FABM Review: Lessons 1 & 2

Accountants employed by a particular business firm or not-for-profit organization, perhaps as chief accountant, controller or financial vice president, are said to be engaged in

• Public Accounting

• Practice in Commerce and Industry

• Taxation

• Government Accounting

The basic purpose of accounting is

• To provide the information that the managers of an economic entity need to control its operations

• To provide information that the creditors of an economic entity can use in deciding whether to make additional loans to the entity

• To measure the periodic income of the economic entity

• To provide quantitative financial information about a business enterprise that is useful in making rational economic decisions

Which area of public accounting means the examination of financial statements by a CPA for the purpose of expressing an opinion as to the fairness of the statements?

• Management Advisory Services

• Taxation

• Internal Auditing

• External Auditing

Which statement is false?

• Accounting is the language of business

• Accountants are the scorekeepers of business

• Accounting is dispensable in the world of business

• None of the above

The preparation of subsequent publication of highly summarized information

• Auditing

• Financial accounting

• Forensic accounting

• Taxation

In this phase, business transactions are recorded thematically and chronologically in the proper accounting books.

• Recording

• Classifying

• Summarizing

• Interpreting

Accounting is a service activity. Its function is to provide quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions. This is defined by

• Accounting Standards Council, 1983

• Financial Accounting Standards Board, 1978

• American Accounting Association, 1996

• American Institute of Certified Public Accountants, 1953

Setting financial objectives, making plans, obtaining finance, and safeguarding the financial resources of the entity

• Auditing

• Financial accounting

• Financial management

• Management accounting

The mechanical task involving the collection of basic financial data

• Bookkeeping

• Accountancy 

• Auditing

• Taxation

Summarization reduces the effects of numerous transactions into useful groups or categories.

• True

• False