Deck 1: Decision Making and the Role of Accounting

Question 1

Who of the following is not an external decision maker?

A) Government regulator
B) Shareholder
C) Creditor
D) Managing director

Answer 1

D

Question 2

Which type of information about J Company would be of most interest to its production manager?

A) Continuity of orders for the factory.
B) Taxable income.
C) Annual dividends.
D) Compliance with accounting standards.

Answer 2

A

Question 3

Accounting is defined as the process of identifying, measuring, recording and __________ economic information to permit informed judgements and economic decisions by users of the information.

A) observing
B) communicating
C) processing
D) certifying

Answer 3

B

Question 4

There are four steps in the accounting process. Which of the steps is most concerned with the classification and summarisation of financial data?

A) Identification
B) Recording
C) Measurement
D) Communication

Question 5

Which of these is not an economic decision?

A) Choosing a utilities provider.
B) Taking out a loan.
C) Purchasing a mobile phone.
D) Supporting a sports team.

Question 6

Which of the following has been the most influential in redefining the role of accountants as analysts and decision makers rather than as mainly number-crunchers?

A) The collapse of major company groups.
B) The trend towards globalisation.
C) Developments in information technology.
D) The increase in demand for non-financial information.

Question 7

Decision makers who are responsible for planning and controlling the operations of an organisation from within are known as:

A) internal decision makers.
B) external decision makers.
C) primary decision makers.
D) general decision makers.

Question 8

The term used to describe the economic events which are the inputs of the accounting information system is:

A) contracts.
B) transactions.
C) deals.
D) agreements.

Question 9

The term 'special purpose financial statements' refers to the fact that the information in the reports is:

A) available to everybody who requires specialised information.
B) useful for special purposes but not in making specific decisions.
C) prepared for users who have specialised needs and have the authority to obtain the required information.
D) prepared to provide general information for use by all users.

Question 10

How many of the following decisions would be made by external as opposed to internal decision makers: investing funds in the business, assessing an application for a loan, expanding the product range, and hiring staff?

A) 1
B) 2
C) 3
D) 4

Question 11

The job of the modern accountant is a challenging one. The most critical requirement is:

A) neatness.
B) punctuality.
C) ability to manage change.
D) ability to add up.

Question 12

The conversion of raw materials into finished products by a manufacturing entity is which of the following?

Question 13

Financial reports intended to serve the diverse needs of a variety of external user groups who are unable to obtain their own accounting information are known as:

A) general purpose financial statements.
B) external purpose financial statements.
C) management reports.
D) external user reports.

Question 14

External decision makers:

A) exist outside the organisation but have an interest in it.
B) reside overseas.
C) operate from branch locations.
D) must be owners.

Question 15

How many of the following decisions would be made by internal as opposed to external decision makers: setting production targets, product pricing, choosing whether to lease or buy assets, and monitoring compliance with company reporting requirements?

A) 1
B) 2
C) 3
D) 4

Question 16

Accounting is a profession that has evolved in response to society's need for economic information to help people make:

A) products.
B) progress.
C) decisions.
D) money.

Question 17

For HT Computers Ltd how many of the following are internal decision makers: bank manager, production manager, human resource manager, chief executive officer?

A) 1
B) 2
C) 3
D) 4

Question 18

Special purpose financial statements provide information mainly for the use of which of these parties?

Question 19

Which of the four stages of the accounting process is considered to require the most extensive training, experience and judgement?

A) Identifying
B) Measuring
C) Communicating
D) Planning

Question 20

External decision makers can be divided into four groups. To which of these groups do investors and creditors belong?

A) Managers and governing bodies
B) Resource providers
C) Financial institutions
D) Reviewers and overseers

Question 21

One of the major professional accounting bodies in Australia is the:

A) ICPP.
B) ICAA.
C) UFO.
D) LLBB.

Question 22

Financial accounting is the area of accounting concerned with providing information to ___________ decision makers of the organisation.

A) advisory
B) external
C) important
D) internal

Question 23

The area of accounting that deals with the preparation of plans and forecasts of future operations is called:

A) auditing.
B) costing.
C) budgeting.
D) liquidating.

