Accounting for Decision Makers – C213 (Topics
1–6) | Financial Accounting, GAAP & Cash
Flows Verified Questions Provided with A+
Graded Rationales Latest Updated 2026
The emphasis in financial accounting is on which of the following external user groups?
Investors and creditors
The primary internal group that uses accounting information is
Management
Internal reports are generally used by
Management
Which of the following is NOT an external user of financial information?
Management
Which of the following is NOT true of the Financial Accounting Standards Board (FASB)?
It is a government agency
Generally accepted accounting principles are
Developed by accounting rule makers
The initials GAAP stand for
Generally Accepted Accounting Principles
The current standard-setting board for accounting in the private sector is the
Financial Accounting Standards Board (FASB)
Which of the following is the government agency that stipulates the rules and regulations that
govern the collection of taxes in the United States?
Internal Revenue Service
Standards established by the International Accounting Standards Board are referred
International Financial Reporting Standards
,Which of the following is NOT a service typically provided by large public accounting firms?
Making management decisions
The organization that develops worldwide accounting standards is the
International Accounting Standards Board (IASB)
The initials CPA stand for
Certified Public Accountant
The statement of cash flows replaces the
A. Balance sheet
B. Statement of financial position
C. Income statement
D. None of these
None of these , The statement of cash flows provides details as to how the cash accountchanged
during a period. The statement of cash flows does not replace the income statement. The
statement of cash flows includes transactions that are not already reflected in the balance sheet
and income statement.
The statement of cash flows
Summarizes all cash inflows and outflows of an entity for a given period of time
Which of the following is NOT a purpose of the statement of cash flows?
It measures the profitability of an entity.
Which of the following statements is NOT true?
The statement of cash flows includes transactions that are not already reflected in the balance
sheet and income statement.
Which of the following is NOT a reason for the integration of worldwide accounting standards?
the need to evaluate investments across the world
The International Accounting Standards Board (IASB) is charged with developing worldwide
accounting practices?
True
,With the current state of information technology, investors outside a company are now allowed
access to a company's internal database of financial information and do their own customized
analysis of a firm's performance.
False, While the technology may be available, companies are still not allowing outsiders access
to their internal accounting records.
Increased federal oversight of the audit process resulted from the passage of the following act
of Congress -
Sarbanes-Oxley Act
A borrower benefits from providing financial information regarding income and expenses in the
form of a lower interest rate on the loan because of reduced uncertainty for the lender with
regard to repayment.
True
Which of the following is NOT one of the three primary financial statements?
The Statement of Retained Earnings
One reason for a company's preparing and providing financial statements is to reduce
uncertainty for an investor regarding the firm's future financial performance.
True
Which of the following financial statements provides a picture of the enterprise at a particular
point in time?
Balance sheet
The basic accounting equation is
Assets = Liabilities + Owners' Equity
Another name for the balance sheet is the
Statement of financial position
Markanich Company purchased land for $90,000 in 2010. In 2013, the land is valued at
$115,000. The land would appear on the company's books in 2013 at
$90,000
Which of the following is the reason that the accounting equation is true by definition?
Liabilities and owner's equity are the sources that fund the purchase of assets
, Another name for the income statement is
Statement of earnings
Which of the following is an overall measure of the performance of a business entity's
activities?
Net income (or net loss)
The financial statement that presents a summary of the revenues and expenses of a business
for a specific period of time, such as a month or a year, is called a(n)
Income Statement
Expenses generally cause
A decrease in net assets
Revenues cause
An increase in net assets
Which of the following activities would be classified as a financing activity?
Repayment of a loan
Which of the following activities would NOT be classified as an investing activity?
Purchase of inventory
During the month, Meridian Company had the following cash transactions:
Cash collected from customers
$ 12,500
Cash received from a loan
8,000
Cash paid for wages payable
(5,750)
Cash paid for the purchase of a building
(15,000)
Cash received for the issuance of new shares of stock
2,600
Cash received from sale of land
6,400
Cash paid for rent
(2,500)
Cash paid for dividends
1–6) | Financial Accounting, GAAP & Cash
Flows Verified Questions Provided with A+
Graded Rationales Latest Updated 2026
The emphasis in financial accounting is on which of the following external user groups?
