Skip to content
Exam Guides

Test Bank For Accounting Principles, 11th Edition

Stay ahead with Test Bank For Accounting Principles, 11th Edition, a comprehensive guide designed to improve understanding and test performance.

Preview 16 of 2008 pages

See the first 16 pages exactly as they appear in the document.

  1. Page 1
    Read page 1 as text

    CHAPTER 1 ACCOUNTING IN ACTION SUMMARY OF QUESTIONS BY LEARNING OBJECTIVES AND BLOOM’S TAXONOMY Item L O BT Item L O BT Item L O BT Item L O BT Item L O BT True - False Statements 1. 1 K 9. 2 K 17. 4 K 25. 6 K sg 33. 1 K 2. 1 K 10. 2 K 18. 4 K 26. 6 K sg 34. 2 K 3. 1 C 11. 2 K 19. 4 K 27. 7 K sg 35. 3 K 4. 2 K 12. 2 K 20. 5 C 28. 7 C sg 36. 4 C 5. 2 K 13. 2 K 21. 5 K 29. 7 C sg 37. 5 K 6. 2 C 14. 2 K 22. 5 K 30. 7 C sg 38. 6 K 7. 2 K 15. 3 K 23. 5 K 31. 8 K sg 39. 7 K 8. 2 C 16. 4 K 24. 6 K 32. 8 K sg 40. 8 K Multiple Choice Questions 41. 1 K 69. 4 C 97. 6 K 125. 8 K s t 15 3. 1 K 42. 1 K 70. 4 K 98. 6 K 126. 8 K s t 154. 1 K 43. 1 K 71. 4 K 99. 6 K 127. 8 AP sg 155. 2 K 44. 1 C 72. 4 C 100. 6 C 129. 8 AP s t 156. 2 K 45. 1 K 73. 4 K 101. 6 K 129. 8 AP sg 157. 4 K 46. 1 K 74. 5 K 102. 6 C 130. 8 K st 158. 4 K 47. 1 K 75. 5 K 103. 6 AP 131. 8 C sg 159. 5 K 48. 1 K 76. 5 K 104. 6 AP 132. 8 K sg 160. 6 K 49. 2 C 77. 5 K 105. 6 AP 133. 8 K sg 161. 7 C 50. 2 C 78. 5 K 106. 6 AP 134. 8 AP sg 162. 7 C 51. 2 C 79. 5 C 107. 6 AP 135. 8 AP sg 163. 8 K 52. 2 C 80. 5 C 108. 6 C 136. 8 AP 164 . 10 K 53. 2 C 81. 5 K 109. 6 AP 137. 8 AP 165. 10 K 54. 2 C 82. 5 K 110. 6 C 138. 8 AP 166. 10 K a 55. 9 K 83. 5 C 111. 6 C 139. 8 AP 167. 10 K a 56. 9 K 84. 5 K 112. 7 C 140. 8 AP 168. 10 K a 57. 9 K 85. 5 K 113. 7 C 141. 8 AP 169. 10 K a 58. 9 C 86. 5 K 114. 6 C 142. 8 AP 170. 10 K 59. 2 K 87. 5 K 115. 7 C 143. 8 AP 171. 10 K 60. 2 K 88. 6 K 116. 7 K 144. 8 AP 172. 10 K 61. 3 C 89. 6 K 117. 7 C 145. 8 AP 173. 10 K 62. 3 K 90. 6 K 118. 7 C 146. 8 AP 174. 10 K 63. 3 C 91. 6 C 119. 7 C 147. 8 AN 175. 10 K 64. 4 K 92. 6 K 120. 7 AN 148. 8 AN 176. 10 K 65. 4 K 93. 6 K 121. 7 C 149. 8 AN 177. 10 K 66. 4 C 94. 6 C 122. 8 C 150. 8 AN 67. 4 K 95. 6 K 123. 8 C 151. 8 AN 68. 4 K 96. 6 K 124. 8 K sg 15 2. 1 K sg This question also appears in the Study Guide. st This question also appears in a s elf - t est at the s tudent c ompanion website. a This question covers a topic in an a ppendix to the chapter.

