MAN 1107 CH 16 PRETEST

The reports and financial statements prepared by accountants: 

• are not as useful now that firms have moved into a more global environment.
• provide information that can be used by decision makers both inside and outside the organization.
• are mainly used to help the firm complete its tax forms.
• are more useful for profit-seeking businesses than they are for not-for-profit organizations.

Accounting transactions are very important to a firm's operations. Which of the following activities would affect the firm's account balances? 

• Understanding economic reports
• Interviewing prospective employees
• Forecasting consumer demand
• Buying and selling goods and services

The area of accounting that provides managers inside the organization with information they need to make decisions is called: 

• financial accounting.
• managerial accounting.
• tax accounting.
• informational accounting.

The preparation of financial statements for people outside the firm (creditors, unions, suppliers, and others) is the goal of: 

• cost accounting.
• auditing.
• financial accounting.
• managerial accounting.

The accounting profession follows generally accepted accounting principles as defined by ___________________. 

• the Sarbanes-Oxley Act.
• the FASB (Financial Accounting Standards Board).
• the PCAOB (Public Company Accounting Oversight Board).
• GAAP.

Important provisions of the Sarbanes-Oxley Act: 

• encourage outside CPA firms to deliver several services to their clients, including auditing services and consulting services.
• approve corporate loans to directors of the company.
• require the CEO and CFO of corporations to certify the accuracy of financial reports.
• encourage the destruction of financial documents to minimize identity theft.

__________ is the accounting practice of recording each transaction with a debit and a credit in the accounting journal. 

• Trial balancing
• Double-entry bookkeeping
• Entry duplication
• Account matching

The Balance Sheet, the Statement of Cash Flows, and the ______________ are three key financial statements prepared by accountants.

• Statement of Retained Earnings
• Income Statement
• Statement of Changes in Financial Position
• Trial Balance

The __________ is an accounting statement that reports the financial condition of a firm at a specific point in time. 

• trial balance
• income statement
• balance sheet
• statement of cash flows

Which financial statement reports the company's revenues and selling costs over a period of time?

• trial balance
• income statement
• balance sheet
• statement of cash flows