Investors and creditors
The primary internal group that uses accounting information is
Management
Internal reports are generally used by
Management
Which of the following is NOT an external user of financial information?
Management
Which of the following is NOT true of the Financial Accounting Standards Board (FASB)?
It is a government agency
Generally accepted accounting principles are
Developed by accounting rule makers
The initials GAAP stand for
Generally Accepted Accounting Principles
The current standard-setting board for accounting in the private sector is the
Financial Accounting Standards Board (FASB)
Which of the following is the government agency that stipulates the rules and regulations that
govern the collection of taxes in the United States?
Internal Revenue Service
Standards established by the International Accounting Standards Board are referred
International Financial Reporting Standards
,Which of the following is NOT a service typically provided by large public accounting firms?
Making management decisions
The organization that develops worldwide accounting standards is the
International Accounting Standards Board (IASB)
The initials CPA stand for
Certified Public Accountant
The statement of cash flows replaces the
A. Balance sheet
B. Statement of financial position
C. Income statement
D. None of these
None of these , The statement of cash flows provides details as to how the cash accountchanged
during a period. The statement of cash flows does not replace the income statement. The
statement of cash flows includes transactions that are not already reflected in the balance sheet
and income statement.
The statement of cash flows
Summarizes all cash inflows and outflows of an entity for a given period of time
Which of the following is NOT a purpose of the statement of cash flows?
It measures the profitability of an entity.
Which of the following statements is NOT true?
The statement of cash flows includes transactions that are not already reflected in the balance
sheet and income statement.
Which of the following is NOT a reason for the integration of worldwide accounting standards?
the need to evaluate investments across the world
The International Accounting Standards Board (IASB) is charged with developing worldwide
accounting practices?
True
,With the current state of information technology, investors outside a company are now allowed
access to a company's internal database of financial information and do their own customized
analysis of a firm's performance.
False, While the technology may be available, companies are still not allowing outsiders access
to their internal accounting records.
Increased federal oversight of the audit process resulted from the passage of the following act
of Congress -
Sarbanes-Oxley Act
A borrower benefits from providing financial information regarding income and expenses in the
form of a lower interest rate on the loan because of reduced uncertainty for the lender with
regard to repayment.
True
Which of the following is NOT one of the three primary financial statements?
The Statement of Retained Earnings
One reason for a company's preparing and providing financial statements is to reduce
uncertainty for an investor regarding the firm's future financial performance.
True
Which of the following financial statements provides a picture of the enterprise at a particular
point in time?
Balance sheet
The basic accounting equation is
Assets = Liabilities + Owners' Equity
Another name for the balance sheet is the
Statement of financial position
Markanich Company purchased land for $90,000 in 2010. In 2013, the land is valued at
$115,000. The land would appear on the company's books in 2013 at
$90,000
Which of the following is the reason that the accounting equation is true by definition?
Liabilities and owner's equity are the sources that fund the purchase of assets
, Another name for the income statement is
Statement of earnings
Which of the following is an overall measure of the performance of a business entity's
activities?
Net income (or net loss)
The financial statement that presents a summary of the revenues and expenses of a business
for a specific period of time, such as a month or a year, is called a(n)
Income Statement
Expenses generally cause
A decrease in net assets
Revenues cause
An increase in net assets
Which of the following activities would be classified as a financing activity?
Repayment of a loan
Which of the following activities would NOT be classified as an investing activity?
Purchase of inventory
During the month, Meridian Company had the following cash transactions:
Cash collected from customers
$ 12,500
Cash received from a loan
8,000
Cash paid for wages payable
(5,750)
Cash paid for the purchase of a building
(15,000)
Cash received for the issuance of new shares of stock
2,600
Cash received from sale of land
6,400
Cash paid for rent
(2,500)
Cash paid for dividends