Question 24

Accountants who administer or wind-up businesses unable to pay debts specialise in the area of:

A) accounting systems.
B) taxation.
C) insolvency.
D) general accounting.

Question 25

Which statement is incorrect?

A) An audit committee acts as a corporate governance device.
B) An audit committee helps to ensure the independence of the internal audit process.
C) In Australia large companies must have an audit committee.
D) The audit committee should strive to ensure continual improvement in accountability.

Question 26

Which of these is not one of the four areas in which public accountants tend to specialise?

A) External audit
B) Taxation services
C) Insolvency
D) Cost accounting

Question 27

Which type of information about J Company would be of most interest to its trade creditors?

A) Ability to pay debts as they fall due.
B) Annual dividends.
C) Taxable income.
D) Continuity of orders for the factory.

Question 28

The initials ICAA stand for:

A) Institute of Chartered Accountants in Australia.
B) Institute of Certified Accounting Associates.
C) International Congregation of Advisory Accountants.
D) Institute of Commercially Active Accountants.

Question 29

Which of these is not a characteristic of financial accounting?

A) Compliance with accounting standards.
B) Annual reporting.
C) Verification by audit.
D) Format determined by the user.

Question 30

The area of accounting that deals with the collection, allocation and control of costs is called:

A) public accounting.
B) cost accounting.
C) internal auditing.
D) general accounting.

Question 31

Accounting work with the primary purpose of verifying the financial statements is called:

A) financial accounting.
B) auditing.
C) cross-check accounting.
D) management accounting.

Question 32

The distinguishing feature of accounting for not-for-profit organisations is the absence of:

A) the profit motive.
B) accounting systems.
C) revenue.
D) paid employees.

Question 33

Which of these is not a requirement for full membership of either of the major Australian professional accounting bodies?

A) A recognised degree.
B) Completion of the professional body's graduate program.
C) Government registration.
D) At least three years of supervised work experience.

Question 34

Which of the following is the true statement?

A) Accounting information for decision making is concerned with the past.
B) Internal and external users of accounting information generally require similar information.
C) Non-accounting information is always more important in decision making than accounting information.
D) Accountants are heavily involved in the budgeting process for a business entity.

Question 35

Which type of information about J Company would be of most interest to the Australian Taxation Office?

A) Sales.
B) Taxable income.
C) Continuity of orders for the factory.
D) Compliance with accounting standards.

Question 36

In the accounting profession the initials CPA stand for:

A) Complying Practicing Accountant.
B) Company Professional Accountant.
C) Certified Practising Accountant.
D) Certified Professional Accountant.

Question 37

In the accounting profession what do the initials CFO stand for?

A) Chief financial officer
B) Cosmic flying object
C) Certified financial officer
D) Company financial organiser

Question 38

Accounting work involving the independent examination and verification of financial reports is known as:

A) consulting.
B) budgeting.
C) auditing.
D) advising.

Question 39

How many of the following are differences between management and financial accounting?
$\bullet$ Types of reports produced
$\bullet$ Frequency of reports
$\bullet$ The format of reports
$\bullet$ The users of reports

A) One
B) Two
C) Three
D) Four

Question 40

The two broad branches into which accounting is divided are:

A) cash and accrual.
B) management and financial.
C) taxation and financial.
D) commercial and non-commercial.

Question 41

Behaviour which conforms to established professional standards is said to be:

A) good.
B) ethical.
C) standard.
D) complying.

Question 42

The type of behaviour that would be regarded as ethical is:

A) blaming others for your own mistakes.
B) accepting a pay rise.
C) manipulating the financial statements.
D) using confidential information for personal gain.

Question 43

Which statement relating to ethics is not correct?

A) A high standard of ethical behaviour is in the long-term interest of businesses.
B) The accounting professional bodies have set down rules of professional conduct for their members.
C) Ethics is concerned with whether human actions are proper or improper.
D) Ethical decisions are always easy to make.

Question 44

The rules set down by the professional accounting bodies which establish standards of conduct for their members are known as:

A) a code of professional conduct.
B) a code of criminal conduct.
C) a code of competence.
D) accounting standards.