,Atrill, Accounting 8e
Chapter 1: Introduction to accounting
LO 1.1 Explain the nature and role of accounting
Multiple choice: Choose the alternative(s) that best completes the statement
or answers the question.
1. Which of the following is the most important function of an accounting system?
A. provide information for decision-making, planning and control.
B. keep employees from embezzling funds.
C. prepare accounting reports
D. collect and record data.
Answer: A
Difficulty: Moderate
Learning Objective 1.1: Explain the nature and role of accounting
A-Head: Nature and role of accounting
AACSB: 8 – Application of knowledge
2. The best description of the primary purpose of providing accounting information is:
A. to allow the preparation of a taxation return.
B. to calculate the bank account balance.
C. to assist users in making informed decisions
D. to enable the financial statements to be prepared.
Answer: C
Difficulty: Basic
Learning Objective 1.1: Explain the nature and role of accounting
A-Head: Nature and role of accounting
AACSB: 8 – Application of knowledge
3. The stages of an accounting system are:
A. evaluation, processing, output.
B. identification, recording, analysis, reporting.
C. setting objectives, planning, analysis.
D. none of the above.
Answer: B
Copyright ©2021 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –
9781488625695/Atrill/Accounting/8e
,Difficulty: Complex
Learning Objective 1.1: Explain the nature and role of accounting
A-Head: Nature and role of accounting
AACSB: 3 – Analytical thinking
4. What are the four key qualities of accounting information?
A. relevance, materiality, comparability, and understandability.
B. identification, analysis, planning, and timeliness.
C. planning, control, comparability and analysis
D. understandability, identification, analysis, and relevance.
Answer: A
Difficulty: Complex
Learning Objective 1.1: Explain the nature and role of accounting
A-Head: Nature and role of accounting
AACSB: 8 – Application of knowledge
5. The best explanation of relevance is:
A. ensuring that information is useful for decision-making.
B. ensuring that information is expressed as clearly as possible.
C. ensuring the benefit of the information is greater than the cost of providing it.
D. ensuring that information is free from bias.
Answer: A
Difficulty: Moderate
Learning Objective 1.1: Explain the nature and role of accounting
A-Head: Nature and role of accounting
AACSB: 8 – Application of knowledge
6. The quality of accounting information that requires items that are basically the same to
be treated in the same manner is:
A. relevance.
B. timeliness.
C. understandability.
D. comparability.
Answer: D
Difficulty: Moderate
Learning Objective 1.1: Explain the nature and role of accounting
A-Head: Nature and role of accounting
AACSB: 8 – Application of knowledge
7. Which of these is a reason why achieving the maximum possible profit in a particular
year may not be in the best interests of a business?
A. Concentrating on the short-term may have detrimental effects in the long-term.
B. It may be achieved by causing environmental problems, which give the business a
bad reputation.
C. If it is achieved with high-risk strategies, such as excessive reliance on borrowings,
it could lead to disaster in the longer term.
D. All of the above.
Answer: D
Difficulty: Moderate
Learning Objective 1.1: Explain the nature and role of accounting
A-Head: Nature and role of accounting
AACSB: 3 – Analytical thinking
2
Copyright ©2021 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –
9781488625695/Atrill/Accounting/8e
, 8. Which test determines if an item of accounting information is worthwhile collecting?
A. cost test.
B. cost/benefit test.
C. worthwhile test.
D. validation test.
Answer: B
Difficulty: Moderate
Learning Objective 1.1: Explain the nature and role of accounting
A-Head: Nature and role of accounting
AACSB: 3 – Analytical thinking
9. The characteristic of accounting information that requires financial reports to be
expressed as clearly as possible and to be capable of being understood by those they
are addressed to, is known as:
A. understandability.
B. control.
C. cost versus benefit test.
D. relevance.
Answer: A
Difficulty: Moderate
Learning Objective 1.1: Explain the nature and role of accounting
A-Head: Nature and role of accounting
AACSB: 1 – Written and oral communication
10. The statement concerning the key qualities of accounting information that is untrue is:
A. the qualities are frequently in conflict.
B. relevant information may help to predict future events or confirm past events.
C. relevant information often contains a degree of subjectivity.
D. None of the statements is untrue, i.e., all are true statements.
Answer: D
Difficulty: Complex
Learning Objective 1.1: Explain the nature and role of accounting
A-Head: Nature and role of accounting
AACSB: 3 – Analytical thinking
11. Which of these is not one of the key qualities of accounting information?
A. Timeliness.
B. Comparability.
C. Relevance .
D. Control.
Answer: D
Difficulty: Complex
Learning Objective 1.1: Explain the nature and role of accounting
A-Head: Nature and role of accounting
AACSB: 3 – Analytical thinking
12. Which statement concerned with establishing the costs and benefits of accounting
information is true?
A. It is usually easier to establish benefits than costs.
B. It is normally easy to establish both the costs and the benefits.
C. Both the costs and benefits are normally difficult to assess.
3
Copyright ©2021 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –
9781488625695/Atrill/Accounting/8e
Chapter 1: Introduction to accounting
LO 1.1 Explain the nature and role of accounting
Multiple choice: Choose the alternative(s) that best completes the statement
or answers the question.
