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296 Cards in this Set
- Front
- Back
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(1)users reley on finanical statemetns for most of the decisions they make
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external
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what does NYSE stand for?
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new york stock exchange
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NAME
this was the first co to provide regulations for accounting and finanical reporting |
NYSE
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what was the first co to provide regulations for accounting and finaical reporting?
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NYSE
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when were most Co created and was a period of intense corporate activity?
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early 1900s
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what caused the securties act of 1933 ? leading reason it was created
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bc of the crash of the stock exchange
believes collapse was bc of lacko f sufficient info about corporate activties and lack of govt oversight of the stock market |
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NAME
this required most co to file registrition statemetns before selling stock to investors |
securities act of 1933
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what is the securities act of 1933?
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required most co to file registrition statements before selling stock to investors
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what is the securities exchange of act of 1934?
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required co to provide annual finanical reports to stockholders
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NAME
this required co to provide annual finanical reports to stockholders |
securities exchange act of 1934
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what does SEC stand for?
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securities exchange commission
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what is the SEC?
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federal agency given responsibility of overseeeing the external finanical reporting of publicily traded co
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NAME
this is a federal agency given responisbility of overseeing the external finanical reporting of pubilicty traded co |
SEC
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what is the differ btwn
the securities act of 1933 and the securities exchange act of 1934? |
(1)securities act of 1933-required most co to file registration statements before selling stock to investors
(2)securities exchange act of 1934-federal agency responisble for overseeing external financial reporting for publicly traded co |
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T or F
the SEC requires co to publish to the public annual quarterly reports |
true
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what is the form that co have to submit to the SEC for their annual report?
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annual registration reports are -10k reports
quarterly statemetns reports are 10-Q reports |
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T or F
just the reprot that the SEC is investegating a co can cause their stock to go down such as Eron |
true
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what are some draw backs from creating a false finanical statement? and getinng caught the SEC?
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has a ripling affects......effects investors and economy.
leads to decreased sales for co, and profits from other co, loss of jobs for employees, and loss of taxes for govt organizations |
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what does the PCAOB stand for?
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public companies accoutning oversight board
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what is the PCAOB?
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is now responisble for oversight of finanical statements audits of publicily traded corporations and the establishment of auditing standards in the US
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NAME
(created by the SOX), this is is now responisble for oversight of finanical statements audits of publicily traded corporations and the establishment of auditing standards in the US |
PCAOB
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what does SOX stand for ?
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sarbanes oxely act of 2002
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what was the primary purpose of the SOX?
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to increase investor investor confidence inthe finanical reports provided by co
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NAME
the primary purpose of this was to increase investor confidence in the finanical reports provided by the co |
SOX
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what is the SOX?
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effects the regulations and responisbilties of auditors, board of directors, and co managers in respect to finanical reporting....by establishing the PCAOB
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NAME
this act established the PCAOB |
SOX
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NAME
this ACT effects the regulations and responisbilties of auditors, board of directors, and co managers in respect to finanical reporting |
SOX
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why was the SOX created?
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was created in response to the Enron, Worldcom, and othe co that left investors not feeling like they could trust the market
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the (1)reports to the SEC
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PCAOB
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the PCAOB reports to the (1)
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SEC
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what are the main functions of the PCAOB?
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(1)fianical reporting responsbilties of the PCAOB, co (board of directors, and external auditors
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how many people are on the board of the PCAOB?
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5
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the PCAOB has (1)memebers
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5
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describe how the how the govt oversees that co following regualtions of finanical reporting (and auditors)
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PCAOB reports to the SEC, which appoints a 5 memebrs to the board
co register with the SEC and report the PCAOB..........PCAOB is responisble for auditing their complicance with the SOX regulations and proffesional standards......t |
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how does the SOX affect corporate management?
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are required to report SEC....and requires a certifcation by the CEO and CFO
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what must the certfication by the CEO and CFO? what are the requirements?
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(1)received and revied final reports (2)reports are not misleading (3)fairly represent co (4)the offecers are responsible for establishing internal controls and have disclosed the co audit committe and external audtiors any deficiences or fraud
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T or F
a co finanical report does not have to include all material off balance sheet transactions and activities that have a materal effect on the corporations current or future finanical condition |
false
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T or F
the SOX requires to disclose whether a co has a code of ethics to the public |
true
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how does the SOX affect external auditors? (7)
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SOX prohibits them from
(1)booking keeping or accounting of the client (2)finanical info systems design and implentation (3)appriasal, or eval services, fairness opinions or contribution in kind reports (4)internal outsourcing services (5)management functions or human resource (6)broker or deal investment advisor or investment banking services (7)legal and expert services unrealted to the audit (8)any other service that the acccounting borad (PCAOB) determines impermissible |
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T or F
the SOX prohibits external auditors from having certain jobs such as working for cleints, being broker or deal/investment adivsor, internal audit outsourcing servce, or providing legal services |
true
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T or F
like most countries, the us accoutning standards are set by the govt |
false-by private organization
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what does FASB stand for?
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finanical accouting standards board
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what does GASB stand for?
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governmental accoutning standards board
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what dos GAO stand for?
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general accounting office
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what does the ISAB stan dfor?
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international accounting standards board
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what is the FASB?