  2. Page 2
  3. Page 3
    Read page 3 as text

    Test Bank for Accounting Principles, Eleventh Edition FOR INSTRUCTOR USE ONLY 1 - 2 SUMMARY OF QUESTIONS BY LEARNING OBJECTIVES AND BLOOM’S TAXONOMY Brief Exercises 178 . 2 C 181 . 6 AP 184 . 7 C 187 . 8 AP 179 . 6 K 182 . 6 AP 185 . 8 AP 188 . 8 AP 180 . 6 K 182 . 6 C 418 6 . 8 C Exercises 189 . 2,4 K 197 . 6 C 205 . 7 C 213 . 8 AP 221 . 8 AN 190 . 6 C 198 . 6, 7 C 206 . 7 C 214 . 8 AP 222 . 8 C 191 . 6 C 199 . 6, 7 C 207 . 7 AP 215 . 8 AP 223 . 8 AP 192 . 6 AP 200 . 6, 7 AP 208 . 7 C 216 . 8 AN 224 . 8 AP 193 . 6 C 201 . 7 AP 209 . 7 C 217 . 8 AP 225 . 8 AP 194 . 6 AP 202 . 7 AP 210 . 7 C 218 . 8 AP 195 . 6 AN 203 . 7 C 211 . 7 C 219 . 8 C 196 . 6 AN 204 . 7 AN 212 . 7 C 220 . 8 AP Completion Statements 226 . 1 K 228 . 2 K 230 . 4 K 232 . 5 K 234 . 6 K 227 . 2 K 229 . 2 K 231 . 4 K 233 . 6 K 235 . 8 K SUMMARY OF LEARNING OBJECTIVES BY QUESTION TYPE Item Type Item Type Item Type Item Type Item Type Item Type Item Type Learning Objective 1 1. TF 33. TF 43. MC 46. MC 1 52 . MC 226 . C 2. TF 41. MC 44. MC 47. MC 1 53 . MC 3. TF 42. MC 45. MC 48. MC 1 54 . MC Learning Objective 2 4. TF 8. TF 12. TF 49. MC 53. MC 155. MC 227 . C 5. TF 9. TF 13. TF 50. MC 54. MC 156. MC 228 . C 6. TF 10. TF 14. TF 51. MC 59. MC 178 . BE 229 . C 7. TF 11. TF 34. TF 52. MC 60. MC 175. Ex Learning Objective 3 15. TF 35. TF 61. MC 62. MC 63. MC Learning Objective 4 16. TF 19. TF 65. MC 68. MC 71. MC 157. MC 230 . C 17. TF 36. TF 66. MC 69. MC 72. MC 158. MC 231 . C 18. TF 64. MC 67. MC 70. MC 73. MC 189 . Ex Learning Objective 5 20. TF 37. TF 77. MC 81. MC 85. MC 232 . C 21. TF 74. MC 78. MC 82. MC 86. MC 22. TF 75. MC 79. MC 83. MC 87. MC 23. TF 76. MC 80. MC 84. MC 159. MC

  4. Page 4
    Read page 4 as text

    Accounting in Action FOR INSTRUCTOR USE ONLY 1 - 3 SUMMARY OF LEARNING OBJECTIVES BY QUESTION TYPE Learning Objective 6 24. TF 91. MC 98. MC 105. MC 182 . BE 195 . Ex 234 . C 25. TF 92. MC 99. MC 106. MC 183 . BE 196 . Ex 26. TF 93. MC 100. MC 107. MC 190 . Ex 197 . Ex 38. TF 94. MC 101. MC 160. MC 191 . Ex 198. Ex 88. MC 95. MC 102. MC 179 . BE 192 . Ex 199. Ex 89. MC 96. MC 103. MC 180 . BE 193 . Ex 200. Ex 90. MC 97. MC 104. MC 181 . BE 194 . Ex 233 . C Learning Objective 7 27. TF 113. MC 120. MC 185. Ex 205 . Ex 197 . Ex 217. Ex 28. TF 115. MC 121. MC 186. Ex 206 . Ex 198 . Ex 29. TF 116. MC 161. MC 201. Ex 207 . Ex 213. Ex 30. TF 117. MC 162. MC 202. Ex 208 . Ex 214. Ex 39. TF 118. MC 184 . BE 203 . Ex 209 . Ex 215. Ex 112. MC 119. MC 184. Ex 204 . Ex 196 . Ex 216. Ex Learning Objective 8 31. TF 129. MC 139. MC 149. MC 201. Ex 225 . Ex 32. TF 130. MC 140. MC 150. MC 202. Ex 235 . C 40. TF 131. MC 141. MC 151. MC 217. Ex 122. MC 132. MC 142. MC 163. MC 218 . Ex 123. MC 133. MC 143. MC 185 . BE 219 . Ex 124. MC 134. MC 144. MC 186 . BE 220 . Ex 125. MC 135. MC 145. MC 187. BE 221 . Ex 126. MC 136. MC 146. MC 1 88 . BE 222 . Ex 127. MC 137. MC 147. MC 199. Ex 223 . Ex 128. MC 138. MC 148. MC 200. Ex 224 . Ex Learning Objective 9 a 55. MC a 56. MC a 57. MC a 58. MC Learning Objective 10 164 . MC 16 6. MC 16 8. MC 1 70. MC 1 72. MC 1 7 4 . MC 1 76. MC 16 5. MC 16 7. MC 16 9. MC 1 71. MC 1 73. MC 1 75. MC 1 77. MC Note: TF = True - False BE = Brief Exercise C = Completion MC = Multiple Choice Ex = Exercise This chapter also contains one set of ten Matching questions and Short - Answer Essay questions. A summary table of all lear ning outcomes, including AACSB, AICPA, and IMA professional standards, is available on the Weygandt Accounting Principles 11 e instructor web site.

