Question 1

Public accountants are typically employees of the firm for which they are providing services.

Accepted Answer

Public accountants are usually employed by accounting firms rather than the companies they audit or provide services for, allowing them to maintain independence.

Question 2

Investing activities focus on selling goods and services, but they also consider cost control as an important element of sound financial management.

Accepted Answer

Investing activities primarily involve the acquisition and disposal of long-term assets, such as property, plant, and equipment, and investments in other companies or securities. Cost control is a component of operating activities, which involve the day-to-day running of the business and the sale of goods and services.

Question 3

Daily business decisions are generally unaffected by accounting information; long-term decisions, however, are affected by accounting information and the interpretation of financial reports.

Accepted Answer

Both daily business decisions and long-term decisions are affected by accounting information and the interpretation of financial reports, as they provide essential data for managing finances, resources, and strategy.

Question 4

Most companies refuse to share any financial information with employees.

Accepted Answer

The answer of Most companies refuse to share any financial...

Question 5

A public accountant provides accounting services to individuals or business firms for a fee.

Accepted Answer

This is the definition of a public accountant.

Question 6

Few not-for-profit organizations publish financial information since they are NOT required by law to do so.

Accepted Answer

Not-for-profit organizations are required by law to publish financial information in order to maintain transparency and accountability to their donors and stakeholders. This includes filing annual tax returns (Form 990) with the Internal Revenue Service (IRS) which are public records that disclose financial information such as revenue, expenses, salaries of key staff, and governance practices. Additionally, many not-for-profit organizations choose to publish annual reports or financial statements on their website or in other public forums to further enhance transparency and promote donor trust.

Question 7

Financing activities focus on providing valuable assets required to run a business.

Accepted Answer

Financing activities include obtaining funds to purchase assets, but their focus is more on how a company raises capital and manages its debt and equity. Providing valuable assets required to run a business is the focus of investing activities.

Question 8

Not-for-profit organizations use only public accountants.

Accepted Answer

Not-for-profit organizations may use both public and private accountants depending on their specific needs and resources. It is not a requirement for them to use only public accountants.

Question 9

The natural progression of a business begins with operating the business.

Accepted Answer

The natural progression of a business typically begins with the idea or concept stage, followed by planning, before moving on to operating the business.

Question 10

Accounting is the language of business.

Accepted Answer

Accounting is a system of recording, analyzing, and verifying financial transactions to provide information to internal and external stakeholders. It is essential for understanding the financial performance and position of a business, making informed decisions, and communicating financial information to stakeholders in a standardized language. Therefore, accounting is often referred to as the language of business.

Question 11

A public accounting firm is prohibited from providing both consulting services and audit services to the same firm.

Accepted Answer

The answer of A public accounting firm is prohibited from...

Question 12

Monica is involved in obtaining new funds to run and expand the business. She is engaged in an investing activity.

Accepted Answer

Monica is involved in obtaining new funds, which falls under the category of investing activity as it involves acquiring long-term assets in exchange for cash or other assets.

Question 13

Camille is an accountant who works for a firm providing auditing services to other businesses. Camille is a public accountant.

Accepted Answer

Camille's job as an accountant is to provide auditing services to other businesses, which makes her a public accountant.

Question 14

Accountants play fundamental roles in not only business but also other aspects of society.

Accepted Answer

Accountants are responsible for financial planning, budgeting, tax preparation, and auditing which are crucial in both business and non-business sectors. They also help individuals with their personal financial planning and tax obligations. Therefore, accountants do play fundamental roles in not only business but also other aspects of society.

Question 15

A management accountant is responsible for collecting and recording financial transactions and preparing of financial statements used by the firm's managers in decision making.

Accepted Answer

The statement accurately describes the responsibilities of a management accountant.

Question 16

An accountant employed by a business other than an accounting firm is called a management accountant.

Accepted Answer

This is true. Management accountants work within a business and are responsible for providing financial information and analysis to support management decisions. On the other hand, accountants employed by accounting firms are typically external auditors or provide tax and consulting services to clients.

Question 17

Accountants play a role in all three business activities: financing, investing, and operating.

Accepted Answer

Accountants are involved in all three business activities as they help with financial record keeping, financial analysis, and planning and decision making in regards to financing, investing, and operating the business.

Question 18

Since publicly traded companies are required to report their financial information, anyone can find out how much Tim Horton's made during the past three months.

Accepted Answer

Publicly traded companies are required to report their financial information, including earnings, revenue, and expenses, on a quarterly basis to the Securities and Exchange Commission (SEC) and make it available to the public through their annual reports, earnings releases, and other filings. This information can be obtained from the company's website or financial news sources. Therefore, anyone can find out how much Tim Horton's made during the past three months.

Question 19

Miles is an accountant and works for a firm that provides tax planning and preparation services to other businesses. Miles is a management accountant.

Accepted Answer

Miles is a tax accountant, not a management accountant.

Question 20

Accounting information can be as important to those outside the organization as it is to those inside the organization.

Accepted Answer

Accounting information can be important for various stakeholders such as investors, creditors, regulatory bodies, customers, suppliers, and even competitors. They use accounting information to make decisions related to investments, credit rating, product pricing, supply chain management, and market analysis, among others. Therefore, accounting information can be crucial not only for internal management and decision-making but also for external stakeholders.

Quiz 15: Understanding Accounting and Financial Statements