Type:
Test Bank
Resource:
Financial Accounting, Enhanced eText
Edition:
11th Edition
Author(s):
Jerry J. Weygandt Paul D. Kimmel Donald E. Kieso
CHAPTER 1 ACCOUNTING IN ACTION SUMMARY OF QUESTIONS BY LEARNING OBJECTIVES AND BLOOM’S TAXONOMY Item
LO
BT
Item
LO
BT
1. 2. 3. 4. 5. 6. 7. 8. 9.
1 1 1 1 1 1 1 1 1
K K C K K C K C K
10. 11. 12. 13. 14. 15. 16. 17. 18.
1 1 2 2 2 2 2 2 2
K K K K K K K K K
44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73.
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2
K K K C K K K K K K C C C C C C K K C K C K K K K K K C K K
74. 75. 76. 77. 78. 79. 80. 81. 82. 83. 84. 85. 86. 87. 88. 89. 90. 91. 92. 93. 94. 95. 96. 97. 98. 99. 100. 101. 102. 103.
2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 3 3 3 3 3 3 3 3 3 3 3
Item
LO
BT
Item
LO
BT
Item
LO
BT
5 5 5 5 5 6 6 6 1
K K K K K K K K K
sg
37. 38. sg 39. sg 40. sg 41. sg 42. sg 43.
1 2 2 2 3 4 5
K K C K K K K
5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 6 6 6
K K AP AP AP K C K K AP AP AP AP AP AP AP AP AP AP AP AP AP AN AN AN AN AN K K K
a
6 1 1 1 1 1 2 2 2 3 4 4 5 5 7 7 7 7 7 7 7 7 7 7 7 7 7 7
C K K K K K K K K K C C K K K K K K K K K K K K K K K K
True-False Statements 19. 20. 21. 22. 23. 24. 25. 26. 27.
2 2 3 3 3 4 4 4 4
K C K K K K C C C
28. 29. 30. 31. 32. a 33. a 34. a 35. sg 36.
sg
Multiple Choice Questions
sg st a
C K K C K K K K K K C C K K C K K K K K K K C K K C K K K K
104. 105. 106. 107. 108. 109. 110. 111. 112. 113. 114. 115. 116. 117. 118. 119. 120. 121. 122. 123. 124. 125. 126. 127. 128. 129. 130. 131. 132. 133.
3 3 3 3 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 4 4 4 4 4 4 5 5 5
K C K C AP AP AP AP AP K K K K C AP C C C C C C K C C C AN C C C K
134. 135. 136. 137. 138. 139. 140. 141. 142. 143. 144. 145. 146. 147. 148. 149. 150. 151. 152. 153. 154. 155. 156. 157. 158. 159. 160. a 161. a 162. a 163.
This question also appears in the Study Guide. This question also appears in a self-test at the student companion website. This question covers a topic in an appendix to the chapter.
164. 165. st 166. st 167. sg 168. st 169. sg 170. st 171. sg 172. sg 173. sg 174. sg 175. sg 176. sg 177. 178. 179. 180. 181. 182. 183. 184. 185. 186. 187. 188. 189. 190. 191. sg
1-2
Test Bank for Financial Accounting, Eleventh Edition
SUMMARY OF QUESTIONS BY LEARNING OBJECTIVES AND BLOOM’S TAXONOMY Brief Exercises 192. 193. 194.
1 3 3
C K K
195. 196. 197.
3 3 3
AP AP C
198. 4 C 199. 5 AP 200. 5 C 6. Exercises
201. 202.
5 5
AP AP
203. 204. 205. 206. 207. 208. 209. 210.
1,2 3 3 3 3 3 3 3
K C C AP C AP AN AN
211. 212. 213. 214. 215. 216. 217. 218.
3 3,4 3,4 3,4 4 4 4 4
C C C AP AP AP C AN
219. 220. 221. 222. 223. 224. 225. 226.
227. 228. 229. 230. 231. 232. 233. 234.
5 5 5 5 5 5 5 5
AP AP AP AN AP AP C AP
235. 236. 237. 238. 239.
5 5 5 5 5
AN C AP AP AP
2 3
K K
248. 249.