  5. Page 5
    Read page 5 as text

    Test Bank for Accounting Principles, Eleventh Edition FOR INSTRUCTOR USE ONLY 1 - 4 CHAPTER LEARNING OBJECTIVES 1. Explain what accounting is . Accounting is an information system that identifies, records, and communicates the economic events of an organization to interested users. 2. Identify the users and uses of accounting . The major users and uses of accounting are as follows : (a) Management uses accounting information to plan , organize , and run the business. (b) Investors (owners) d ecid e whether to buy, hold, or sell their financial interests on the basis of accounting data . (c) Creditors (suppliers and bankers) evaluat e the risks of granting credit or lending money on the basis of accounting information . Other group s that use accounting information are taxing authorities, regulatory agencies, customers , and labor unions. 3. Understand why ethics is a fundamental business concept . Ethics are the standards of conduct by which actions are judged as right or wrong. Effective financial reporting depends on sound ethical behavior. 4. Explain generally accepted accounting principles . Generally accepted accounting principles are a common set of standards used by accountants. 5. Explain the monetary unit assumption and the economic entity assumption . The monetary unit assumption requires that companies include in the accounting records only transaction data that can be expressed in terms of money. The economic entity assumption requires that the activities of each economic entity be kept separate from the activities of its owner ( s ) and other economic entities. 6. State the accounting equation , and define its components. The basic accounting equation is: Assets = Liabilities + Owner's Equity Assets are resources owned by a business. Liabilities are creditorship claims on total assets. Owner's equity is the ownership claim on total assets. The expanded accounting equation is: Assets = Liabilities + Owner's Capital − Owner's Drawings + Revenue s − Expenses Owner's Capital is assets the owner puts into the business. Owner's drawings are the Assets the owner withdraws for personal use. Revenues are increases in assets resulting from income - earning activities. Expenses are the costs of assets consumed of services used in the process of earning revenue. 7. Analyze the effect s of business transactions on the accounting equation . Each business transaction must have a dual effect on the accounting equation. For example, if an individual asset increase s , there must be a corresponding (1) decrease in another asset, or (2) increase in a specific liability, or (3) increase in owner's equity. 8. Understand the four financial statements and how they are prepared . An income statement presents the revenues and expenses , and resulting Net income or Net loss for a specifi c period of time. An owner's equity statement summarizes the changes in owner's equity for a specific period of time. A balance sheet reports the assets, liabilities, and owner's equity at a specific date. A statement of cash flows summarizes information about the cash inflows (receipts) and outflows (payments) for a specific period of time. a 9. Explain the career opportunities in accounting . Accounting offers many different jobs in fields such as public and private accounting, government al , and forensic accounting. Accounting is a popular major because there are many different types of jobs, with unlimited potential for career advancement.

