ACC 101 Lecture 3: ACC 101 - Pre-Tests_Quizzes

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coppertoad742

28 Jan 2019

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The obligation to provide services to another entity is a type of liability. The best definition of assets is the resources belonging to a company having future benefit to the company. The intentional preparation of misleading financial statements, known as fraudulent financial reporting, can result from all of the following except recording a revenue that has been earned but not yet received. All of the following statements about corporations are true except the stockholders have direct control of the business. The statement of retained earnings relates the income statement to the balance sheet by showing how the retained earnings account changed during the accounting period. Income statement, statement of retained earnings, balance sheet, statement of cash flows. The purpose of an audit is to ascertain that the financial statements follow gaap. The following users of accounting information have a direct financial interest in a business except a finacial advisor.

Related Questions

1. Which of the following statements is true regardingdeclared dividends?

		a) They are an expense of doing business.
		b) Companies are legally obligated to declaredividends.
		c) They are a way to distribute profits to a companyâsstockholders.
		d)They are reported on the balance sheet.

2. Net income would be understated due to which of thefollowing errors?

		a) Employee wages that have not yet been paid are notrecorded.
		b) Depreciation expense is not recorded.
		c) Collection of accounts receivable is notrecorded.
		d) Revenue that has been earned but not yet collectedhas not been recorded.

3. Regarding the need for adjustments, which statementis not true?

		a) Adjusting entries are intended to change operatingresults to reflect managementâs objectives for operatingperformance.
		b) Adjustments help the financial statements present thebest picture of whether the companyâs activities were profitablefor the period.
		c) Adjustments help the financial statements present theeconomic resources the company owns and owes at the end of theperiod.
		d) Without adjustments, financial statements present anincomplete and misleading picture of the company.

4. A company purchased a certificate of deposit on June1 that will pay $120 interest three months from that date. On June31, which of the following adjusting entries would bemade?

		a) Debit Interest Receivable for $120; credit InterestRevenue for $120
		b) Debit Interest Revenue for $40; credit INterestReceivable for $40
		c) Debit Interest Receivable for $40; credit InterestRevenue for $40
		d) Debit Interest Revenue for $120; credit InterestReceivable for $120

blueporpoise470

Question 1

In recent years, the large CPA firms have performed a highvolume of consulting services for many of their audit clients. Thishas become a highly controversial issue, because it is allegedthat:

	a.	The CPAs are not competent to perform these services.
	b.	The potential of earning large revenues from audit clientsimpairs auditor independence.
	c.	CPA firms are inclined to "cut corners" on the audits becausethey are devoting the bulk of their time to consulting.
	d.	CPA firms are engaged in unfair competition with consultingfirms.

Question 2

An auditor's report states: "...we do not express an opinion."This constitutes what type of opinion?

	a.	Qualified.
	b.	Adverse.
	c.	Unqualified.
	d.	Disclaimer.

Question 3

Which statement is NOT true?

	a.	The FASB is a federal regulatory agency.
	b.	The FASB encourages comments on exposure drafts from interestedthird parties.
	c.	To date, the FASB has issued over 100 authoritativepronouncements.
	d.	Pronouncements of GAAP-establishing bodies preceding the FASBwere widely criticized for lacking a theoretical basis.

Question 4

Third parties are NOT entitled to place any reliance upon a CPAin the case of what type of engagement?

	a.	Compilation.
	b.	Compliance audit.
	c.	Attestation.
	d.	Review.

Question 5

Which statement best reflects the business entity concept?

	a.	It is assumed that the entity will continue in businessindefinitely.
	b.	The financial results of legally separate entities should not becombined.
	c.	The business is viewed as an entity separate from theowners.
	d.	Entities should report their results of operations annually.

Question 6

Which principle determines the fiscal period in which an expenseshould be recorded?

	1.	Realization.
	2.	Matching.
	3.	Fiscal period
	4.	Conservatism.

Question 7

Form 10-Qis used for:

	a.	Annual reporting to the SEC.
	b.	Quarterly reporting to the SEC.
	c.	Reporting of special events to the SEC.
	d.	Determination of standards to be followed in reporting to theSEC.

Question 8

Which of the following attributes is the primary argument forthe historical cost principle?

	a.	Predictive value.
	b.	Relevance.
	c.	Understandability.
	d.	Verifiability.

Question 9

The standard, unqualified audit report of a public company:

	a.	Is addressed to the SEC.
	b.	Covers the financial statements but not the footnotes.
	c.	States that the financial statements are fairly presented inaccordance with GAAP.
	d.	More than one of the above is correct.
	e.	None of the above are correct.

Question 10

The most frequent cause of audit failure in audits of publiccompanies is:

	a.	Incompetence or improper supervision of audit staff.
	b.	Cleverly concealed employee frauds.
	c.	Unwillingness of the partner in charge to compel the client tocorrect misleading financial statements.
	d.	Bribery of key audit personnel by the audit client.

Question 11

In most audits, the greatest concern faced by the auditor is therisk of:

	a.	Clerical errors not detected by the client's system of internalcontrol.
	b.	Incompetence and carelessness of audit staff.
	c.	Management fraud.
	d.	Employee irregularities.

violetseal270

In which of the following financial statements would a retained earnings account be found?

Select one:

a. Sole trader.

b. Company.

c. Partnership.

d. None of the options shown would contain a retained earnings account.

A partnership of three siblings would have how many capital accounts in the equity section of the balance sheet?

Select one:

a. One.

b. Two.

c. Three.

d. None.

Which of the following is an advantage of being a sole trader?

Select one:

a. The owner has total autonomy over business decisions.

b. The business is not a separate legal entity.

c. The owner has unlimited liability.

d. The business has limited life.

Partnerships should always have a Partnership Agreement in place to avoid potential disagreements.

Select one:

True

False

If a partner in a partnership decides to leave or retire from the business, the partnership can continue on with no disruption or administrative changes.

Select one:

True

False

pearbat965

ACC 101 Lecture 3: ACC 101 - Pre-Tests_Quizzes

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