3 5
K K
4 4 4 4 4 4 4 4
C C AP C C C C C
Completion Statements 240. 241.
1 1
K K
242. 243.
1 1
K K
244. 245.
2 2
K K
246. 247.
Matching 250.
1-5
K
a
6 3
K C
Short-Answer Essay 251. 252.
253. 254.
1 1
S C
255. 256.
2 5
E C
SUMMARY OF LEARNING OBJECTIVES BY QUESTION TYPE Item
Type
Item
Type
Item
1. 2. 3. 4. 5. 6. 7.
TF TF TF TF TF TF TF
8. 9. 10. 11. 36. 37. 44.
TF TF TF TF TF TF MC
45. 46. 47. 48. 49. 50. 51.
12. 13. 14. 15. 16. 17. 18. 19.
TF TF TF TF TF TF TF TF
20. 38. 39. 40. 62. 63. 64. 65.
TF TF TF TF MC MC MC MC
66. 67. 68. 69. 70. 71. 72. 73.
Type
Item
Type
Item
Learning Objective 1 MC 52. MC 59. MC 53. MC 60. MC 54. MC 61. MC 55. MC 165. MC 56. MC 166. MC 57. MC 167. MC 58. MC 168. Learning Objective 2 MC 74. MC 82. MC 75. MC 83. MC 76. MC 84. MC 77. MC 85. MC 78. MC 86. MC 79. MC 87. MC 80. MC 88. MC 81. MC 89.
.
Type
Item
Type
Item
Type
MC MC MC MC MC MC MC
169. 192. 203. 240. 241. 242. 243.
MC BE Ex C C C C
250. 253. 254.
MA SA SA
MC MC MC MC MC MC MC MC
90. 91. 92. 170. 171. 172. 203. 244.
MC MC MC MC MC MC Ex C
245. 246. 250. 255.
C C MA SA
Accounting in Action
1-3
SUMMARY OF LEARNING OBJECTIVES BY QUESTION TYPE 21. 22. 23. 41. 93. 94. 95.
TF TF TF TF MC MC MC
96. 97. 98. 99. 100. 101. 102.
MC MC MC MC MC MC MC
103. 104. 105. 106. 107. 108. 109.
24. 25. 26. 27. 42. 117.
TF TF TF TF TF MC
118. 119. 120. 121. 122. 123.
MC MC MC MC MC MC
124. 125. 126. 127. 128. 129.
28. 29. 30. 31. 32. 43. 131. 132. 133.
TF TF TF TF TF TF MC MC MC
134. 135. 136. 137. 138. 139. 140. 141. 142.
MC MC MC MC MC MC MC MC MC
143. 144. 145. 146. 147. 148. 149. 150. 151.
a
33. a 34.
TF TF
a
35. a 161.
TF MC
178. 179.
MC MC
180. 181.
MC MC
a
162. 163.
a
182. 183.
Note: TF = True-False MC = Multiple Choice
Learning Objective 3 MC 110. MC 173. MC 111. MC 193. MC 112. MC 194. MC 113. MC 195. MC 114. MC 196. MC 115. MC 197. MC 116. MC 204. Learning Objective 4 MC 130. MC 214. MC 174. MC 215. MC 175. MC 216. MC 198. BE 217. MC 212. Ex 218. MC 213. Ex 219. Learning Objective 5 MC 152. MC 176. MC 153. MC 177. MC 154. MC 199. MC 155. MC 200. MC 156. MC 201. MC 157. MC 202. MC 158. MC 227. MC 159. MC 228. MC 160. MC 229. Learning Objective 6 MC a164. MC MC a251. SA Learning Objective 7 MC 184. MC 186. MC 185. MC 187.
BE = Brief Exercise Ex = Exercise
.
MC BE BE BE BE BE Ex
205. 206. 207. 208. 209. 210. 211.
Ex Ex Ex Ex Ex Ex Ex
212. 213. 214. 247. 248. 250. 254.
Ex Ex Ex C C MA SA
Ex Ex Ex Ex Ex Ex
220. 221. 222. 223. 224. 225.
Ex Ex Ex Ex Ex Ex
226. 250.