  6. Page 6
    Read page 6 as text

    Accounting in Action FOR INSTRUCTOR USE ONLY 1 - 5 TRUE - FALSE STATEMENTS 1. Owners of business firms are the only people who need accounting information. Ans: F L O1 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 2. Transactions that can be measured in dollars and cents are recorded in the financial information system. Ans: T L O1 BT: K Difficulty: Easy TOT: .5 min AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 3. The hiring of a new company president is an economic event recorded by the financial information system. Ans: F L O1 BT: C Difficulty: Easy TOT: .5 min AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 4. Management of a business enterprise is the major external user of information. Ans: F L O2 BT: K Difficulty: Easy TOT: .5 min AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reportin g 5. Accounting communicates financial information about a business enterprise to both internal and external users. Ans: T L O2 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 6. Accounting information is used only by external users with a financial interest in a business enterprise. Ans: F L O2 BT: C Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 7. Financial statements are the major means of communicating accounting information to interested parties. Ans: T L O2 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 8. Bookkeeping and accounting are one and the same because the bookkeeping function includes the accounting process. Ans: F L O2 BT: C Difficulty: Easy TOT: .5 min . AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 9. The origins of accounting are attributed to Luca Pacioli, a famous mathematician. Ans: T L O2 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 10. The study of accounting will be useful only if a student is interested in working for a profit - oriented business firm. Ans: F L O2 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 11. Private accountants are accountants who are not employees of business enterprises. Ans: F L O2 BT:K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 12. The study of accounting is not useful for a business career unless your career objective is to become an accountant. Ans: F L O2 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 13. A working knowledge of accounting is not relevant to a lawyer or an architect. Ans: F L O2 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 14. Expressing an opinion as to the fairness of the information presented in financial statements is a service performed by CPAs. Ans: T L O2 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting

  7. Page 7
    Read page 7 as text

    Test Bank for Accounting Principles, Eleventh Edition FOR INSTRUCTOR USE ONLY 1 - 6 15. Accountants rely on a fundamental business concept — ethical behavior — in reporting financial information. Ans: T L O3 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 16. T he primary accounting standard - setting body in the United States is the Internationa l Accounting Standards Board. Ans: F L O4 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 17. The Financial Accounting Standards Board is a part of the Securities and Exchange Commission. Ans: F L O4 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 18. The Securities and Exchange Commission overse e s U.S. financial markets and accounting s tandard - setting bodies . Ans: T L O4 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 19. The cost and fair market value of an asset are the same at the time of acquisition and in all subsequent periods. Ans: F L O4 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 20 . Even though a partnership is not a separate legal entity, for accounting purposes the partnership affairs should be kept separate from the personal activities of the owners. Ans: T L O5 BT: C Difficulty; Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 21. A partnership must have more than one owner. Ans: T L O5 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 22. The economic entity assumption requires that the activities of an entity be kept separate and distinct from the activities of its owner and all other economic entities. Ans: T L O5 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 23. The monetary unit assumption states that transactions that can be measured in terms of money should be recorded in the accounting records. Ans: T L O5 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 24. In order to possess future service potential, an asset must have physical substance. Ans: F L O6 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 25. Owners' claims to total business assets take precedence over the claims of creditors because owners invest assets in the business and are liable for losses. Ans: F L O6 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 26. The basic accounting equation states that Assets = Liabilities. Ans: F L O6 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 27. Accountants record both internal and external transactions. Ans: T L O7 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 28. Internal transactions do not affect the basic accounting equation because they are economic events that occur entirely within one company. Ans: F L O7 BT: C Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting

  8. Page 8
    Read page 8 as text

    Accounting in Action FOR INSTRUCTOR USE ONLY 1 - 7 29. The purchase of store equipment for cash reduces the owner's equity by an equal amount. Ans: F L O7 BT: C Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 30. The purchase of office equipment on credit increases total assets and total liabilities. Ans: T L O7 BT: C Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 31. The primary purpose of the statement of cash flows is to provide information about the cash receipts and cash payments of a company during a period. Ans: T L O8 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 32. Net income for the period is determined by subtracting total expenses and drawings from total revenues. Ans: F L O8 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 33. Identifying is the process of keeping a chronological diary of events measured in dollars and cents. Ans: F L O1 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 34. Management consulting includes examining the financial statements of companies and expressing an opinion as to the fairness of their presentation. Ans: F L O2 BT: K Difficulty; Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 35. Accountants do not have to worry about issues of ethics. Ans: F L O3 BT: K Difficulty: Easy TOT: .5 min. AACSB: Ethics AICPA BB: Critical Thinking AICPA FN: Reporting 36. At the time an asset is acquired, cost and fair value should be the same. Ans: T L O4 BT: C Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 37. The monetary unit assumption requires that all dollar amounts be rounded to the nearest dollar. Ans: F L O5 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 38. The basic accounting equation is in balance when the creditor and ownership claims against the business equal the assets. Ans: T L O6 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 39. External transactions involve economic events between the company and some other enterprise or party. Ans: T L O7 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 40. In the owner's equity statement, revenues are listed first, followed by expenses, and net income (or net loss). Ans: F L O8 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting

