Question 1

What is the accounting equation?&#10;A) Liabilities = Assets + Owners Equity&#10;B) Assets = Liabilities + Owners Equity&#10;C) Owners Equity = Liabilities + Assets&#10;D) All of the above

Accepted Answer

The accounting equation is Assets = Liabilities + Owners Equity, which means that the value of all assets owned by a company is equal to the sum of all of its liabilities and its owners' equity. Choice A is incorrect because it presents the equation in the wrong order. Choice C is incorrect because it presents the equation in a different order than the standard format. Choice D is incorrect because it is not possible for all of the above answers to be correct since they present different equations.

Question 2

Which one of the following is not one of the three basic services public accounting firms provide to clients?&#10;A) Auditing&#10;B) Management consulting&#10;C) Tax preparation&#10;D) Preparing Financial Statements

Accepted Answer

Public accounting firms typically provide auditing, tax preparation, and management consulting services. Preparing financial statements is generally the responsibility of the company's internal accounting staff, not a service provided by public accounting firms.

Question 3

________ is anything of value owned or leased by a business.&#10;A) A liability&#10;B) Owner's equity&#10;C) Profit&#10;D) An asset

Accepted Answer

An asset is anything of value owned or leased by a business. Liabilities are debts or obligations owed by a business, owner's equity is the owner's claim to the assets of the business, and profit is the difference between revenue and expenses.

Question 4

What guidelines or standards do accountants follow?&#10;A) GAAP&#10;B) AcSB&#10;C) IFRS&#10;D) IACB

Accepted Answer

The answer of What guidelines or standards do accountants follow?&#10;A)...

Question 5

Accounting plays a key role in all of the following except ______________________.&#10;A) financing activities to provide necessary funds to start and expand a business&#10;B) investing activities to provide valuable assets required to run a business&#10;C) interpreting macro and micro analyses to report changes in the economy&#10;D) operating activities that focus on selling goods and services, along with insuring sound financial management

Accepted Answer

While accounting may provide data that is used in macro and micro analyses, it does not itself interpret such analyses. That is a function of other specialists such as economists or financial analysts.

Question 6

Which one of the following is the only permanent financial statement?&#10;A) Balance sheet&#10;B) Income statement&#10;C) Statement of changes in equity&#10;D) Statement of cashflows

Accepted Answer

The balance sheet is the only permanent financial statement as it provides a snapshot of the company's financial position at a specific point in time. The income statement, statement of changes in equity, and statement of cash flows all show how the company has performed over a period of time, and are therefore not considered permanent.

Question 7

The ________ budget tracks the firm's cash inflows and outflows.&#10;A) sales&#10;B) transaction&#10;C) capital expenditures&#10;D) cash

Accepted Answer

The cash budget tracks the firm's cash inflows and outflows, and is used to help manage and plan for cash flow needs. The sales budget focuses on projecting sales revenues, while the transaction budget tracks all transactions during a specific period, and the capital expenditures budget focuses on expenses related to long-term assets.

Question 8

Which of the following statements best describes open-book management?&#10;A) A management system whereby all employees are involved in financial decision-making.&#10;B) A management system whereby all employees are allowed to view financial information to understand how their work contributes to company success.&#10;C) A management system whereby bankers and other lenders are privy to common accounting information to evaluate a potential borrower's financial soundness.&#10;D) a and b only

Accepted Answer

Open-book management is a system where all employees are allowed access to financial information to understand how their work impacts the company's success, fostering transparency and accountability.

Question 9

Total liabilities divided by total assets is which ratio?&#10;A) Return on equity&#10;B) Net profit margin&#10;C) Debt ratio&#10;D) Liquidity ratio

Accepted Answer

Total liabilities divided by total assets is the debt ratio, which measures the amount of a company's assets that are financed by debt.

Question 10

Which one of the following users applies accounting information in order to evaluate credit ratings?&#10;A) Shareholders&#10;B) Union officials&#10;C) Lenders, suppliers&#10;D) Creditors

Accepted Answer

Lenders and suppliers often use accounting information to evaluate credit ratings of potential borrowers in order to determine the likelihood of repayment of debt. Shareholders are more concerned with a company's financial performance and profitability. Union officials are interested in matters related to labor relations, wages, and benefits. Creditors are also interested in credit ratings, but they are a subset of lenders and suppliers.

Question 11

In Canada, which organization is primarily responsible for evaluating, setting, or adopting accounting principles related to pension plans and to private or non-profit businesses?&#10;A) Accounting Standards Board (AcSB)&#10;B) International Financial Reporting Standards (IFRS)&#10;C) International Accounting Standards Board (IASB&#10;D) International Board of Accountants (IBA)

Accepted Answer

The answer of In Canada, which organization is primarily responsible...

Question 12

What question can a management accountant answer?&#10;A) Where has the company been?&#10;B) What strengths does the company have?&#10;C) Will certain situations decrease the company's exposure to excessive risk?&#10;D) Does the firm's information system provide detailed and timely information to all levels of management?

Accepted Answer

The answer of What question can a management accountant answer?&#10;A)...

Question 13

The procedure by which accountants convert data about individual transactions to financial statements is called ??????????___________________________________.&#10;A) the accounting cycle&#10;B) an asset&#10;C) a liability&#10;D) form utility

Accepted Answer

The answer of The procedure by which accountants convert data...

Question 14

A financial record of a company's revenues, expenses, and profits over a specific period of time is called the _______________.&#10;A) balance sheet&#10;B) statement of cash flows&#10;C) income statement&#10;D) statement of changes in equity

Accepted Answer

The answer of A financial record of a company's revenues,...

Question 15

Accounting is the process of _______________________________________.&#10;A) producing goods and services&#10;B) recording, measuring, and interpreting financial data&#10;C) obtaining funds for the firm's operations&#10;D) developing a marketing plan

Accepted Answer

The answer of Accounting is the process of _______________________________________.&#10;A) producing...

Deck 15: Understanding Accounting and Financial Statements