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Worksheetspoa 01.01
Total questions: 48
Worksheet time: 24mins
Name
Class
Date
1.
Accountants refer to an economic event as a
a)
a. purchase
b)
b. sale
c)
c. transaction
d)
d. change in ownership
2.
The process of recording transactions has become more efficient because
a)
a. fewer events can be quantified in financial terms
b)
b. computers are used in processing business events
c)
c. more people have been hired to record business transactions
d)
d. business events are recorded only at the end of the year
3.
Communication of economic events is the part of the accounting process that involves
a)
a. identifying economic events
b)
b. quantifying transactions into dollars and cents
c)
c. preparing accounting reports
d)
d. recording and classifying information
4.
Which of the following events cannot be quantified into dollars and cents and recorded as an accounting transaction?
a)
a. The appointment of a new CPA firm to perform an audit
b)
b. The purchase of a new computer
c)
c. The sale of store equipment
d)
d. Payment of income taxes
5.
The use of computers in recording business events
a)
a. has made the recording process more efficient
b)
b. does not use the same principles as manual accounting systems
c)
c. has greatly impacted the identification stage of the accounting process
d)
d. is economical only for large businesses
6.
The accounting process involves all of the following except
a)
a. identifying economic transactions that are relevant to the business
b)
b. communicating financial information to users by preparing financial reports
c)
c. recording nonquantifiable economic events
d)
d. analyzing and interpreting financial reports
7.
The accounting process is correctly sequenced as
a)
a. identification, communication, recording
b)
b. recording, communication, identification
c)
c. identification, recording, communication
d)
d. communication, recording, identification
8.
Which of the following techniques are not used by accountants to interpret and report financial information?
a)
a. Graphs
b)
b. Special memos for each class of external users
c)
c. Charts
d)
d. Ratios
9.
Which of the following would not be considered an internal user of accounting data for the XYZ Company?
a)
a. President of the company
b)
b. Production manager
c)
c. Merchandise inventory clerk
d)
d. President of the employees' labor union
10.
Which of the following would not be considered an external user of accounting data for the XYZ Company?
a)
a. Internal Revenue Service Agent
b)
b. Management
c)
c. Creditors
d)
d. Customers
11.
Which of the following would not be considered internal users of accounting data for a company?
a)
a. The president of a company
b)
b. The controller of a company
c)
c. Creditors of a company
d)
d. Salesmen of the company
12.
Which of the following is an external user of accounting information?
a)
a. Labor unions
b)
b. Finance directors
c)
c. Company officers
d)
d. Managers
13.
Which one of the following is not an external user of accounting information?
a)
a. Regulatory agencies
b)
b. Customers
c)
c. Investors
d)
d. All of these are external users
14.
Bookkeeping differs from accounting in that bookkeeping primarily involves which part of the accounting process?
a)
a. Identification
b)
b. Communication
c)
c. Recording
d)
d. Analysis
15.
All of the following are services offered by public accountants except
a)
a. budgeting
b)
b. auditing
c)
c. tax planning
d)
d. consulting
16.
Which list below best describes the major services performed by public accountants?
a)
a. Bookkeeping, mergers, budgets
b)
b. Employee training, auditing, bookkeeping
c)
c. Auditing, taxation, management consulting
d)
d. Cost accounting, production scheduling, recruiting
17.
Preparing tax returns and engaging in tax planning is performed by
a)
a. public accountants only
b)
b. private accountants only
c)
c. both public and private accountants
d)
d. IRS accountants only
18.
A private accountant can perform many activities in a business organization but would not work in
a)
a. budgeting
b)
b. accounting information systems
c)
c. external auditing
d)
d. tax accounting
19.
The origins of accounting are generally attributed to the work of
a)
a. Christopher Columbus
b)
b. Abner Doubleday
c)
c. Luca Pacioli
d)
d. Leonardo da Vinci
20.
Financial accounting provides economic and financial information for all of the following except
a)
a. creditors
b)
b. investors
c)
c. managers
d)
d. other external users
21.
The final step in solving an ethical dilemma is to
a)
a. identify and analyze the principal elements in the situation
b)
b. recognize an ethical situation
c)
c. identify the alternatives and weigh the impact of each alternative on stakeholders
d)
d. recognize the ethical issues involved
22.
The first step in solving an ethical dilemma is to
a)
a. identify and analyze the principal elements in the situation
b)
b. identify the alternatives
c)
c. recognize an ethical situation and the ethical issues involved
d)
d. weigh the impact of each alternative on various stakeholders
23.
Ethics are the standards of conduct by which one's actions are judged as
a)
a. right or wrong
b)
b. honest or dishonest
c)
c. fair or unfair
d)
d. all of these
24.
Generally accepted accounting principles are
a)
a. income tax regulations of the Internal Revenue Service
b)
b. standards that indicate how to report economic events
c)
c. theories that are based on physical laws of the universe
d)
d. principles that have been proven correct by academic researchers
25.
The cost principle requires that when assets are acquired, they be recorded at
a)
a. appraisal value
b)
b. exchange price paid
c)
c. selling price
d)
d. list price
26.
The cost of an asset and its fair market value are
a)
a. never the same.
b)
b. the same when the asset is sold.
c)
c. irrelevant when the asset is used by the business in its operations.
d)
d. the same on the date of acquisition
27.
