Principles of Financial and Managerial
Accounting - D196
Accounting plays a vital role in the decision-making process. Which action is the first
step in the decision-making process? correct answer- Identify the issue
The money that a company needs to buy its land, pay its employees, and buy its
supplies is called capital. What are the potential sources of capital for a business?
correct answer- Investors, creditors, and retained business earnings
Which primary area of accounting generates reports for internal users? correct answer-
Management accounting
True or False: Accountants measure and communicate the results of business activities.
correct answer- True
Which group uses financial information to evaluate whether a company will be able to
repay a loan? correct answer- Lenders
Which of the primary financial statements reports the resources, obligations, and
owner's equity of a company? correct answer- Balance sheet
What is the role of the IASB in regulating accounting standards? correct answer-
Establish international accounting standards
What group of people make up the FASB? correct answer- People from a variety of
business-related backgrounds
What is the role of the GASB in setting accounting standards? correct answer- The
GASB is a private-sector organization that establishes accounting and financial
reporting standards for U.S. state and local governments.
In what way do accountants have an economic incentive to conduct themselves
ethically? correct answer- The value of the information produced by accountants is
related to the confidence that users have in the reliability of that information.
How is it possible for an accountant to intentionally deceive financial statement users
and yet still technically be in compliance with generally accepted accounting principles
(GAAP)? correct answer- There is flexibility inherent in the assumptions underlying the
preparation of financial statements.
,Your boss approaches you with a concerning letter from the IRS and asks you to
explain the role of the IRS in regulating accounting standards. Based on the role of the
IRS, what could be the problem detailed in the letter? correct answer- The company has
not filed its taxes in accordance with the law.
Anika is considering investing in a tech company that is known for developing smart
home appliances. Before investing, Anika first wants to ensure that the company's past
financial performance has been satisfactory and that the company manages its cash
flows well. What type of accounting information would provide this evidence for Anika?
correct answer- Financial reports
Alliah Company just released its public accounting data for 20X9. Which user of
accounting information will monitor this data to ensure that the company is providing
sufficient information for investors? correct answer- Government agencies
A new product line manager approaches the accounting department in order to
understand the past performance of the product line he has been asked to manage in
the future. Which role of accounting involves obtaining and using financial information to
determine the financial health and performance of a business or product line? correct
answer- Evaluation
You read in the newspaper that a local company you are familiar with has been found
guilty in court of publishing financial statements that are false and misleading to users of
those financial statements. In this situation, what could the American Institute of
Certified Public Accountants (AICPA) do in response to the accountants who were
found guilty of unethical conduct in accounting practices? correct answer- Implement
professional sanctions
What is the correct summary sequence in the accounting cycle? correct answer-
Analyze, Record, Summarize, Prepare
Business documents, such as a sales invoice, a purchase order, or a check stub, are an
important part of the accounting process. From an accounting cycle standpoint, what is
purpose of business documents? correct answer- To confirm that a transaction has
occurred
What is the purpose of the financial accounting cycle? correct answer- To turn
transactions into financial statements and provide useful financial information for
decision makers
What is a transaction in accounting? correct answer- An interaction in which two parties
exchange something of value
In the context of the financial accounting cycle, what is the definition of an account?
correct answer- A specific accounting record that provides an efficient way to categorize
similar types of transactions
, What is an arm's-length transaction? correct answer- An exchange between two
independent parties
Which event represents a transaction recorded as part of the financial accounting
cycle? correct answer- The sale of a product for cash or on account
A company sells a product to a customer on account. Which part(s) of the accounting
equation does this particular transaction change? correct answer- Both assets and
owners' equity
What is an example of an internal transaction? correct answer- An employee is
transferred from one department to another.
Oliver is an accountant for a restaurant supply business that sells dishes, table linens,
and food preparation equipment to restaurants. In preparing the January financial
statements for the company, Oliver must consider all of the financial events that
occurred during the month, including purchases from vendors, sales to customers, and
other transactions.
What is the first step of the financial accounting cycle that Oliver will perform? correct
answer- Analyze transactions
Oliver is an accountant for a restaurant supply business that sells dishes, table linens,
and food preparation equipment to restaurants. In preparing the January financial
statements for the company, Oliver must consider all of the financial events that
occurred during the month, including purchases from vendors, sales to customers, and
other transactions.
Which item is a liability? correct answer- Mortgage
Oliver is an accountant for a restaurant supply business that sells dishes, table linens,
and food preparation equipment to restaurants. In preparing the January financial
statements for the company, Oliver must consider all of the financial events that
occurred during the month, including purchases from vendors, sales to customers, and
other transactions.
Which of the items listed should Oliver record as an external transaction? correct
answer- Purchases of inventory from suppliers
Oliver is an accountant for a restaurant supply business that sells dishes, table linens,
and food preparation equipment to restaurants. In preparing the January financial
statements for the company, Oliver must consider all of the financial events that
occurred during the month, including purchases from vendors, sales to customers, and
other transactions.