  9. Page 9
    Read page 9 as text

    Test Bank for Accounting Principles, Eleventh Edition FOR INSTRUCTOR USE ONLY 1 - 8 Answers to True - False Statements Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. 1. F 7. T 13. F 19. F 25. F 31. T 37. F 2. T 8. F 14. T 20. T 26. F 32. F 38. T 3. F 9. T 15. T 21. T 27. T 33. F 39. T 4. F 10. F 16. F 22. T 28. F 34. F 40. F 5. T 11. F 17. F 23. T 29. F 35. F 6. F 12. F 18. T 24. F 30. T 36. T MULTIPLE CHOICE QUESTIONS 41. Accountants refer to an economic event as a a. purchase. b. sale. c. transaction. d. change in ownership. Ans: c L O1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reportin g 42. The process of recording transactions has become more efficient because a. fewer events can be quantified in financial terms. b. computers are used in processing business events. c. more people have been hired to record business transactions. d. business events are recorded only at the end of the year. Ans: b L O1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 43. Communication of economic events is the part of the accounting process that involves a. identifying economic events. b. quantifying transactions into dollars and cents. c. preparing accounting reports. d. recording and classifying information. Ans: c L O1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 44. Which of the following events cannot be quantified into dollars and cents and recorded as an accounting transaction? a. The appointment of a new CPA firm to perform an audit. b. The purchase of a new computer. c. The sale of store equipment. d. Payment of income taxes. Ans: a L O1 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 45. The use of computers in recording business events a. has made the recording process more efficient. b. does not use the same principles as manual accounting systems. c. has greatly impacted the identification stage of the accounting process. d. is economical only for large businesses. Ans: a L O1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting

  10. Page 10
    Read page 10 as text

    Accounting in Action FOR INSTRUCTOR USE ONLY 1 - 9 46. The accounting process involves all of the following except a. identifying economic transactions that are relevant to the business. b. communicating financial information to users by preparing financial reports. c. recording nonquantifiable economic events. d. analyzing and interpreting financial reports. Ans: c L O1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 47. The accounting process is correctly sequenced as a. identification, communication, recording. b. recording, communication, identification. c. identification, recording, communication. d. communication, recording, identification. Ans: c L O1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 48. Which of the following techniques are not used by accountants to interpret and report financial information? a. Graphs . b. Special memos for each class of external users . c. Charts . d. Ratios . Ans: b L O1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 49. Which of the following would not be considered an internal user of account ing data for the GHI Company? a. President of the company . b. Production manager . c. Merchandise inventory clerk . d. President of the employees' labor union . Ans: d L O2 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 50. Which of the following would not be considered an external use r of accounting data for the GHI Company? a. Internal Revenue Service Agent . b. Management . c. Creditors . d. Customers . Ans: b L O2 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 51. Which of the following would not be considered internal users of accounting data for a company? a. The president of a company . b. The controller of a company . c. Creditors of a company . d. Salesmen of the company . Ans: c L O2 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting

  11. Page 11
    Read page 11 as text

    Test Bank for Accounting Principles, Eleventh Edition FOR INSTRUCTOR USE ONLY 1 - 10 52. Which of the following is an external user of accounting information? a. Labor unions . b. Finance direct ors . c. C ompany office rs . d. Managers . Ans: a L O2 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 53. Which one of the following is not an external user of accounting information ? a. Regulatory agencies . b. Customers . c. Investors . d. All of these answers choices are external users . Ans: d L O2 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 54. Bookkeeping differs from accounting in that bookkeeping primarily involves which part of the accounting process? a. Identification . b. Communication . c. Recording . d. Analysis . Ans: c L O2 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting a 55. All of the following are services offered by public accountants except a. budgeting. b. auditing. c. tax planning. d. consulting. Ans: a L O9 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting a 56. Which list below best describes the major services performed by public accountants? a. Bookkeeping, mergers, budgets . b. Employee training, auditing, bookkeeping . c. Auditing, taxation, management consulting . d. Cost accounting, production scheduling, recruiting . Ans: c L O9 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting a 57. Preparing tax returns and engaging in tax planning is performed by a. public accountants only. b. private accountants only. c. both public and private accountants. d. IRS accountants only. Ans: c L O9 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting a 58. A private accountant can perform many activities in a business organization but would not work in a. budgeting. b. accounting information systems. c. external auditing. d. tax accounting. Ans: c L O9 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting

