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Book Cover
Financial and Managerial Accounting: The Basis for Business Decisions, 12/e
Jan R. Williams, University of Tennessee
Susan F. Haka, Michigan State University
Mark S. Bettner, Bucknell University
Robert F. Meigs

Accounting for Decision Making

Online Tutorial Quiz

Please answer all questions



1

The primary purpose of accounting is to determine whether the business entity is profitable or unprofitable in its operations.
A)True
B)False
2

Costs, prices, sales volume, profits, and return on investment are all accounting measurements.
A)True
B)False
3

The types of accounting information are limited.
A)True
B)False
4

Accountants use the term financial position to describe an entity's activities during the year.
A)True
B)False
5

Financial accounting information is designed primarily to assist investors and creditors in deciding where to place their scarce investment resources.
A)True
B)False
6

Management accounting involves the development and interpretation of accounting information intended specifically to aid management in acquiring investment resources.
A)True
B)False
7

The most challenging aspect of tax accounting is in the preparation of the many forms required for an entity's tax return.
A)True
B)False
8

An accounting system consists of personnel, procedures, devices, and records used by an organization to develop accounting information and to communicate this information to decision makers.
A)True
B)False
9

The cost of producing the types of accounting reports required by law is always cost-effective.
A)True
B)False
10

External users of financial accounting information are the same users of management accounting information.
A)True
B)False
11

Return of investment and return on investment refer to the same thing--the amount returned at the end of the investment period.
A)True
B)False
12

If you invest $50,000 and receive $52,500 at the end of the investment period, the return on your investment is 5 percent.
A)True
B)False
13

The primary financial statements are an income statement and a balance sheet.
A)True
B)False
14

One financial statement that covers a specific period of time is the balance sheet.
A)True
B)False
15

Externally reported financial information and financial statements are primarily historical in nature.
A)True
B)False
16

Management accounting is the preparation and use of accounting information systems to achieve the organization's objectives by supporting decision makers outside the enterprise.
A)True
B)False
17

Plant managers are internal users of accounting information systems.
A)True
B)False
18

The management accounting information created and used primarily by internal users is intended above all for planning and control decisions.
A)True
B)False
19

One of the specific purposes of management accounting system is to provide information useful to help the enterprise achieve its goals, objectives, and mission.
A)True
B)False
20

Standards adopted and used as a guide in measuring, recording, and reporting the financial affairs and activities of a business are known as accounting concepts.
A)True
B)False
21

Today, the most authoritative source of generally accepted accounting principles is the Financial Accounting Standards Board (FASB).
A)True
B)False
22

The primary purpose of the conceptual framework for financial reporting is to provide guidance to the FASB in developing new accounting standards.
A)True
B)False
23

The Securities and Exchange Commission is a governmental agency with the legal power to establish accounting principles and financial reporting requirements for publicly owned corporations.
A)True
B)False
24

The main purpose of the internal control structure is to detect fraud.
A)True
B)False
25

Uncovering fraud is the primary purpose of an audit.
A)True
B)False
26

The major purpose of an audit is to uncover theft and fraud so that the users of the financial statements can have a high level of assurance that all money is accounted for properly.
A)True
B)False
27

The American Institute of Certified Public Accountants licenses certified public accountants.
A)True
B)False
28

Whichever career in accounting you choose, public, management, financial forecasting, cost accounting, internal auditing, government accounting, or accounting education, it is your obligation as a professional to serve the public's best interest, even at the sacrifice of personal advantage.
A)True
B)False
29

The American Institute of Certified Public Accountants issues the Certificate of Management Accounting (CMA).
A)True
B)False
30

The code of ethics of the Institute of Management Accountants (IMA) includes the requirements of competency, confidentiality, integrity, and subjectivity.
A)True
B)False
31

Which of the following provides information about the financial resources, obligations, and activities of an economic entity that is intended for use primarily by external decision makers?
A)Financial accounting
B)Management accounting
C)Tax accounting
D)Cost accounting
E)Bookkeeping
32

Which of the following provides information that is intended primarily for use by internal management in decision making required to run the business?
A)Financial accounting
B)Management accounting
C)Tax accounting
D)Cost accounting
E)Bookkeeping
33

Which of the following involves the preparation of income tax returns and anticipating the tax effects of business transactions and structuring them in such a way as to minimize the income tax burden?
A)Financial accounting
B)Management accounting
C)Tax accounting
D)Cost accounting
E)Bookkeeping
34

Which of the following involves determining the cost of certain business activities and interpreting cost information?
A)Financial accounting
B)Management accounting
C)Tax accounting
D)Cost accounting
E)Bookkeeping
35

Which of the following refers to recording the routine transactions and day-to-day record keeping of an enterprise?
A)Financial accounting
B)Management accounting
C)Tax accounting
D)Cost accounting
E)Bookkeeping
36

An accounting system is cost-effective when it does which of the following?
A)Produces useful information
B)Produces reports required by law
C)Uses computers to replace manual activities
D)All of the above
E)None of the above
37

The basic functions of an accounting system include which of the following?
A)Interpreting and recording the effects of business transactions
B)Classifying the effects of similar transactions
C)Summarizing and communicating the information contained in the system
D)Only A and B
E)A, B, and C
38

