QUESTION Bradley is a CPA in Chicago. He offers many important services to his clients. Which of the following is LEAST likely to be among the services Bradley offers? A) independent audits B) tax accounting C) management advisory services D) forensic accounting E) accounting system design ANSWER Answer: D Explanation: D) The principal services […]
QUESTION Howard is a public accountant working for a local nonprofit. How is he likely being paid for his accounting services? A) a fee basis B) as a hired employee C) a salaried basis D) a standard industry rate E) only during income tax season ANSWER Answer: A Explanation: A) Unlike private accountants, who […]
QUESTION Which is the main kind of audit that external auditors typically provide? A) independent audits B) certified internal audits C) forensic audits D) not-for-profit audits E) private audits ANSWER Answer: A Explanation: A) External auditors provide independent audits because they are not otherwise affiliated with the company that they are auditing.
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 […]
QUESTION Which of the following occurred as a direct result of a specific high-profile accounting scandal? A) the beginning of forensic accounting B) the beginning of independent audits C) the enactment of the Sarbanes-Oxley Act of 2002 D) the creation of the Government Accountability Office E) the rise of not-for-profit accounting ANSWER Answer: C […]
QUESTION The purpose of double-entry bookkeeping is to act as a check on errors. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: Double-entry bookkeeping acts as a check on errors because each transaction is recorded in two different accounts: both as a credit and a debit.
QUESTION Accounting principles used by different accountants may vary. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: Accounting relies on generally accepted accounting principles as standards to ensure financial statements are relevant, reliable, consistent, and comparable.
QUESTION The accounting process begins with assessing the firm’s financial condition using ratio analysis. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: The last phase of the accounting process is to assess the firm’s financial condition using ratio analysis. The accounting process begins by collecting the results of bookkeeping—that is, […]
