Question 1

Which of the following perform or assist in a wide variety of tasks for the firms in which they work including budgeting,cost and asset management,and the preparation of reports for the firm's stakeholders?

Accepted Answer

Private accountants work within a firm and are responsible for a wide variety of tasks such as budgeting, cost and asset management, and the preparation of reports for the firm's stakeholders. Public accountants work for accounting firms that provide accounting services to a variety of clients, government accountants work for government agencies, and internal auditors perform audits to assess a company's internal controls and risk management.

Question 2

What is the term for valuable things owned by the firm?

Accepted Answer

Valuable things owned by the firm are referred to as assets. Choices A and B refer to the financing and equity structure of the company, while choice C refers to obligations or debts owed by the firm.

Question 3

Which type of accounting addresses the needs of external stakeholders,including shareholders,creditors,and government regulators?

Accepted Answer

Financial accounting is the type of accounting that addresses the needs of external stakeholders, including shareholders, creditors, and government regulators. It involves the preparation of financial statements, such as the balance sheet, income statement, and cash flow statement, which are used by these stakeholders to make decisions about the company. Forensic accounting, investigative accounting, and managerial accounting all focus on different aspects of accounting and are typically used for internal purposes rather than external reporting.

Question 4

Which set of statements comprises the major output of financial accounting?

Accepted Answer

The major output of financial accounting consists of three financial statements: balance sheet, income statement, and statement of cash flows. These statements provide information about a company's financial position, performance, and cash flows, which are useful for decision-making by investors, creditors, and other stakeholders. The other options listed are either internal documents (general journal, cash budget, and capital budget) or external reports that may be optional or not directly related to financial accounting.

Question 5

What has the accounting profession adopted to guide the practice of financial accounting in order to provide external shareholders with relevant,reliable,consistent,and comparable financial information?

Accepted Answer

Generally accepted accounting principles (GAAP) are a set of formal rules, standards, and guidelines that the accounting profession has adopted to provide financial statement users with the relevant, reliable, consistent, and comparable financial information. These principles are established by various standard-setting organizations, including the Financial Accounting Standards Board (FASB) in the United States. GAAP helps ensure that financial statements are prepared in a consistent manner that can be easily understood by investors and other stakeholders. A is incorrect because there is no such thing as formal accounting rules and procedures. B and D are incorrect because there are no such things as standardized accounting procedures or general accounting rules for financial statements.

Question 6

What is the term for the claims owners have against the firm's assets?

Accepted Answer

Owners' equity represents the claims owners have against the firm's assets, reflecting the residual interest in the assets of the entity after deducting liabilities.

Question 7

Which of the following summarizes a firm's financial position at a specific point in time (e.g.,a specific quarter or year)?

Accepted Answer

A balance sheet provides a summary of a firm's financial position at a specific point in time, including its assets, liabilities, and equity. A statement of cash flows shows the inflow and outflow of cash over a specific period of time and does not necessarily provide information on a firm's overall financial position. An income statement shows a firm's revenue and expenses over a specific period of time, but does not provide information on assets and liabilities. An investment income statement is not a commonly used financial statement.

Question 8

Samantha is an accounting major who has been disturbed by all of the recent accounting scandals.She has decided to dedicate her career to catching those involved in embezzlement,securities fraud,money laundering,and other white collar crimes.To achieve this,what type of training should Samantha seek?

Accepted Answer

Samantha should seek training to become a forensic accountant. Forensic accountants specialize in investigating financial crimes and can help catch those involved in embezzlement, securities fraud, money laundering, and other white-collar crimes. They also work closely with law enforcement and lawyers to analyze financial records and provide expert testimony in legal proceedings. This would be the best choice for Samantha to achieve her goal.

Question 9

Which of the following are responsible for verifying accuracy of their organization's internal records and validating the accounting procedures?

Accepted Answer

Internal auditors are responsible for verifying accuracy of their organization's internal records and validating the accounting procedures. Officials at Canada Revenue Agency are responsible for enforcing tax laws and regulations, but not validating accounting procedures. Public accountants may be hired by organizations to provide audit services, but they are not responsible for verifying accuracy of internal records on a day-to-day basis. Forensic bookkeepers are specialists who investigate financial irregularities, but they are not responsible for validating accounting procedures.

