QUESTION Why do accounting standards require consistency and comparability? A) so that companies can be as profitable as possible B) so that companies’ financial states can be measured meaningfully C) so that companies’ financial results are as reliable as possible D) so that foreign businesses can make sense of American business practices E) so that […]
QUESTION Which of the following is NOT among the standards of the generally accepted accounting principles? A) to ensure that financial statements are relevant B) to ensure that financial statements are reliable C) to ensure that financial statements are comparable D) to ensure that financial statements are affordable E) to ensure that financial statements are […]
QUESTION Shawna, a forensic accountant, has been hired by a large company to test the company’s financial statements. There are questions about the accuracy of records that were entered by bookkeepers. Which of the following steps of the accounting process will Shawna most likely focus on? A) putting transactions into a ledger B) putting journal […]
QUESTION What is the name given to a record book or computer program containing the daily record of a firm’s transactions? A) double-entry book B) accounting log C) financial report D) journal E) ledger ANSWER Answer: D Explanation: D) A journal is a record book or computer program containing the daily record of a […]
QUESTION Why is the format for recording each journal entry known as double-entry bookkeeping? A) because two accountants work together on the journal B) because the journal entries are reviewed twice daily C) because each transaction is recorded in two different accounts D) because photocopies are always taken of each journal page E) because firms […]
QUESTION Which of the following is TRUE of the Financial Accounting Standards Board (FASB)? A) It is a federal agency. B) It is regulated by the government. C) It delegates the primary responsibility for GAAP to the SEC. D) It is responsible for only two of the four generally accepted accounting principles. E) It establishes, […]
QUESTION Which of the following is one of the organizations in which the authority for the GAAP rests? A) Securities and Exchange Commission B) Governmental Accounting Board of Standards C) Government Accountability Office D) Federal Accounting Board of Management E) Congress ANSWER Answer: A Explanation: A) The authority for the GAAP is with two […]
QUESTION Net sales are the funds received from all sales of the firm’s products. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: Gross sales are the funds received from all sales of the firm’s products. Net sales are what are left after sales returns and allowances are subtracted from gross […]
QUESTION Which of the following is a formal evaluation of a client’s financial records? A) annual report B) double-entry bookkeeping C) budget D) audit E) trial balance ANSWER Answer: D Explanation: D) An audit is a formal evaluation of a client’s financial records, usually by an outside independent agent, to determine their fairness and […]
QUESTION The debt to owners’ equity ratio measures the extent to which a company uses debt to finance its operations. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: The debt to owners’ ratio consists of total liabilities divided by owners’ equity. If it is high, it means liabilities are too […]