  12. Page 12
    Read page 12 as text

    Accounting in Action FOR INSTRUCTOR USE ONLY 1 - 11 59. The origins of accounting are generally attributed to the work of a. Christopher Columbus. b. Abner Doubleday. c. Luca Pacioli. d. Leonardo da Vinci. Ans: c L O2 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 60 . Financial accounting provides economic and financial information for all of the following except a. creditors. b. investors. c. managers. d. other external users. Ans: c L O2 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 6 1 . The final step in solving an ethical dilemma is to a. identify and analyze the principal elements in the situation . b. recognize an ethical situation . c. identify the alternatives and weigh the impact of each alternative on stakeholders . d. recognize the ethical issues involved . Ans: c L O2 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 6 2 . The first step in solving an ethical dilemma is to a. identify and analyze the principal elements in the situation. b. identify the alternatives. c. recognize an ethical situation and the ethical issues involved. d. weigh the impact of each alternative on various stakeholders. Ans: c L O3 BT: K Difficulty: Easy TOT: 1.0 m in. AACSB: Ethics AICPA BB: Critical Thinking AICPA FN: Reporting 6 3 . Ethics are the standards of conduct by which one's actions are judged as a. right or wrong. b. honest or dishonest. c. fair or unfair. d. all of these answer choices are correct . Ans: d L O3 BT: C Difficulty: Easy TOT: 1.0 m in. AACSB: Ethics AICPA BB: Critical Thinking AICPA FN: Reporting 6 4 . Generally accepted accounting principles are a. income tax regulations of the Internal Revenue Service. b. standards that indicate how to report economic events. c. theories that are based on physical laws of the universe. d. principles that have been proven correct by academic researchers. Ans: b L O4 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 6 5 . The historical cost principle requires that when assets are acquired, they be recorded at a. appraisal value. b. cost . c. market price. d. book value . Ans: b L O4 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting

  13. Page 13
    Read page 13 as text

    Test Bank for Accounting Principles, Eleventh Edition FOR INSTRUCTOR USE ONLY 1 - 12 6 6 . The historical cost of an asset and its fair value are a. never the same. b. the same when the asset is sold. c. irrelevant when the asset is used by the business in its operations. d. the same on the date of acquisition. Ans: d L O4 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 6 7 . The body of theory underlying accounting is not based on a. physical laws of nature. b. concepts. c. principles. d. definitions. Ans: a L O4 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 6 8 . The private sector organization involved in developing accounting principles is the a. Feasible Accounting Standards Body. b. Financial Accounting Studies Board. c. Financial Accounting Standards Board. d. Financial Auditors' Standards Body. Ans: c L O4 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 6 9 . The SEC and FASB are two organizations that are primarily responsible for establishing generally accepted accounting principles . It is true that a. they are both governmental agencies. b. the SEC is a private organization of accountants. c. the SEC often mandates guidelines when no accounting principles exist. d. the SEC and FASB rarely cooperate in developing accounting standards. Ans: c L O4 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 70 . GAAP stands for a. Generally Accepted Auditing Procedures. b. Generally Accepted Accounting Principles. c. Generally Accepted Auditing Principles. d. Generally Accepted Accounting Procedures. Ans: b L O4 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 7 1 . Financial information that is capable of making a difference in a decision is a. faithfully representative . b. relevant . c. convergent . d. generally accepted . Ans: b L O4 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 7 2 . The Duce Company has five plants nationwide that cost a total of $ 1 00 million. The current fair value of the plants is $ 5 00 million. The plants will be recorded and reported as assets at a. $ 1 00 million. b. $ 6 00 million. c. $400 million. d. $ 5 00 million. Ans: a L O4 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting

