Principles of Financial and Managerial
Accounting - D196 with correct Answers
2025
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.
Identifying the issue is the first step in the decision-making process.
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
True or False: Accountants measure and communicate the results of business activities.
- CORRECT ANSWER-True
Which primary area of accounting generates reports for internal users? - CORRECT
ANSWER-Management accounting- generates reports for internal users, such as
budgets and cost analyses.
Which group uses financial information to evaluate whether a company will be able to
repay a loan? - CORRECT ANSWER-Lenders -
Lenders are interested in whether or not a company will be able to repay a loan, so they
use financial information to analyze the company's financial ability to do so.
Which of the primary financial statements reports the resources, obligations, and
owner's equity of a company? - CORRECT ANSWER-Balance sheet- Balance sheet
reports the resources of a company (the assets), the company's obligations (the
liabilities), and the owners' equity, which represents the difference between what is
owned (assets) and what is owed (liabilities).
,Statement of cash flows
What group of people make up the FASB? - CORRECT ANSWER-Auditors, corporate
accountants, analysts, and accounting academics. The FASB is not directly controlled
by the SEC, although SEC input is extremely important to the FASB in its deliberations.
What is the role of the GASB in setting accounting standards? - CORRECT ANSWER-a
private-sector organization that establishes accounting and financial reporting standards
for U.S. state and local governments.
What is the role of the IASB in regulating accounting standards? - CORRECT
ANSWER-Establish international accounting standards. A private organization based in
London. Currently, does not have legal authority to set accounting standards for U.S.
companies,
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. The flexibility inherent in the
assumptions underlying the preparation of financial statements means that an
accountant can intentionally deceive financial statement users and yet still technically
be in compliance with GAAP.
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.Accountants are in the "trust" business. If users of the financial information
that is being prepared do not have confidence in, or do not trust, the information that is
being provided to make business decisions, then the role of the accountant becomes far
less important. If accountants and the accounting system are not reliable and
trustworthy, then the value of the information they produce is lower.
What is the role of the IRS - CORRECT ANSWER-To ensure that tax filing complies
with financial accounting standards.
What is the purpose of Financial reports? - CORRECT ANSWER-Used by individuals
and organizations that have an economic interest in the business. They provide
information about the financial performance of a company.
Bank statements
Which user of accounting information will monitor data to ensure that the company is
providing sufficient information for investors? - CORRECT ANSWER-Government
agencies SEC
, 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
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
They can enforce professional sanctions by taking away the CPA designation from an
accountant who has acted unethically.
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.
What is the first step of the financial accounting cycle - CORRECT ANSWER-Analyze
transactions
Which item is a liability? - CORRECT ANSWER-Inventory
Accounting - D196 with correct Answers
2025
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.
Identifying the issue is the first step in the decision-making process.
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
True or False: Accountants measure and communicate the results of business activities.
- CORRECT ANSWER-True
Which primary area of accounting generates reports for internal users? - CORRECT
ANSWER-Management accounting- generates reports for internal users, such as
budgets and cost analyses.
Which group uses financial information to evaluate whether a company will be able to
repay a loan? - CORRECT ANSWER-Lenders -
Lenders are interested in whether or not a company will be able to repay a loan, so they
use financial information to analyze the company's financial ability to do so.
Which of the primary financial statements reports the resources, obligations, and
owner's equity of a company? - CORRECT ANSWER-Balance sheet- Balance sheet
reports the resources of a company (the assets), the company's obligations (the
liabilities), and the owners' equity, which represents the difference between what is
owned (assets) and what is owed (liabilities).
,Statement of cash flows
What group of people make up the FASB? - CORRECT ANSWER-Auditors, corporate
accountants, analysts, and accounting academics. The FASB is not directly controlled
by the SEC, although SEC input is extremely important to the FASB in its deliberations.
What is the role of the GASB in setting accounting standards? - CORRECT ANSWER-a
private-sector organization that establishes accounting and financial reporting standards
for U.S. state and local governments.
What is the role of the IASB in regulating accounting standards? - CORRECT
ANSWER-Establish international accounting standards. A private organization based in
London. Currently, does not have legal authority to set accounting standards for U.S.
companies,
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. The flexibility inherent in the
assumptions underlying the preparation of financial statements means that an
accountant can intentionally deceive financial statement users and yet still technically
be in compliance with GAAP.
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.Accountants are in the "trust" business. If users of the financial information
that is being prepared do not have confidence in, or do not trust, the information that is
being provided to make business decisions, then the role of the accountant becomes far
less important. If accountants and the accounting system are not reliable and
trustworthy, then the value of the information they produce is lower.
What is the role of the IRS - CORRECT ANSWER-To ensure that tax filing complies
with financial accounting standards.
What is the purpose of Financial reports? - CORRECT ANSWER-Used by individuals
and organizations that have an economic interest in the business. They provide
information about the financial performance of a company.
Bank statements
Which user of accounting information will monitor data to ensure that the company is
providing sufficient information for investors? - CORRECT ANSWER-Government
agencies SEC
, 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
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
They can enforce professional sanctions by taking away the CPA designation from an
accountant who has acted unethically.
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.
What is the first step of the financial accounting cycle - CORRECT ANSWER-Analyze
transactions
Which item is a liability? - CORRECT ANSWER-Inventory
