Question 1

Jobs performed by accountants do not require expertise in complex subject areas

Accepted Answer

Jobs performed by accountants require expertise in complex subject areas such as tax laws, financial reporting standards, and auditing regulations.

Question 2

Management accountants work within a business organization, preparing reports and analyzing financial information for the company that employs them.

Accepted Answer

This statement is true. Management accountants are responsible for providing financial information to internal stakeholders within a business, such as managers, executives, and other decision-makers, and helping them make informed decisions based on that information. They may also be involved in budgeting, forecasting, cost analysis, and other financial activities.

Question 3

Public accountants ensure that the government's expenditures are maintained in compliance with regulations.

Accepted Answer

Public accountants do not ensure that the government's expenditures are maintained in compliance with regulations. This is the responsibility of government auditors.

Question 4

Stockholders sometimes refer to accounting information as the "language of business" because they rely heavily on financial information for progress.

Accepted Answer

Stockholders use accounting information to understand the financial health of a company and make informed decisions about their investments. Therefore, accounting information is often referred to as the "language of business" as it's an essential part of a shareholder's ability to assess the performance of the company.

Question 5

Generally accepted accounting principles (GAAP) are a set of accounting standards used in the preparation of financial statements.

Accepted Answer

GAAP are a set of accounting standards used in the preparation of financial statements that are generally accepted and recognized as authoritative by accounting professionals in the United States.

Question 6

Accounting systems are utilized by companies for several reasons, but they have little value when it comes to making economic decisions.

Accepted Answer

Accounting systems provide valuable financial information that can be used to make economic decisions such as budgeting, pricing, and forecasting.

Question 7

Management accountants and public accountants do the same type of work but have different qualifications.

Accepted Answer

Management accountants focus on internal financial processes and decision-making within an organization, while public accountants provide external auditing, tax, and consulting services. They often have different qualifications and certifications, such as CMA for management accountants and CPA for public accountants.

Question 8

Management accountants work for private citizens who are not part of a firm, whereas public accountants work internally for publicly traded companies.

Accepted Answer

Management accountants can work for private firms as well as publicly traded companies, while public accountants work for public accounting firms that provide services to various companies, including publicly traded ones.

Question 9

The managers of a company are the only stakeholders of that company to have a legitimate interest in its accounting information.

Accepted Answer

Various stakeholders such as investors, creditors, suppliers, customers, employees, regulatory agencies, and the government also have a legitimate interest in a company's accounting information. They use this information to make decisions about investing, lending, supplying goods and services, purchasing, working for, regulating, and taxing the company. The managers of a company are just one set of stakeholders among many.

Question 10

Many accountants become certified fraud examiners due to the less rigorous requirements of becoming a certified public accountant.

Accepted Answer

The requirements to become a Certified Fraud Examiner (CFE) are actually more rigorous than those to become a Certified Public Accountant (CPA). In order to become a CFE, one must have a bachelor's degree, at least two years of relevant professional experience, pass a four-part exam, and adhere to a code of ethics. In comparison, the requirements to become a CPA vary by state but generally include a bachelor's degree, 150 credit hours of education, passing the CPA exam, and meeting work experience requirements.

Question 11

Government accountants provide services such as external auditing and management consulting to clients on a fee basis.

Accepted Answer

Government accountants typically work within government agencies and do not provide services like external auditing and management consulting to clients on a fee basis. These services are usually provided by private sector accounting firms.

Question 12

Achieving recognition as a certified public accountant is easy and does not require direct experience in the accounting field.

Accepted Answer

Achieving recognition as a certified public accountant typically requires meeting education and experience requirements, passing a rigorous exam, and meeting specific licensure requirements. This involves gaining relevant experience in the accounting field.

Question 13

Internal auditors identify mismanagement and employee theft in organizations which employ them.

Accepted Answer

Internal auditors are responsible for assessing an organization's internal controls and identifying any areas of potential risk or mismanagement, including the detection of employee theft.

Question 14

Government agencies, such as the Securities and Exchange Commission (SEC), are typically audited by public accountants.

Accepted Answer

The answer of Government agencies, such as the Securities and...

Question 15

Management, internal, and government accountants are business titles used by certified public accountants.

Accepted Answer

Certified public accountants (CPAs) may work in various roles, but "management accountant," "internal accountant," and "government accountant" are not specific titles exclusive to CPAs. These roles can be filled by accountants with different certifications or qualifications.

Question 16

Creditors primarily use accounting information to meet the reporting needs of federal and state agencies.

Accepted Answer

Creditors use accounting information to assess a company's financial health and creditworthiness, to make lending decisions, and to monitor repayment of loans. While federal and state agencies may also require some reporting, this is not a primary use of accounting information by creditors.

Question 17

The Financial Accounting Standards Board is a private organization with the legal authority to develop and enforce generally accepted accounting principles.

Accepted Answer

The Financial Accounting Standards Board (FASB) is a private organization that develops generally accepted accounting principles (GAAP) in the United States, but it does not have legal authority to enforce them. Enforcement is typically carried out by regulatory bodies such as the Securities and Exchange Commission (SEC).

Question 18

Some key users of an organization's accounting information include managers, government agencies, and stockholders.

Accepted Answer

These three groups are commonly identified as key users of an organization's accounting information, as they have a significant interest in the financial performance and position of the company.

Question 19

Internal auditors are private accountants responsible for verifying another company's internal accounting procedures.

Accepted Answer

Internal auditors are employed by the company they audit to ensure its own internal accounting procedures and controls are effective, not another company's.

Question 20

The ability to understand accounting information is not valuable to a person investing in a business.

Accepted Answer

Understanding accounting information is crucial for investors as it helps them in making informed investment decisions based on financial statements, cash flows, and other financial ratios. It helps them to evaluate the performance of a company and its financial health. Therefore, understanding accounting information is highly valuable to a person investing in a business.

Quiz 8: Accounting: Decision Making by the Numbers