  14. Page 14
    Read page 14 as text

    Accounting in Action FOR INSTRUCTOR USE ONLY 1 - 13 7 3 . The fair value principle is applied for a. all assets. b. current assets. c. buildings. d. investment securities. Ans: d L O4 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 7 4 . The proprietorship form of business organization a. must have at least three owners in most states. b. represents the largest number of businesses in the United States. c. combines the records of the business with the personal records of the owner. d. is characterized by a legal distinction between the business as an economic unit and the owner. Ans: b L O5 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 7 5 . The economic entity assumption requires that the activities a. of different entities can be combined if all the entities are corporations. b. must be reported to the Securities and Exchange Commission. c. of a sole proprietorship cannot be distinguished from the personal economic events of its owners. d. of an entity be kept separate from the activities of its owner. Ans: d L O5 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 7 6 . A business organized as a corporation a. is not a separate legal entity in most states. b. requires that stockholders be personally liable for the debts of the business. c. is owned by its stockholders. d. terminates when one of its original stockholders dies. Ans: c L O5 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 7 7 . The partnership form of business organization a. is a separate legal entity. b. is a common form of organization for service - type businesses. c. enjoys an unlimited life. d. has limited liability. Ans: b L O5 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 7 8 . Which of the following is not an advantage of the corporate form of business organization? a. Limited liability of stockholders b. Transferability of ownership c. Unlimited personal liability for stockholders d. Unlimited life Ans: c L O5 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 7 9 . A small neighborhood barber shop that is operated by its owner would likely be organized as a a. joint venture. b. partnership. c. corporation. d. proprietorship. Ans: d L O5 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting

  15. Page 15
    Read page 15 as text

    Test Bank for Accounting Principles, Eleventh Edition FOR INSTRUCTOR USE ONLY 1 - 14 80 . John and Sam 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. joint venture. b. partnership. c. corporation. d. proprietorship. Ans: b L O5 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 8 1 . Which of the following is true regarding the corporate form of business organization? a. Corporations are the most prevalent form of business organization. b. Corporate businesses are generally smaller in size than partnerships and proprietor - ships. c. The revenues of corporations are greater than the combined revenues of partnerships and proprietorships. d. Corporations are separate legal entities organized exclusively under federal law. Ans: c L O5 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 8 2 . 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. stand alone concept. b. monetary unit assumption. c. corporate form of ownership. d. economic entity assumption. Ans: d L O5 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 8 3 . Ted Leo is the proprietor (owner) of Ted's , a retailer of golf apparel. When recording the financial transactions of Ted 's , Ted does not r ecord an entry for a car he purchased for personal use. Ted took out a personal loan to pay for the car. What accounting concept guides Ted 's behavior in this situation? a. Pay back concept b. Economic entity assumption c. Cash basis concept d. Monetary unit assumption Ans: b L O5 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 8 4 . A basic assumption of accounting assumes that the dollar is a. unrelated to business transactions. b. a poor measure of economic activities. c. the common unit of measure for all business transactions. d. useless in measuring an economic event. Ans: c L O5 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 8 5 . The assumption that the unit of measure remains sufficiently constant over time is part of the a. economic entity assumption. b. cost principle. c. historical cost principle. d. monetary unit assumption. Ans: d L O5 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting

  16. Page 16
    Read page 16 as text

    Accounting in Action FOR INSTRUCTOR USE ONLY 1 - 15 8 6 . A business that enjoy limited liability is a a. proprietorship. b. partnership. c. corporation. d. sole proprietorship. Ans: c L O5 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 8 7 . A problem with the monetary unit assumption is that a. the dollar has not been stable over time. b. the dollar has been stable over time. c. the dollar is a common medium of exchange. d. it is impossible to account for international transactions. Ans: a L O5 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 8 8 . The common characteristic possessed by all assets is a. long life. b. great monetary value. c. tangible nature. d. future economic benefit. Ans: d L O6 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 8 9 . Owner's equity is best depicted by the following: a. Assets = Liabilities. b. Liabilities + Assets. c. Residual equity + Assets. d. Assets – Liabilities. Ans: d L O6 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 90 . The basic accounting equation may be expressed as a. Assets = Equities. b. Assets – Liabilities = Owner's Equity. c. Assets = Liabilities + Owner's Equity. d. All of these answer choices are correct. . Ans: d L O6 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 9 1 . Liabilities a. are future economic benefits. b. are existing debts and obligations. c. possess service potential. d. are things of value used by the business in its operation. Ans: b L O6 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting 9 2 . Liabilities of a company would not include a. notes payable. b. accounts payable. c. s alaries and wages payable. d. cash. Ans: d L O6 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting

1992 more pages in the full document

Unlock it once and it stays in your library, ready to chat with or turn into flashcards.

Unlock the full document

More Accounting study materials

See all

Study this document with CramX

Once it is in your library, every tool can work from it.