Ex MA
MC MC BE BE BE BE Ex Ex Ex
230. 231. 232. 233. 234. 235. 236. 237. 238.
Ex Ex Ex Ex Ex Ex Ex Ex Ex
239. 249. 250. 256.
Ex C MA SA
MC MC
188. 189.
MC MC
190. 191.
MC MC
C = Completion MA = Matching SA = Short-Answer Essay
1-4
Test Bank for Financial Accounting, Eleventh Edition
CHAPTER LEARNING OBJECTIVES 1. Identify the activities and users associated with accounting. Accounting is an information system that identifies, records, and communicates the economic events of an organization to interested users. The major users and uses of accounting are as follows: (a) Management uses accounting information to plan, organize, and run the business. (b) Investors (owners) decide whether to buy, hold, or sell their financial interests on the basis of accounting data. (c) Creditors (suppliers and bankers) evaluate the risks of granting credit or lending money on the basis of accounting information. Other groups that use accounting information are taxing authorities, regulatory agencies, customers, and labor unions. 2. Explain the building blocks of accounting: ethics, principles, and assumptions. Ethics are the standards of conduct by which actions are judged as right or wrong. Effective financial reporting depends on sound ethical behavior. Generally accepted accounting principles are a common set of standards used by accountants. The monetary unit assumption requires that companies include in the accounting records only transaction data that can be expressed in terms of money. The economic entity assumption requires that the activities of each economic entity be kept separate from the activities of its owners and other economic entities. 3. State the accounting equation, and define its components. The basic accounting equation is: Assets = Liabilities + Stockholders' Equity Assets are resources owned by a business. Liabilities are creditorship claims on total assets. Stockholders' equity is the ownership claim on total assets. 4. Analyze the effects of business transactions on the accounting equation. Each business transaction must have a dual effect on the accounting equation. For example, if an individual asset increases, there must be a corresponding (1) decrease in another asset, or (2) increase in a specific liability, or (3) increase in stockholders' equity. The expanded accounting equation is: Assets = Liabilities + Common Stock + Revenues − Expenses − Dividends Common stock is affected when the company issues new shares of stock in exchange for cash. Revenues are increases in assets resulting from income-earning activities. Expenses are the costs of assets consumed or services used in the process of earning revenue. Dividends are payments the company makes to its stockholders. 5. Describe the four financial statements and how they are prepared. An income statement presents the revenues and expenses, and resulting net income or net loss, for a specific period of time. A retained earnings statement summarizes the changes in retained earnings for a specific period of time. A balance sheet reports the assets, liabilities, and stockholders' equity at a specific date. A statement of cash flows summarizes information about the cash inflows (receipts) and outflows (payments) for a specific period of time. a
6. Explain the career opportunities in accounting. Accounting offers many different jobs in fields such as public and private accounting, governmental accounting, and forensic accounting. Accounting is a popular major because there are many different types of jobs, with unlimited potential for career advancement.
.
Accounting in Action
1-5
TRUE-FALSE STATEMENTS 1.
Owners of business firms are the only people who need accounting information. Ans: F LO 1, SECTION 1 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
2.
Transactions that can be measured in dollars and cents are recorded in the financial information system. Ans: T LO 1, SECTION 1 BT: K Difficulty: Easy TOT: .5 min AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
3.
The hiring of a new company president is an economic event recorded by the financial information system. Ans: F LO 1, SECTION 1 BT: C Difficulty: Easy TOT: .5 min AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
4.
Management of a business enterprise is the major external user of information. Ans: F LO 1, SECTION 1 BT: K Difficulty: Easy TOT: .5 min AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
5.
Accounting communicates financial information about a business enterprise to both internal and external users. Ans: T LO 1, SECTION 1 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
6.
Accounting information is used only by external users with financial interests in a business enterprise. Ans: F LO 1, SECTION 1 BT: C Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
7.
Financial statements are the primary means of communicating accounting information to interested parties. Ans: T LO 1, SECTION 1 Reporting
8.
BT: K
Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN:
Bookkeeping and accounting are one and the same because the bookkeeping function includes the accounting process. Ans: F LO 1, SECTION 1 BT: C Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
9.
