Accounting Comp Exam Review – Flashcards

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Management accounting refers to the preparation and use of accounting information designed to meet the needs of decision makers outside the business organization
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True
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External users of accounting information have a financial interest in an entity but are not involved with the day-to-day operations of the enterprise.
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True
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Management accountants primarily are concerned with developing information:
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Suited to the needs of decision makers within the organization
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The accounting standards and concepts used in the preparation of financial statements are called
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Generally accepted accounting principles (GAAP).
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In the phrase "generally accepted accounting principles," the words generally accepted mean that the principles:
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Are understood and observed by all the participants in the financial reporting process.
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Generally accepted accounting principles are the "ground rules" used in the preparation of
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Financial statements.
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Which of the following is generally not considered an external user of accounting information?
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Factory managers.
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The tailoring of an accounting report to meet the needs of a specific decision maker is more characteristic of financial accounting reports than of management accounting reports
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false
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Managerial accounting information is designed primarily to assist investors and creditors in deciding how to allocate scarce resources.
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false
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The set of standards, assumptions, and concepts that form the "ground rules" for financial reporting in the United States is termed
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Generally accepted accounting principles.
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The content of management accounting reports needs to be presented in conformity with generally accepted accounting principles
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false
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It is the function of management accounting to perform the following activities, except:
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Audited financial statements.
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All of the following are characteristics of management accounting, except:
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Information must be developed in conformity with generally accepted accounting principles or with income tax regulations.
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Which of the following are not considered "external" users of financial statements?
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managers
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Which of the following is not a user of internal accounting information?
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creditors
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Financial statements are prepared:
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Primarily for the benefit of persons outside of the business organization.
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Although accounting information is used by a wide variety of external parties, financial reporting is primarily directed toward the informational needs of:
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Investors and creditors
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Investors are individuals and other enterprises that have provided equity to the reporting enterprise.
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true
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strong internal control structure:
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Contributes to the accuracy and reliability of the accounting records.
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The objectives of an accounting system include all of the following except:
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Dictate the specific types of business transactions that the enterprise may engage in.
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Information is cost effective when:
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The value of the information exceeds the cost of producing it.
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Overseeing a company's affairs to ensure that the company is managed with the best interest of shareholders in mind is called:
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Internal control.
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The best definition of an accounting system is:
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The personnel, procedures, devices, and records used by an entity to develop accounting information and communicate this information to decision makers.
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Management accounting information is oriented toward the future while financial accounting information is historical in nature.
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true
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Public accounting is the segment of the profession where professionals offer audit, tax, and consulting services to clients.
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true
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The field of accounting may best be described as:
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The art of interpreting, measuring, and describing economic activity.
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The internal control structure of an organization has no relationship to the reliability of accounting information.
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false
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The accounting systems of most business organizations:
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Are tailored to meet the organization's needs for accounting information and the resources available for operating the system
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Which of the following is not a basic function of an accounting system?
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To ensure that a business organization will be managed profitably.
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The basic purpose of an audit is to:
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Assure financial statements are in conformity with GAAP.
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Generally accepted accounting principles:
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may change over time
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One purpose of generally accepted accounting principles is to make accounting information prepared by different companies more comparable.
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True
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Investors are individuals and other enterprises that have provided equity to the reporting enterprise
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true
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An accounting practice can become a "generally accepted accounting principle" through widespread use, even if the practice is not mentioned in the official pronouncements of the accounting standard-setting organizations.
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true
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Which of the following is not characteristic of financial accounting?
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The information is developed primarily by "private accountants" that is, accountants employed by business organizations
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Return on investment is the same as return of investment.
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false
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Which of the following is not an important factor in ensuring the integrity of accounting information?
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The cost of preparing the financial information.
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The principal difference between management accounting and financial accounting is that financial accounting information is
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Intended primarily for use by decision makers outside the business organization.
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Internal users of financial accounting information include all of the following except
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Chief Executive Officer.
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Which of the following is a characteristic of financial accounting information?
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Its preparation requires judgment.
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Which of the following does not describe accounting
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It is an end rather than a means to an end.
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Which of the following is not an objective of generally accepted accounting principles?
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To minimize the amount of income taxes owed.
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