Chapter 8 Review

Stockholders typically want to view a firm's accounting information to:

• be aware of possible layoffs in the future.

• understand the workloads of low-level employees

• know if management has generated a strong-enough return on investment

• check if the firm has enough funds to pay for the orders it has placed

____ work within their organizations to detect problems such as waste, mismanagement, embezzlement, and employee theft.

• Revenue officers

• Internal Referees

• Internal Auditors

• Gazetted Officers

Generally accepted accounting principles (GAAP) are a set of accounting standards that us used in the:

• conversion of currencies.

• evaluation of employee payroll.

• assessment of export taxes.

• preparation of financial statements.

In the United States, the ultimate legal authority to set and enforce accounting standards lies with the ____.

• Domestic Banking Association

• Fund Standards Board

• Securities and Exchange Commission

• Internal Revenue Service

In the United States, the Securities and Exchange Commission had delegated the responsibility for developing accounting standards to a private organization called ____.

• International Finance and Funding Board

• Financial Accounting Standards Board

• Federal Accounting Standards Advisory Board

• Association of Accounting Technicians Board

The major responsibilities involved in financial accounting are the preparation of the:

• statutory license, social audit report, and journal ledger.

• journal ledger, cash budget, and company bylaws.

• articles of incorporation, auditor's report, and master budget.

• balance sheet, income statement, and statement of cash flows.

In the context of financial statements, _____ are debts that come due within a year of the date on the balance sheet.

• contingent liabilities

• decennial liabilities

• alternative liabilities

• current liabilities

____ refers to the claims owners have against their firm's assets.

• Preferred stock

• Stockholders' equity

• Minority interest

• Owners' liability

Which of the following serves to be the rationale behind the accounting equation?

• A firm's assets should be bought through the contingency fund of the firm and part through public funding.

• A firm must finance the purchase of their assets, and the owners and no-owners should be contribute toward it.

• The value of a firm's assets must be equal to the owners' equity and the revenue earned by the firm's activities.

• The average amount spent on the salary of the employees of a firm should be equal to the value of the assets of the firm.

Increases in a firm's assets that result from the sale of good, provision of services. or other activities intended to earn income are refereed to as ____.

• debt

• equity

• liability

• revenue