The origins of accounting are attributed to Luca Pacioli, a famous mathematician. Ans: T LO 1, SECTION 1 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
10.
The study of accounting is not useful for a business career unless your career objective is to become an accountant. Ans: F LO 1, SECTION 1 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
11.
A working knowledge of accounting is not relevant to a lawyer or an architect. Ans: F LO 1, SECTION 1 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
12.
A partnership must have more than one owner. Ans: T LO 2, SECTION 2 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
.
1-6 13.
Test Bank for Financial Accounting, Eleventh Edition The economic entity assumption requires that the activities of an entity be kept separate and distinct from the activities of its owner and all other economic entities. Ans: T LO 2, SECTION 2 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
14.
The monetary unit assumption states that only transactions that can be measured in terms of money should be recorded in the accounting records. Ans: T LO 2, SECTION 2 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
15.
Accountants rely on a fundamental business concept—ethical behavior—in reporting financial information. Ans: T LO 2, SECTION 2 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
16.
The primary accounting standard-setting body in the United States is the International Accounting Standards Board. Ans: F LO 2, SECTION 2 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
17.
The Financial Accounting Standards Board is a part of the Securities and Exchange Commission. Ans: F LO 2, SECTION 2 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
18.
The Securities and Exchange Commission oversees U.S. financial markets and accounting standard-setting bodies. Ans: T LO 2, SECTION 2 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
19.
The cost and fair value of an asset are the same at the time of acquisition and in all subsequent periods. Ans: F LO 2, SECTION 2 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
20.
Even though a partnership is not a separate legal entity, for accounting purposes the partnership affairs should be kept separate from the personal activities of the owners. Ans: T LO 2, SECTION 2 BT: C Difficulty; Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
21.
In order to possess future service potential, an asset must have physical substance. Ans: F LO 3, SECTION 3 BT: K Reporting
22.
Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN:
Owners' claims to total business assets take precedence over the claims of creditors because owners invest assets in the business and are liable for losses. Ans: F LO 3, SECTION 3 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
23.
The basic accounting equation states that Assets = Liabilities. Ans: F LO 3, SECTION 3 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
24.
Both internal and external transactions are recorded in accounting records. Ans: T LO 4, SECTION 4 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
.
Accounting in Action 25.
1-7
Internal transactions do not affect the basic accounting equation because they are economic events that occur entirely within one company. Ans: F LO 4, SECTION 4 BT: C Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
26.
The purchase of store equipment for cash reduces assets and stockholders’ equity by an equal amount. Ans: F LO 4, SECTION 4 BT: C Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
27.
The purchase of office equipment on credit increases total assets and total liabilities. Ans: T LO 4, SECTION 4 BT: C Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
28.
The primary purpose of the statement of cash flows is to provide information about the cash receipts and cash payments of a company during a period. Ans: T LO 5, SECTION 5 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
29.
Net income for the period is determined by subtracting total expenses and drawings from total revenues. Ans: F LO 5, SECTION 5 Reporting
30.
The income statement is sometimes referred to as the statement of operations. Ans: T LO 5, SECTION 5 Reporting
31.
33.
BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN:
The ending retained earnings balance is reported on both the retained earnings statement and the balance sheet. Ans: T LO 5, SECTION 5 Reporting
a
BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN:
A balance sheet reports the assets and liabilities of a company for a specific period of time. Ans: F LO 5, SECTION 5 Reporting
32.
BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN:
BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN:
The study of accounting will be useful only if a student is interested in working for a profitoriented business firm. Ans: F LO 6, SECTION 6 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
a
34.
Private accountants are accountants who are not employees of business enterprises. Ans: F LO 6, SECTION 6 BT:K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
a
35.
Expressing an opinion as to the fairness of the information presented in financial statements is a service performed by CPAs. Ans: T LO 6, SECTION 6 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
36.
Identifying is the process of keeping a chronological diary of events measured in dollars and cents. Ans: F LO 1, SECTION 1 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
.
1-8 37.
Test Bank for Financial Accounting, Eleventh Edition Management consulting includes examining the financial statements of companies and expressing an opinion as to the fairness of their presentation. Ans: F LO 1, SECTION 1 BT: K Difficulty; Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
38.