Question 10

Which type of accountants combine their knowledge of accounting with investigative skills to help detect and investigate tax evasion,embezzlement,money laundering,and securities fraud?

Accepted Answer

Forensic accountants are specialized accountants who use their knowledge of accounting and investigative skills to detect, investigate, and prevent financial fraud, tax evasion, and other financial crimes. They work with law enforcement agencies, insurance companies, and other organizations to investigate financial misdeeds and provide expert testimony in court.

Question 11

Which statement describes the accounting profession during the first few years of the 21st century?

Accepted Answer

The accounting profession during the first few years of the 21st century was embarrassed by a series of scandals such as Enron and Worldcom that seemed to suggest a serious decline in accounting standards. These scandals led to increased scrutiny and regulation of the accounting profession.

Question 12

Which type of accountants provide to individuals and businesses a wide variety of services on a fee basis,including income tax preparation,external auditing services,and consultation on a variety of accounting issues and problems?

Accepted Answer

Public accountants provide a wide variety of services to individuals and businesses on a fee basis, including income tax preparation, external auditing services, and consultation on a variety of accounting issues and problems. Private accountants work exclusively for one company, contract-basis accountants work on a temporary basis for a specific project or time period, and forensic accountants specialize in investigating financial fraud and white-collar crime.

Question 13

Which of the following work for local,provincial,and federal agencies,preparing government financial statements as well as performing tasks similar to those carried out by their private-sector counterparts?

Accepted Answer

Government accountants work for local, provincial, and federal agencies, preparing government financial statements as well as performing tasks similar to those carried out by their private-sector counterparts. The other choices like comptrollers, fiscal accountants, and recording accountants may also work in the government sector, but their job roles may not be identical to that of government accountants.

Question 14

What is the body of principles that guides the financial accounting process used to create financial statements?

Accepted Answer

GAAP (generally accepted accounting principles) is the body of principles that guides the financial accounting process used to create financial statements. Choice B, C, and D are not recognized accounting principles.

Question 15

According to Arthur Levitt,a former chair of the U.S.Securities and Exchange Commission (SEC),what has resulted from the degree of flexibility that currently exists within GAAP?

Accepted Answer

According to Arthur Levitt, the degree of flexibility in GAAP allows managers to use creative accounting to manipulate financial results and make them look better than they actually are.

Question 16

What resulted from the corporate scandals in the late 1990s and early part of the 21st century?

Accepted Answer

The corporate scandals in the late 1990s and early 2000s, such as Enron and Worldcom, resulted in a call for improved ethical training and standards in the accounting profession. This led to the implementation of the Sarbanes-Oxley Act of 2002, which aimed to address issues of corporate accountability and transparency, and required companies to comply with stricter financial reporting requirements. The scandals also eroded investor confidence and led to increased scrutiny of corporate governance and auditing practices. However, it did not result in a surge in the reputation of the accounting profession or the replacement of external auditors with government auditors.

Question 17

What is the term for what the firm owes its creditors?

Accepted Answer

Liabilities refer to the debts or obligations that a firm owes to its creditors. This can include things like loans, accounts payable, and accrued expenses.

Question 18

How are the accounting tasks once performed by bookkeepers now significantly different?

Accepted Answer

With the advent of computers and accounting software, routine tasks such as data entry and record-keeping can now be automated, reducing the need for manual intervention by bookkeepers. This shift in the accounting landscape has significantly changed the nature of the accounting tasks performed by bookkeepers.

Question 19

The balance sheet is organized to reflect the accounting equation.What is the accounting equation?

Accepted Answer

The accounting equation is Assets = Liabilities + Owners' Equity. This means that the total value of a company's assets must always equal the sum of its liabilities and owners' equity. The balance sheet is organized in a way that reflects this equation, with assets listed on the left-hand side and liabilities and owners' equity listed on the right-hand side. Therefore, choice B is the correct answer.

Question 20

What process would provide shareholders or creditors with information about the overall financial performance of a firm?

Accepted Answer

Financial accounting is the process of recording, summarizing, and reporting the financial transactions of a business to external stakeholders, such as shareholders and creditors. It provides information about the overall financial performance of the firm, including its profitability, liquidity, and solvency. Accrual accounting, internal auditing, and managerial accounting are all important processes but do not specifically provide information to external stakeholders about the firm's overall financial performance.

Quiz 7: Accounting: Decision Making by the Numbers