QUESTION An important task for a nonprofit accountant is to provide financial transparency. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: The most important tasks for nonprofit accountants are not only to determine if the organization is staying within its budget but also to provide financial transparency—that is, give contributors […]
QUESTION Current assets are chiefly important because of their net worth. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: The essential characteristic of current assets is their liquidity: their ability to be converted into cash within one year.
QUESTION Government accounting standards are set by Congress. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: Government accounting standards are set by the Governmental Accounting Standards Board.
QUESTION Fixed assets are expected to be used for a long period of time. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: Fixed assets are those that are expected to be used for several years.
QUESTION External auditors perform independent audits. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: External auditors are public accountants who audit or review clients’ financial information to see whether it was prepared under generally accepted accounting principles. Such audits are called independent audits because they are done by firms that […]
QUESTION Current assets are defined as items that can be converted into cash within one year. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: Current assets include not only cash itself, but also marketable securities, accounts receivable, and merchandise inventory—all items that can be converted into cash within one year.
QUESTION A public accountant may work with an accounting firm. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: Public accountants have the choice of either working as an individual practitioner or as a CPA with an accounting firm.
QUESTION The advent of computers and accounting software has made the services of accountants unnecessary. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: Although computers and accounting have vastly speeded up and simplified accounting, accountants are still necessary and to some extent have been freed up to more productively focus […]
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.