The body of theory underlying accounting is not based on
a)
a. physical laws of nature
b)
b. concepts
c)
c. principles
d)
d. definitions
28.
The private sector organization involved in developing accounting principles is the
a)
a. Feasible Accounting Standards Body
b)
b. Financial Accounting Studies Board
c)
c. Financial Accounting Standards Board
d)
d. Financial Auditors' Standards Body
29.
The SEC and FASB are two organizations that are primarily responsible for establishing generally accepted accounting principles. It is true that
a)
a. they are both governmental agencies
b)
b. the SEC is a private organization of accountants
c)
c. the SEC often mandates guidelines when no accounting principles exist
d)
d. the SEC and FASB rarely cooperate in developing accounting standards
30.
GAAP stands for
a)
a. Generally Accepted Auditing Procedures
b)
b. Generally Accepted Accounting Principles
c)
c. Generally Accepted Auditing Principles
d)
d. Generally Accepted Accounting Procedures
31.
Which of the following is not a characteristic of the cost principle?
a)
a. Reliability
b)
b. Subjectivity
c)
c. Objectivity
d)
d. Verifiability
32.
The ACE Company has five plants nationwide that cost $100 million. The current market value of the plants is $500 million. The plants will be recorded and reported as assets at
a)
a. $100 million
b)
b. $600 million
c)
c. $400 million
d)
d. $500 million
33.
All of the following are advantages cost has over other valuations except that it
a)
a. is reliable
b)
b. can be objectively measured
c)
c. can be verified
d)
d. is relevant
34.
The proprietorship form of business organization
a)
a. must have at least three owners in most states
b)
b. represents the largest number of businesses in the United States
c)
c. combines the records of the business with the personal records of the owner
d)
d. is characterized by a legal distinction between the business as an economic unit and the owner
35.
The economic entity assumption requires that the activities
a)
a. of different entities can be combined if all the entities are corporations
b)
b. must be reported to the Securities and Exchange Commission
c)
c. of a sole proprietorship cannot be distinguished from the personal economic events of its owners
d)
d. of an entity be kept separate from the activities of its owner
36.
A business organized as a corporation
a)
a. is not a separate legal entity in most states.
b)
b. requires that stockholders be personally liable for the debts of the business.
c)
c. is owned by its stockholders.
d)
d. terminates when one of its original stockholders dies
37.
The partnership form of business organization
a)
a. is a separate legal entity
b)
b. is a common form of organization for service-type businesses
c)
c. enjoys an unlimited life
d)
d. has limited liability
38.
Which of the following is not an advantage of the corporate form of business organization?
a)
a. Limited liability of stockholders
b)
b. Transferability of ownership
c)
c. Unlimited personal liability for stockholders
d)
d. Unlimited life
39.
A small neighborhood barber shop that is operated by its owner would likely be organized as a
a)
a. joint venture
b)
b. partnership
c)
c. corporation
d)
d. proprietorship
40.
Joan and Sara met at law school and decide to start a small law practice after graduation. They agree to split revenues and expenses evenly. The most common form of business organization for a business such as this would be a
a)
a. joint venture
b)
b. partnership
c)
c. corporation
d)
d. proprietorship
41.
Which of the following is true regarding the corporate form of business organization?
a)
a. Corporations are the most prevalent form of business organization
b)
b. Corporate businesses are generally smaller in size than partnerships and proprietor-ships
c)
c. The revenues of corporations are greater than the combined revenues of partnerships and proprietorships
d)
d. Corporations are separate legal entities organized exclusively under federal law
42.
A basic assumption of accounting that requires activities of an entity be kept separate from the activities of its owner is referred to as the
a)
a. stand alone concept
b)
b. monetary unit assumption
c)
c. corporate form of ownership
d)
d. economic entity assumption
43.
Deb Smith is the proprietor (owner) of Smitty's, a retailer of athletic apparel. When recording the financial transactions of Smitty's, Deb does not record an entry for a car she purchased for personal use. Deb took out a personal loan to pay for the car. What accounting concept guides Deb's behavior in this situation?
a)
a. Pay back concept
b)
b. Economic entity assumption
c)
c. Cash basis concept
d)
d. Monetary unit assumption
44.
A basic assumption of accounting assumes that the dollar is
a)
a. unrelated to business transactions.
b)
b. a poor measure of economic activities.
c)
c. the common unit of measure for all business transactions.
d)
d. useless in measuring an economic event
45.
The assumption that the unit of measure remains sufficiently constant over time is part of the
a)
a. economic entity assumption
b)
b. cost principle
c)
c. historical cost principle
d)
d. monetary unit assumption
46.
A business that enjoys limited liability is a
a)
a. proprietorship
b)
b. partnership
c)
c. corporation
d)
d. sole proprietorship
47.
A problem with the monetary unit assumption is that
a)
a. the dollar has not been stable over time
b)
b. the dollar has been stable over time
c)
c. the dollar is a common medium of exchange
d)
d. it is impossible to account for international transactions
48.
The common characteristic possessed by all assets is
a)
a. long life
b)
b. great monetary value
c)
c. tangible nature
d)
d. future economic benefit
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