Quantitative reports and related verbal disclosures that convey monetary information as a basis for representing its financial health and future prospects are called:

Select one:

a. misstatements.

b. supplemental statements.

c. financial statements.

d. statement of notes and disclosures.

e. annexures.

Who is involved in the day-to-day operations of a corporation?

Select one:

a. Board of directors

b. Stockholders

c. Government

d. Creditors

e. Management

Which of the following statements is true of financial accounting?

Select one:

a. It is used to make lease or purchase decisions.

b. It is primarily used to make internal decisions of a business.

c. It is used by external parties to make investment decisions.

d. Managerial accounting is another name for financial accounting.

e. The effectiveness of advertising can be judged using financial accounting.

Who are the common users of financial and managerial accounting information?

Select one:

a. Government

b. Managers

c. Shareholders

d. Competitors

e. Customers

Which of the following is one of the major challenges faced by an accountant?

Select one:

a. Deciding which accounting standard to follow

b. Determining if a transaction is affecting asset, liability, revenue or expense

c. Setting structural rules and principles for reporting

d. Reporting events in the face of uncertainty

e. Developing terminologies for financial accounting

Which of the following statements is true of financial accounting?

Select one:

a. Exactness is the goal of financial accounting.

b. Financial accounting information is free from uncertainties.

c. Accounting is referred to as the language of business.

d. Financial accounting doesnt have its own set of terminology, making it difficult to interpret financial information.

e. Financial accounting is limited to access the future prospects of an organization.

Which of the following is a decision that would most likely involve managerial accounting information?

Select one:

a. Loaning money to another company

b. Deciding whether to buy or rent equipment

c. Investing in the stock of another company

d. Deciding whether to extend credit to a potential customer

e. Choosing which employer to work for based on future prospects

The group stockholders elected to oversee their corporation is _____.

Select one:

a. management

b. the board of directors

c. employees

d. a stock exchange

e. investors

Which of the following is true of financial statements?

Select one:

a. Financial statements are distributed only to the employees of a company.

b. Financial statements are limited to a representation of a companys operation.

c. Financial statements will create a likeness of the reporting organization.

d. Financial statements provide employee details.

e. Financial statements are exactly accurate.

Financial accounting rules require interest to be reported at a reasonable rate:

Select one:

a. at the beginning of the accounting period.

b. when a floating rate is set by the creditor.

c. when specified interest rate is higher than market rate.

d. when specified interest rate is less than market rate.

e. when interest rate is not specifically mentioned in the debt agreement.

As accounting is a business language, which of the following guides the reporting process so that the resulting accounting information will be fairly presented and readily understood by all interested parties?

Select one:

a. Guidance document attached to financial statements

b. Grammar rules

c. Syntax and punctuation

d. Structural rules and principles

e. Decision-making process

Which of the following is a requirement for successful communication of financial information?

Select one:

a. Presence of exact numbers

b. Nonexistence of uncertainties

c. The structural rules must be understood by all parties involved.

d. Receiver being a close-minded

e. Nonexistence of defined set of terminology

Which of the following decisions would be considered more of a managerial accounting decision than a financial accounting decision?

Select one:

a. Loaning money to Company X instead of Company Y

b. Determining that Company J is more profitable than Company K

c. Investing in the stock of Company T instead of Company U

d. Deciding the price to be charged for a new product

e. Deciding whether to extend credit to Company L

Who among the following are the users of managerial accounting information?

Select one:

a. Lender

b. Competitors

c. Government

d. Third Party Investor

e. Board of Directors

Which of the following statements is true of financial accounting?

Select one:

a. Managerial accounting is a branch of financial accounting.

b. Financial accounting reports are based on accounting principles.

c. Financial accounting and managerial accounting have same objectives.

d. Financial accounting information has no relevance for the employees of a company.

e. Financial accounting is optional for companies.

Which of the following statements is true of financial information?

Select one:

a. It should always be exactly accurate.

b. It does not represent the likeliness of an organization, if it is not exact.

c. It is free from uncertainties.

d. It can be useful even if it is not exact.

e. It almost always does contains material misstatements.

Who hires the management of a corporation?

Select one:

a. Board of directors

b. Stockholders

c. Government

d. Creditors

e. SEC

Which of the following is an accidental misstatement?

Select one:

a. Error

b. Materiality

c. Representational faithfulness

d. Irrelevance

e. Fraud

Financial statements are a representation of an organizations:

Select one:

a. frauds.

b. operations.

c. competitors.

d. threats.

e. work union.

An error (made accidentally) or fraud (done intentionally) where reported figures or words actually differ from the underlying reality is called a(n):

Select one:

a. inconsistency.

b. insincerity.

c. misstatement.

d. uncertainty.

e. materiality.