Accountants do not have to worry about issues of ethics. Ans: F LO 2, SECTION 2 BT: K Difficulty: Easy TOT: .5 min. AACSB: Ethics AICPA BB: Critical Thinking AICPA FN: Reporting
39.
At the time an asset is acquired, cost and fair value should be the same. Ans: T LO 2, SECTION 2 BT: C Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
40.
The monetary unit assumption requires that all dollar amounts be rounded to the nearest dollar. Ans: F LO 2, SECTION 2 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
41.
The basic accounting equation is in balance when the creditor and ownership claims against the business equal the assets. Ans: T LO 3, SECTION 3 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
42.
External transactions involve economic events between the company and some other enterprise or party. Ans: T LO 4, SECTION 4 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
43.
In the retained earnings statement, revenues are listed first, followed by expenses, and net income (or net loss). Ans: F LO 5, SECTION 5 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
Answers to True-False Statements Item
1. 2. 3. 4. 5. 6. 7.
Ans.
Item
Ans.
Item
Ans.
Item
Ans.
Item
Ans.
Item
Ans.
Item
Ans.
F T F F T F T
8. 9. 10. 11. 12. 13. 14.
F T F F T T T
15. 16. 17. 18. 19. 20. 21.
T F F T F T F
22. 23. 24. 25. 26. 27. 28.
F F T F F T T
29. 30. 31. 32. 33. 34. 35.
F T F T F F T
36. 37. 38. 39. 40. 41. 42.
F F F T F T T
43.
F
.
Accounting in Action
1-9
MULTIPLE CHOICE QUESTIONS 44.
Accountants refer to an economic event as a a. purchase. b. sale. c. transaction. d. change in ownership. Ans: c LO 1, SECTION 1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
45.
The starting point of the accounting process is a. communicating information to users. b. identifying economic events. c. recording economic events. d. None of these answers are correct. Ans: b LO 1, SECTION 1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
46.
Communication of economic events is the part of the accounting process that involves a. identifying economic events. b. quantifying transactions into dollars and cents. c. preparing accounting reports. d. recording and classifying information. Ans: c LO 1, SECTION 1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
47.
Which of the following events cannot be quantified into dollars and cents and recorded as an accounting transaction? a. The appointment of a new CPA firm to perform an audit b. The purchase of a new computer c. The sale of store equipment d. Payment of income taxes Ans: a LO 1, SECTION 1 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
48.
Interpretation of reported information involves each of the following except a. limitations of reported data. b. meaning of reported data. c. uses of reported data. d. All of these choices are correct. Ans: d LO 1, SECTION 1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
49.The accounting process involves all of the following except a. identifying economic transactions that are relevant to the business. b. communicating financial information to users by preparing financial reports. c. recording non-quantifiable economic events. d. analyzing and interpreting financial reports. Ans: c LO 1, SECTION 1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
.
1 - 10 50.
Test Bank for Financial Accounting, Eleventh Edition The accounting process is correctly sequenced as a. identification, communication, recording. b. recording, communication, identification. c. identification, recording, communication. d. communication, recording, identification. Ans: c LO 1, SECTION 1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
51.
Which of the following techniques is not used by accountants to interpret and report financial information? a. Graphs b. Special memos for each class of external users c. Charts d. Ratios Ans: b LO 1, SECTION 1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
52.
Accounting consists of three basic activities that are related to economic events of an organization. These include a. identifying, recording, and communicating. b. identifying, calculating, and responding. c. classifying, numbering, and reporting. d. issuing, reporting, and classifying. Ans: a LO 1, SECTION 1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
53.
All of the following statements are correct except a. Good decision-making depends on good information. b. A vital element in communicating economic events is the accountant's ability to analyze and interpret reported information. c. The origins of accounting are generally attributed to Socrates, a classical Greek philosopher, who promoted accounting as a social contract. d. The information that a user of financial information needs depends upon the kinds of decisions the user makes. Ans: c LO 1, SECTION 1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
54.
Which of the following is not considered an internal user of accounting data? a. President of the company b. Production manager c. Merchandise inventory clerk d. President of the employees' labor union Ans: d LO 1, SECTION 1 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
.