an owner's equity?

A) A customer pays $3000 for a piece of equipment.
B) An owner pays $7000 for supplies and equipment.
C) An individual starts a new business and puts up $5000 of their own money to get started.
D) The owner is sued and $2000 is paid for retaining an attorney.

Question 35

The inventory an organization has on hand would be called what?

A) asset
B) liability
C) credit
D) debit

Question 36

An employee receives his paycheck and he records the amount in his personal checkbook. Which is the best term to describe this action?

A) entering a debit
B) entering a credit
C) increasing owner's equity
D) adding to inventory

Question 37

When using an audit trail, the auditor begins with the source document.

Question 38

Requiring an employee to be granted authority before having access to valuable assets is demonstrating which element of internal control?

A) delegation of authority
B) separation of duties
C) safeguarding of assets

Question 39

Accountants are mainly focused on which step of the finance cycle?

A) assessment
B) planning
C) execution

Question 40

Forecasting is best defined as

A) a financial projection of how an organization is likely to perform in the future
B) an organization's revenue and expenditure plan
C) activities involved in the purchasing of goods and the contracting for services
D) a retrospective study which is then projected into the future with the assumption of consistency

Question 41

A formal document seeking information about products or services available in the marketplace that can meet the organization's needs.

A) Request for proposal
B) Request for Information
C) Request for Quotation

Question 42

Match the term with the best descriptor.
records transactions into a series of documents called journals, accounts, and general ledgers

A)bookkeeping
B)bookkeeper
C)managerial accounting
D)journal
E)account
F)general ledger
G)audits
H)internal controls

Question 43

A formal document that seeks pricing information from a group of vendors for specific products or services is called a

A) request for proposal.
B) request for information.
C) request for quotation.

Question 44

Which of the following is a formal document that seeks from a group of vendors pricing information for specific products or services?

A) RFP
B) RFQ
C) budget
D) capital expenditure forms

Question 45

Match the term with the best descriptor.
assesses the organization's performance and accounts for assets, liabilities, and costs; selects the organization's accounting methods; enforces that method through internal monitoring and audits; responsible for both managerial and financial accounting; pays the organization's taxes

A)finance
B)CFO (chief financial officer)
C)treasurer
D)controller
E)accountant
F)bookkeeper

Question 46

What is a debt or obligation owed by an organization?

A) Asset
B) Liability
C) Owner's equity

Question 47

Match the term with the best descriptor.
the science of money, credit, and banking

A)finance
B)CFO (chief financial officer)
C)treasurer
D)controller
E)accountant
F)bookkeeper

Question 48

Match the term with the best descriptor.
records entries in the financial records of an organization

A)finance
B)CFO (chief financial officer)
C)treasurer
D)controller
E)accountant
F)bookkeeper

Question 49

What is a book or document in which each transaction is entered in chronological order called?

A) Bookkeeping
B) Journal
C) General ledger
D) Accounting

Question 50

Match the term with the best descriptor.
oversees the organization's finances

A)finance
B)CFO (chief financial officer)
C)treasurer
D)controller
E)accountant
F)bookkeeper

Question 51

ROI is sometimes referred to as all of the following EXCEPT

A) Rate.
B) Rate of Return.
C) Rate of Profit.
D) Release of Information.

Question 52

What is sometimes referred to as cost accounting?

A) Financial accounting
B) Managerial accounting
C) Cash accounting

Question 53

Inconsistencies between two numbers or statements is called ____________________.

Question 54

Match the term with the best descriptor.
oversees the organization's assets and financial planning; obtains the organization's financing and manages its cash, credit, and inventories

A)finance
B)CFO (chief financial officer)
C)treasurer
D)controller
E)accountant
F)bookkeeper

Question 55

What is something of value that can be used to serve an organization's needs?

A) Asset
B) Liability
C) Owner's equity

Question 56

A(n) _______ serves to discover mistakes after their occurrence.

A) bookkeeper
B) accountant
C) audits
D) bookkeeping

Question 57

Match the term with the best descriptor.
keeps, examines, and adjusts the financial records of an organization

A)finance
B)CFO (chief financial officer)
C)treasurer
D)controller
E)accountant
F)bookkeeper

Question 58

____________________ refers to the activities involved in the purchasing of goods and the contracting for services.

Question 59

Accounting procedures, precautions, and forms established to prevent and minimize errors and fraud are called

A) internal controls.
B) external controls.
C) audits.
D) bookkeeping.

Question 60

The two types of accounting are ____________________ and ____________________.

Question 61

Explain generally accepted accounting principles.

Question 62

What are the three steps in the finance cycle? List them in the proper sequence from beginning to end.

Question 63

Define budget. List and describe the two ways in which the budget process is managed.

Question 64

Match the term with the best descriptor.
record keeping aspect of accounting

A)bookkeeping
B)bookkeeper
C)managerial accounting
D)journal
E)account
F)general ledger
G)audits
H)internal controls

Question 65

Match the term with the best descriptor.
accounting procedures, precautions, and forms established to prevent and minimize errors and fraud

A)bookkeeping
B)bookkeeper
C)managerial accounting
D)journal
E)account
F)general ledger
G)audits
H)internal controls

Question 66

Match the term with the best descriptor.
book or document in which each transaction is entered in chronological order

A)bookkeeping
B)bookkeeper
C)managerial accounting
D)journal
E)account
F)general ledger
G)audits
H)internal controls

Question 67

What is the difference between accounting and finance?

Question 68

Match the term with the best descriptor.
sometimes referred to as cost accounting

A)bookkeeping
B)bookkeeper
C)managerial accounting
D)journal
E)account
F)general ledger
G)audits
H)internal controls

Question 69

Match the term with the best descriptor.
complete set of accounts established and maintained by the organization

A)bookkeeping
B)bookkeeper
C)managerial accounting
D)journal
E)account
F)general ledger
G)audits
H)internal controls

Question 70

Match the term with the best descriptor.
separate recording for each asset and liability

A)bookkeeping
B)bookkeeper
C)managerial accounting
D)journal
E)account
F)general ledger
G)audits
H)internal controls

Question 71

Explain the difference between a journal and a general ledger.

Question 72

Match the term with the best descriptor.
serves to discover mistakes after their occurrence

A)bookkeeping
B)bookkeeper
C)managerial accounting
D)journal
E)account
F)general ledger
G)audits
H)internal controls