Financial Accounting (Chapter 1)

Which of the following does not describe accounting

• Language of business

• Is an end rather than a means to an end

• Useful for decision making

• Used by businesses, government, non-profit organizations and individuals

To unnderstand and use accounting information in making economic decisions, you must understand

• The nature of economic activities that accounting information describes.

• The assumptions and measurement techniques involved in developing accounting information.

• Which information is relevant for a particular type of decision that is being made.

• All of the above.

External users of financial accounting information include all of the following except

• Investors

• Labor unions

• Line managers

• General public

Objectives of financial reporting to external investors and creditors include preparing information about all the following except

• Information used to determine which products to produce

• Information about economic resources, claims to those resources and changes in both resources and claims

• Information that is important in assessing the amount, timing and uncertainty of future cash flows

• Information that is useful in making investment and credit decisions

Purpose of an accounting system include all of the following except

• Interpret and record the effects of business transactions

• Classify the effects of transactions to facilitate preparation of reports.

• Dictate the specific types of business transactions that the enterprise may engage in

• Summarize and communicate the information to decision makers.

Financial accounting information is characterized by all of the following except

• It is historical in nature

• It results from inexact and approximate measures

• It is factual, so it does not require judgement to prepare

• It is enhanced by management's explanation.

Which of the following is not a user of management accounting information?

• Store manager

• Chief Executive Officer

• Creditor

• Chief Financial Officer

Characteristics of management accounting information include all of the following except

• It is audited by a CPA

• It must be timely

• It is oriented towards the future

• It meaures efficiency and effectiveness

The primary standard-setting body in the United States tasked with responsibility of ddetermining generally accepted accounting principles (GAAP) is the

• General Accounting Office (GAO)

• Financial Accounting Standards Board (FASB)

• Institute of Internal Auditors

• Institute of Management Accountants

Which of the following is not an objective of management accounting

• Assigning decision-making authority over enterprise’s resources to the employees

• Providing wealth of information for supporting decision-making activity

• Dictate the specific types of business transactions that the enterprise may engage in

• i.Evaluate and reward decision making performance.