Deck 3: Accountants and Auditors

Question 1

Auditors review private financial information for mistakes and other problems that may occur with accounting

Answer 1

True

Question 2

GAAP stands for Generally Accepted Accounting Practices.

Answer 2

False

Question 3

The practice of smoothing earnings over time

A)gives shareholders a sense of reduced risk in the firm.
B)detects fraud.
C)ensures compliance with accounting regulations.
D)is illegal.
E)is encouraged by the IRS.

Answer 3

A

Question 4

Financial Accounting provides information for outsiders.

Question 5

The Sarbanes-Oxley Act of 2002 authorized the creation of this organization to oversee audits:

A)Financial Accounting Standards Board FASB)
B)American Institute for Certified Public Accountants AICPA)
C)Public Company Accounting Oversight Board PCAOB)
D)International Accounting Standards Board IASB)
E)Sarbanes-Oxley Oversight Board SOXOB)

Question 6

The Financial Accounting Standards Board FASB) sets the standards for the Generally Accepted Accounting Principles GAAP) commonly used in the USA.

Question 7

The development of information for insiders, such as company executives, is called:

A)Financial Accounting
B)Management Accounting
C)A Balancing Act
D)Income Statement Accounting
E)Bean Counting

Question 8

A relationship between a firm's auditors and its consultants can be a problem because:

A)Auditors may be pressured to overlook borderline practices.
B)Responsibility of effective monitoring is hindered because their bonuses depend on how much money the consulting group earns for the accounting firm.
C)There is a conflict of interest for auditors.
D)All of the above.
E)None of the above.

Question 9

Today, accounting departments are considered as being profit centers with the task of increasing profits through application of accounting methods.

Question 10

The American Institute for Certified Public Accountants AICPA) no longer exists because of the creation of the Public Company Accounting Oversight Board PCAOB).

Question 11

Fraud occurs when a firm intentionally pushes their accounting applications beyond the intent of GAAP.

Question 12

In a recent study, _____ was found to have the best legal environment to discourage earnings manipulation:

A)U.K.
B)Germany
C)Canada
D)USA
E)Narnia

Question 13

When IRS tax forms are being completed, choices are made to maximize earnings in order to drive up the firm's stock price.

Question 14

Board Members of the Financial Accounting Standards Board must divest all ties with former employers before taking office.

Question 15

Firms are not required to have internal auditors.