Question 1

Derek has a bachelor's degree in accounting and additional training in tax law. He is responsible for preparing tax returns and developing tax strategies for his employer, and has done so for the past seven years. Derek is a certified government accountant.

Accepted Answer

The answer of Derek has a bachelor's degree in accounting...

Question 2

As a certified public accountant (CPA), Kay might become involved in helping clients select appropriate accounting computer software for their firm.

Accepted Answer

As a CPA, Kay has knowledge and expertise in accounting, including accounting software, and can assist clients in selecting appropriate software for their firm.

Question 3

The Sarbanes-Oxley Act strengthens the protection for whistleblowers who report wrongful actions of company officers.

Accepted Answer

The Sarbanes-Oxley Act includes provisions that protect whistleblowers who report wrongful actions by company officers. The act prohibits retaliation against whistleblowers and requires companies to establish procedures for receiving and investigating complaints.

Question 4

As the burden of taxes grows, the role of the auditor becomes increasingly important to the organization.

Accepted Answer

The answer of As the burden of taxes grows, the...

Question 5

Recent accounting scandals raised serious questions about the legitimacy of an accounting firm performing both auditing and consulting work for the same company.

Accepted Answer

Recent accounting scandals, such as those involving Enron and WorldCom, highlighted the potential conflict of interest when a single accounting firm performs both auditing and consulting work for the same client. The Sarbanes-Oxley Act of 2002 sought to address this issue by limiting the types of non-audit services that accounting firms can provide to their audit clients.

Question 6

Accounting, as the language of business, is solely concerned with providing information useful to managers of profit-seeking firms.

Accepted Answer

While accounting does provide useful information to managers of profit-seeking firms, it also provides information to investors, creditors, government agencies, and other stakeholders. Additionally, accounting is not solely concerned with profit-seeking firms, as it is used by non-profit organizations, governmental entities, and personal financial management as well.

Question 7

Citywide Insurance Corporation's internal accountants can prepare an audit for the company.

Accepted Answer

Internal accountants are employed by the company and can prepare an audit for the company. However, an external auditor is generally preferred for auditing since they are independent and unbiased.

Question 8

As a certified public accountant, you would be working in the area of managerial accounting.

Accepted Answer

While certified public accountants may work in various fields such as auditing, taxation, and financial accounting, managerial accounting is generally not their primary area of work. Managerial accounting is more often associated with management positions within a company.

Question 9

In large companies, certified internal auditors are usually responsible for preparing tax returns and developing tax strategies for businesses.

Accepted Answer

Certified internal auditors are responsible for performing independent and objective evaluations of a company's financial and operational systems, not preparing tax returns or developing tax strategies. This falls under the domain of tax professionals such as accountants or tax lawyers.

Question 10

According to the "Legal Briefcase" box in Chapter 17, a forensic accountant investigates company records for evidence of fraud.

Accepted Answer

The Legal Briefcase box in Chapter 17 states that a forensic accountant is hired to investigate company records for evidence of fraud.

Question 11

Accounting is not important for nonprofit organizations since financial data is not critical to their success.

Accepted Answer

Accounting is important for nonprofit organizations as it helps them track their financial transactions, plan budgets, and make informed decisions. It also allows them to fulfill legal and regulatory requirements and provide transparency to stakeholders.

Question 12

Because each business is unique, the accounting profession recognizes that the accounting principles followed by one company may need to be completely different from the accounting principles followed by another firm.

Accepted Answer

The answer of Because each business is unique, the accounting...

Question 13

The Financial Accounting Standards Board only sets standards for accountants in the private sector; however, government accountants have no universally accepted procedures that they must follow.

Accepted Answer

While the Financial Accounting Standards Board primarily sets standards for accountants in the private sector, it also sets standards for government accountants who follow Generally Accepted Accounting Principles (GAAP). Additionally, government accountants must follow specific procedures set by the Government Accounting Standards Board (GASB).

Question 14

A series of high-profile scandals in the early 2000s put the accounting profession under intense scrutiny.

Accepted Answer

The late 1990s and early 2000s saw several major accounting scandals, including the collapse of Enron and WorldCom, which led to increased scrutiny and regulation of the accounting profession.

Question 15

Martha is a member of a conservative political group that wants to identify and publicize examples of wasteful government spending. The type of accounting information Martha and her group will follow most closely is provided by certified public accountants.

Accepted Answer

While certified public accountants do provide accounting information, the type of information that Martha and her group would follow most closely would likely be provided by government auditors or management accountants who specialize in identifying and analyzing government spending.

Question 16

Information contained in a firm's annual report largely represents work done by managerial accountants.

Accepted Answer

The answer of Information contained in a firm's annual report...

Question 17

The Sarbanes-Oxley Act prohibits accounting firms from providing certain non-auditing work (such as consulting services) to companies they audit.

Accepted Answer

The Sarbanes-Oxley Act does prohibit accounting firms from providing certain non-auditing work, such as consulting services, to companies they audit. This is to ensure independence and objectivity in the audit process.

Question 18

Managers who are concerned about keeping costs under controlshould be very interested in the information and advice provided by their company's managerial accountants.

Accepted Answer

This statement is true. Managerial accountants provide valuable insights and analysis to help managers make informed decisions about cost control and other financial matters.

Question 19

GAAP refers to a set of standards concerning accounting principles that were established by the Financial Accounting Standards Board.

Accepted Answer

GAAP (Generally Accepted Accounting Principles) is a set of accounting principles, standards, and procedures established by the Financial Accounting Standards Board in the United States.

Question 20

Jamal is an accountant employed full-time by The Barkley Company. Jamal is an example of a public accountant.

Accepted Answer

Jamal is actually an example of a private accountant because he is employed full-time by a single company. Public accountants are typically self-employed or work for accounting firms that provide services to multiple clients.

Quiz 17: Understanding Accounting and Financial Information