The communication of financial information within an organization so that internal decisions can be made in an appropriate manner is known as:

Select one:

a. financial accounting.

b. managerial accounting.

c. cost analysis.

d. tax accounting.

e. information analysis.

Which of the following is an intentional misstatement?

Select one:

a. Error

b. Mistake

c. Representational faithfulness

d. Fraud

e. Materiality

Which of the following is an intentional misstatement?

Select one:

a. Error

b. Mistake

c. Representational faithfulness

d. Fraud

e. Materiality

NASDAQ refers to:

Select one:

a. National Association of Securities Dealers Automated Quotations.

b. National Association of Stock Dealers Automated Quotations.

c. National Association of Shares Dealers Automated Quotations.

d. National Administration for Shares Dealers Automated Quotations.

e. National Administration of Securities Dealers Automated Quotations.

Legal process by which owners of an organization apply to a state government to have it identified as an entity legally separate from its owners is called:

Select one:

a. incorporation.

b. registration.

c. filling.

d. stocking.

e. attributing.

Which of the following is a factor pertaining to knowledge of information that will affect a decision made by a user from that information?

Select one:

a. Materiality

b. Representation faithfulness

c. Error

d. Misstatement

e. Fraud

Which of the following is a common feature of financial and managerial accounting?

Select one:

a. Both have same objectives

b. Both are reported at year end in the annual report

c. Both are analyzed by external users while making investment decisions

d. Both are used by the management in making decisions

e. Both are prepared according to U.S. GAAP

Financial information that contains no material misstatements in accordance with an accepted standard for financial reporting is termed as:

Select one:

a. free from uncertainty.

b. fairly presented.

c. fraudulent reporting.

d. universal reporting.

e. inconsistent.

Financial information is not fairly presented if it contains:

Select one:

a. verbal explanations

b. intangible assets.

c. material misstatement.

d. contingent liability.

e. assumptions.

Which of the following is the largest stock exchange in the world?

Select one:

a. NASDAQ

b. New York Stock Exchange

c. London Stock Exchange

d. Tokyo Stock Exchange

e. Shanghai Stock Exchange

Which of the following is true of misstatement?

Select one:

a. A misstatement is of two types: inconsistency and inaccuracy.

b. Misstatement always leads to liquidation of a company.

c. Only the cause should be weighed in considering whether the misstatement is material or not.

d. A misstatement is deemed to be material if it is so significant that its presence would impact a decision made by an interested party

e. Financial information is said to be fairly presented, even though material misstatement exists.

Who elects a corporations board of directors?

Select one:

a. Management

b. Stockholders

c. Employees

d. Creditor

e. Government

Which of the following is an example of an uncertainty faced by an organization?

Select one:

a. Monthly rent expense paid on office building

b. Cash balance reported on a bank statement

c. Annual salary paid to an employee

d. Current cash balance reported on a companys financial statement

e. Cash bonus to be paid to employees based on companys stock price

An advantage of ownership in a corporation over ownership in a partnership is:

Select one:

a. tax benefits.

b. easy establishment.

c. each stockholder has a say in the operation of the corporation.

d. the ability to raise capital through issuance of stock.

e. owner decides the amount of dividend to be distributed.

A company constructs a building and reports the cost of construction at $400 million. Which of the following is a true statement?

Select one:

a. The company cannot spend more than $400 million on the building.

b. The accountant would never let the amount of $400 million be reported if it were not right down to the penny.

c. Reporting $400 million in the financial statement will lead to material misstatement.

d. To be fairly presented, the true cost of the building cannot be materially different from $400 million.

e. Investors will expect that $400 million was the exact cost of the building.

Which of the following has the authority to formally recognize a business as a separate legal entity?

Select one:

a. FASB

b. State Government

c. NASDAQ

d. Board of Directors

e. SEC

Which of the following are the two types of misstatements?

Select one:

a. Materiality and fraud

b. Fraud and errors

c. Errors and mismatch

d. Materiality and errors

e. Fraud and issues

Which of the following factors is considered in judging if the misstatements are material?

Select one:

a. People responsible for the misstatement

b. Profits made by the company

c. Number of employees in the company

d. Size and cause of the misstatement

e. Competitors profits

An advantage of ownership in a sole proprietorship over ownership in a corporation is:

Select one:

a. separation of owner and business as legal entities.

b. tax benefits.

c. the ability to raise capital through issuance of stock.

d. limited liability for debts.

e. having a board of directors.

The communication of an appropriate picture of an organization, which can serve as the basis for appropriate decisions is termed as:

Select one:

a. representational faithfulness.

b. material misstatement.

c. conservatism.

d. principle of prudence.

e. certainty.