Accounting - D196
Accounting plays a vital role in the decision-making process. Which action is the first
step in the decision-making process? correct answer- Identify the issue
The money that a company needs to buy its land, pay its employees, and buy its
supplies is called capital. What are the potential sources of capital for a business?
correct answer- Investors, creditors, and retained business earnings
Which primary area of accounting generates reports for internal users? correct answer-
Management accounting
True or False: Accountants measure and communicate the results of business activities.
correct answer- True
Which group uses financial information to evaluate whether a company will be able to
repay a loan? correct answer- Lenders
Which of the primary financial statements reports the resources, obligations, and
owner's equity of a company? correct answer- Balance sheet
What is the role of the IASB in regulating accounting standards? correct answer-
Establish international accounting standards
What group of people make up the FASB? correct answer- People from a variety of
business-related backgrounds
What is the role of the GASB in setting accounting standards? correct answer- The
GASB is a private-sector organization that establishes accounting and financial
reporting standards for U.S. state and local governments.
In what way do accountants have an economic incentive to conduct themselves
ethically? correct answer- The value of the information produced by accountants is
related to the confidence that users have in the reliability of that information.
How is it possible for an accountant to intentionally deceive financial statement users
and yet still technically be in compliance with generally accepted accounting principles
(GAAP)? correct answer- There is flexibility inherent in the assumptions underlying the
preparation of financial statements.
,Your boss approaches you with a concerning letter from the IRS and asks you to
explain the role of the IRS in regulating accounting standards. Based on the role of the
IRS, what could be the problem detailed in the letter? correct answer- The company has
not filed its taxes in accordance with the law.
Anika is considering investing in a tech company that is known for developing smart
home appliances. Before investing, Anika first wants to ensure that the company's past
financial performance has been satisfactory and that the company manages its cash
flows well. What type of accounting information would provide this evidence for Anika?
correct answer- Financial reports
Alliah Company just released its public accounting data for 20X9. Which user of
accounting information will monitor this data to ensure that the company is providing
sufficient information for investors? correct answer- Government agencies
A new product line manager approaches the accounting department in order to
understand the past performance of the product line he has been asked to manage in
the future. Which role of accounting involves obtaining and using financial information to
determine the financial health and performance of a business or product line? correct
answer- Evaluation
You read in the newspaper that a local company you are familiar with has been found
guilty in court of publishing financial statements that are false and misleading to users of
those financial statements. In this situation, what could the American Institute of
Certified Public Accountants (AICPA) do in response to the accountants who were
found guilty of unethical conduct in accounting practices? correct answer- Implement
professional sanctions
What is the correct summary sequence in the accounting cycle? correct answer-
Analyze, Record, Summarize, Prepare
Business documents, such as a sales invoice, a purchase order, or a check stub, are an
important part of the accounting process. From an accounting cycle standpoint, what is
purpose of business documents? correct answer- To confirm that a transaction has
occurred
What is the purpose of the financial accounting cycle? correct answer- To turn
transactions into financial statements and provide useful financial information for
decision makers
What is a transaction in accounting? correct answer- An interaction in which two parties
exchange something of value
In the context of the financial accounting cycle, what is the definition of an account?
correct answer- A specific accounting record that provides an efficient way to categorize
similar types of transactions
, What is an arm's-length transaction? correct answer- An exchange between two
independent parties
Which event represents a transaction recorded as part of the financial accounting
cycle? correct answer- The sale of a product for cash or on account
A company sells a product to a customer on account. Which part(s) of the accounting
equation does this particular transaction change? correct answer- Both assets and
owners' equity
What is an example of an internal transaction? correct answer- An employee is
transferred from one department to another.
Oliver is an accountant for a restaurant supply business that sells dishes, table linens,
and food preparation equipment to restaurants. In preparing the January financial
statements for the company, Oliver must consider all of the financial events that
occurred during the month, including purchases from vendors, sales to customers, and
other transactions.
What is the first step of the financial accounting cycle that Oliver will perform? correct
answer- Analyze transactions
Oliver is an accountant for a restaurant supply business that sells dishes, table linens,
and food preparation equipment to restaurants. In preparing the January financial
statements for the company, Oliver must consider all of the financial events that
occurred during the month, including purchases from vendors, sales to customers, and
other transactions.
Which item is a liability? correct answer- Mortgage
Oliver is an accountant for a restaurant supply business that sells dishes, table linens,
and food preparation equipment to restaurants. In preparing the January financial
statements for the company, Oliver must consider all of the financial events that
occurred during the month, including purchases from vendors, sales to customers, and
other transactions.
Which of the items listed should Oliver record as an external transaction? correct
answer- Purchases of inventory from suppliers
Oliver is an accountant for a restaurant supply business that sells dishes, table linens,
and food preparation equipment to restaurants. In preparing the January financial
statements for the company, Oliver must consider all of the financial events that
occurred during the month, including purchases from vendors, sales to customers, and
other transactions.