Which of the following financial statements is also known as a statement of financial position?
A)Balance sheet
B)Income statement
C)Statement of cash flows
D)Bank statement
E)None of the above
39

The personnel, procedures, devices, and records used by an organization to develop accounting information and communicate that information to decision makers are called which of the following?
A)Audits
B)Accounting systems
C)Personnel systems
D)Internal control structures
E)None of the above
40

The two things that make up cash flow prospects are which of the following?
A)Return of investment and return on investment
B)Return on investment and timing of investment
C)Return of investment and timing of investment
D)Periodic interest and dividends
E)None of the above
41

Which of the following shows details and results of the company's profit-related activities for a period of time?
A)Balance sheet
B)Income statement
C)Statement of cash flows
D)Statement of financial position
E)None of the above
42

Which of the following shows the details of the company's activities involving cash during a period of time?
A)Income statement
B)Statement of financial position
C)Balance sheet
D)Revenue - Costs = Profits
E)None of the above
43

Which of the following would be considered an external user?
A)Owner
B)Store manager
C)Plant manager
D)Board of directors
E)All of the above
44

You made a $10,000 loan to your cousin's company. At the end of one year, the company returned to you $10,850. The $850 is called which one of the following?
A)Return of investment
B)Return on investment
C)An 8.5% return on investment
D)B and C
E)A and C
45

A characteristic of externally reported information is that it is which of the following?
A)Largely historical in nature
B)May be inexact and contain approximations
C)Is general-purpose in nature
D)Its usefulness is enhanced by explanation
E)All of the above
46

Which of the following would be considered an internal user?
A)Owner
B)Creditor
C)Chief financial officer
D)Labor union
E)None of the above
47

Which of the following is not a characteristic of management accounting information?
A)Timeliness is of importance
B)Decision-making authority is identified
C)Historically oriented
D)Measures efficiency and effectiveness
E)A means to an end, not an end in and of itself
48

Which of the following provides the framework for determining what information is to be included in financial statements and how that information is to be presented?
A)Generally accepted auditing standards
B)Generally accepted amortization standards
C)Accounting standards and practices
D)Securities and Exchange Commission
E)Generally accepted accounting principles
49

Measures used by an organization to guard against errors, waste, and fraud; to assure the reliability of accounting information; to promote compliance with management policies; and to evaluate the level of performance of all divisions of the company, are called which of the following?
A)Audits
B)Internal control structure
C)Internal auditing
D)Integrity
E)None of the above
50

Which of the following enhances the integrity of accounting information?
A)Institutional features can add significantly to the integrity
B)Professional accounting organizations play a significant role
C)Personal competence, judgment, and ethical behavior play a role
D)All of the above
E)Only A and C
51

Which of the following is a professional accounting organization that is dedicated to the promotion and development of the practice of internal auditing?
A)Institute of Internal Auditors
B)Institute of Management Accountants
C)American Institute of CPAs
D)Financial Accounting Standards Board (FASB)
E)American Accounting Association
52

Which of the following is a professional accounting organization that intends to influence the concepts and ethical practice of management accounting and financial management?
A)Institute of Internal Auditors
B)Institute of Management Accountants
C)American Institute of CPAs
D)Financial Accounting Standards Board (FASB)
E)American Accounting Association
53

Which of the following is a professional accounting organization of certified public accountants that engages in a variety of professional activities, including establishing auditing standards, conducting research, and working closely with the FASB in establishing financial reporting standards?
A)Institute of Internal Auditors
B)Institute of Management Accountants
C)American Institute of CPAs
D)Financial Accounting Standards Board (FASB)
E)American Accounting Association
54

The membership of which of the following consists primarily of accounting educators?
A)Institute of Internal Auditors
B)Institute of Management Accountants
C)American Institute of CPAs
D)Financial Accounting Standards Board (FASB)
E)American Accounting Association
55

An investigation of financial statements designed to determine their fairness in relation to generally accepted accounting principles is called which of the following?
A)Internal control structure
B)External control structure
C)Audit
D)Bookkeeping
E)Management accounting
56

Which of the following issues a Certificate in Internal Auditing?
A)Institute of Internal Auditors
B)Institute of Management Accountants
C)American Institute of CPAs
D)Financial Accounting Standards Board (FASB)
E)American Accounting Association
57

Which of the following issues a Certificate in Management Accounting?
A)Institute of Internal Auditors
B)Institute of Management Accountants
C)American Institute of CPAs
D)Financial Accounting Standards Board (FASB)
E)American Accounting Association
58

Which of the following issues licenses to practice as a Certified Public Accountant?
A)Institute of Management Accountants
B)American Institute of CPAs
C)Financial Accounting Standards Board (FASB)
D)American Accounting Association
E)None of the above
59

Expectations of ethical conduct are important for accountants. For management accountants, the code of ethics includes which of the following requirements?
A)Competence
B)Confidentiality
C)Integrity
D)Objectivity
E)All of the above
60

Which of the following is not a government agency?
A)Internal Revenue Service (IRS)
B)Security and Exchange Commission (SEC)
C)General Accounting Office (GAO)
D)American Accounting Association (AAA)
E)Federal Deposit Insurance Corporation#