1. Which of the following is the most important function of an accounting system?
A. provide information for decision-making, planning and control.
B. keep employees from embezzling funds.
C. prepare accounting reports
D. collect and record data.
Answer: A
Difficulty: Moderate
Learning Objective 1.1: Explain the nature and role of accounting
A-Head: Nature and role of accounting
AACSB: 8 – Application of knowledge
2. The best description of the primary purpose of providing accounting information is:
A. to allow the preparation of a taxation return.
B. to calculate the bank account balance.
C. to assist users in making informed decisions
D. to enable the financial statements to be prepared.
Answer: C
Difficulty: Basic
Learning Objective 1.1: Explain the nature and role of accounting
A-Head: Nature and role of accounting
AACSB: 8 – Application of knowledge
3. The stages of an accounting system are:
A. evaluation, processing, output.
B. identification, recording, analysis, reporting.
C. setting objectives, planning, analysis.
D. none of the above.
Answer: B
Copyright ©2021 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –
9781488625695/Atrill/Accounting/8e
,Difficulty: Complex
Learning Objective 1.1: Explain the nature and role of accounting
A-Head: Nature and role of accounting
AACSB: 3 – Analytical thinking
4. What are the four key qualities of accounting information?
A. relevance, materiality, comparability, and understandability.
B. identification, analysis, planning, and timeliness.
C. planning, control, comparability and analysis
D. understandability, identification, analysis, and relevance.
Answer: A
Difficulty: Complex
Learning Objective 1.1: Explain the nature and role of accounting
A-Head: Nature and role of accounting
AACSB: 8 – Application of knowledge
5. The best explanation of relevance is:
A. ensuring that information is useful for decision-making.
B. ensuring that information is expressed as clearly as possible.
C. ensuring the benefit of the information is greater than the cost of providing it.
D. ensuring that information is free from bias.
Answer: A
Difficulty: Moderate
Learning Objective 1.1: Explain the nature and role of accounting
A-Head: Nature and role of accounting
AACSB: 8 – Application of knowledge
6. The quality of accounting information that requires items that are basically the same to
be treated in the same manner is:
A. relevance.
B. timeliness.
C. understandability.
D. comparability.
Answer: D
Difficulty: Moderate
Learning Objective 1.1: Explain the nature and role of accounting
A-Head: Nature and role of accounting
AACSB: 8 – Application of knowledge
7. Which of these is a reason why achieving the maximum possible profit in a particular
year may not be in the best interests of a business?
A. Concentrating on the short-term may have detrimental effects in the long-term.
B. It may be achieved by causing environmental problems, which give the business a
bad reputation.
C. If it is achieved with high-risk strategies, such as excessive reliance on borrowings,
it could lead to disaster in the longer term.
D. All of the above.
Answer: D
Difficulty: Moderate
Learning Objective 1.1: Explain the nature and role of accounting
A-Head: Nature and role of accounting
AACSB: 3 – Analytical thinking
2
Copyright ©2021 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –
9781488625695/Atrill/Accounting/8e
, 8. Which test determines if an item of accounting information is worthwhile collecting?
A. cost test.
B. cost/benefit test.
C. worthwhile test.
D. validation test.
Answer: B
Difficulty: Moderate
Learning Objective 1.1: Explain the nature and role of accounting
A-Head: Nature and role of accounting
AACSB: 3 – Analytical thinking
9. The characteristic of accounting information that requires financial reports to be
expressed as clearly as possible and to be capable of being understood by those they
are addressed to, is known as:
A. understandability.
B. control.
C. cost versus benefit test.
D. relevance.
Answer: A
Difficulty: Moderate
Learning Objective 1.1: Explain the nature and role of accounting
A-Head: Nature and role of accounting
AACSB: 1 – Written and oral communication
10. The statement concerning the key qualities of accounting information that is untrue is:
A. the qualities are frequently in conflict.
B. relevant information may help to predict future events or confirm past events.
C. relevant information often contains a degree of subjectivity.
D. None of the statements is untrue, i.e., all are true statements.
Answer: D
Difficulty: Complex
Learning Objective 1.1: Explain the nature and role of accounting
A-Head: Nature and role of accounting
AACSB: 3 – Analytical thinking
11. Which of these is not one of the key qualities of accounting information?
A. Timeliness.
B. Comparability.
C. Relevance .
D. Control.
Answer: D
Difficulty: Complex
Learning Objective 1.1: Explain the nature and role of accounting
A-Head: Nature and role of accounting
AACSB: 3 – Analytical thinking
12. Which statement concerned with establishing the costs and benefits of accounting
information is true?
A. It is usually easier to establish benefits than costs.
B. It is normally easy to establish both the costs and the benefits.
C. Both the costs and benefits are normally difficult to assess.
3
Copyright ©2021 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –
9781488625695/Atrill/Accounting/8e