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has been the primary organization for settin accounting standards for business inthe US
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NAME
this has been the primary organization for settin accounting standards for business inthe US |
FASB
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what is the GASB?
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set accounting standards for the state and local govt units
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NAME
this set accounting standards for the state and local govt units |
GASB
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where are the headquartors for FASB and the GASB?
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nortwalk, connecitcut
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the headquaters for (1)and (2)are in nortwalk, connicent
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FASB and GASB
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what is the GAO?
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is the primary federal govt agency that oversees accounting in the federal govt
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is the GASB private or federal?
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private
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NAME
this is the primary federal govt agency that oversees accounting in the federal govt |
GAO
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what is the IASB?
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reccomends accounting standards that is belives are approopriate for a broad range of global acitivities involving co in many nations
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NAME
this reccomends accounting standards that is belives are approopriate for a broad range of global acitivities involving co in many nations |
IASB
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what are the standard setting process for creating GAAP? from the FASB and GASB and IASB? (7)
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(1)accounting issues are id and eval for consideration (2)a discussion memoranduium is issued in response are solcited (3)public hearings are held (4)an exposure draft is issues and responses are solicited (5)ADDITIONAL public hearings are held as needed (6)a standard is issued (7)existing standards are reviewed and modified as needed
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what is a discussion memorandum?
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is a doc that ids accounting issues and alternative to resolving the issues
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NAME
this is a doc that ids accounting issues and alternative to resolving these issues |
discussion memorandum
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what is a exposure draft?
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is a doc that describes a propsed accounting standard
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NAME
this is a doc that describes a propsed accounting standards |
exposure draft
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what is a statements of finanical accounting standards?
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an accounting standard is an official pronouncement establishing acceptable accounting procedures or finanical report content
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FASB standards are also called (1)
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statements of finanical accounting standards
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(1)is also called statemtns of finanical accounting standards
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FASB standards
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what is the FASB conceptual framework?
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is a set of objectives, principles, and def to guide the development of new accounting standards
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NAME
this is a set of objectives, principles, and def to guide the development of new accounting standards |
FASB conceptual framework
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what are the (4)major components of the FASB conceptual framework?
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(1)objectivse of finanical reporting (2)qualitative characteristics of accounting info (3)elements of finanical statemetns (4)recoginition and measurement in finanical statemetns
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NAME
these include (1)objectivse of finanical reporting (2)qualitative characteristics of accounting info (3)elements of finanical statemetns (4)recoginition and measurement in finanical statemetns |
FASB conceptual framework
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NAME
the purpose of these are to provide current and potential investors, creditors, and other users with info about co |
objectives of finanical reporrting
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what are qualitative characteristics?
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are attributes that make accounting info useful
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NAME
these are attributes that make accounting info useful |
qualitiatve charachertists
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what are the most important qualitative charcteristics?
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(1)relevance and reliability
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what does it mean for finanical statements should be relevant and reliabile?(2)
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relevant-info should be timely and predictive or feedback value (2)reliable-info should faithfully represent economic events and should be verifable and neutral
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NAME
these provide def of the primary classes of items contained in faincnial statements |
elements of fainniacal statemetn
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give some ex of elements of the finanical statements?
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def of primary classes of items contained in the statemetn
ex) assets, liabilties, OE, investmetnts, reveues, expen etc |
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NAME
these id info that should be contained in the finanical statements |
recognition and measurement criteria
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what are NORMALLY included in corporate annual report? (8)
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(1)a letter from the CEO (2)description of co products and business acitvties (3)a summary of selected business data (4)discussion by management of co performance (5)finanical statemetns (6)notes to the finanical statements (7)statement of management responisbility for the finanical statemetns (8)an audit report
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what dose MD&A stand for?
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management's discussion and analysis
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what is the MD&A?
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explains important events and changes in performance during the years preseneted in the financial statements
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NAME
this explains important events and changes in performance during the years preseneted in the financial statements |
MD&A
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what are some examples of issues that are normoal considered?
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(1)a comparision of operating results among that data provided in the co's income statement (2)liquidty and cash flows as indicated by cash and short-term cash flows (3)major business tasks(4)finanical risks such as foreign currency exchange rates, equity security prices, and interest rate changes on debt securities (5)changes in accounting methods used by co (6)subsequent events
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what are notes to finanical statements?
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help readers to interpret the statements....describe how some numbers were computed and provide additional info
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what is an audit?
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involves the detailed, systematic investigation of co's accounting records and procedures for the purpose of determining the reliability of finanical reports
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NAME
involves the detailed, systematic investigation of co's accounting records and procedures for the purpose of determining the reliability of finanical reports |
audit
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T or F
with an audit report, they comare info with past years |
true
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what is attestation?
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occurs when an auditor affirms the fairness of the finanical statements and other info
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NAME
this occurs when an auditor affirms the fairness of the finanical statements and other info |
attestation
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what does a fair presentation mean?
what does an unqualifed opnion on an audit report mean? |
means that it is fair representation means that the statements are prepared in conformity with GAAp and are free from material omission
unqualifed opnion-means the auditor stating that there are no limits or conditions to his opnions. it a 100% fair representation |
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what are auditing standards?
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include procedures used in conducting an audit to help auditors form an opinion about the fairness of the audited statemetns
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NAME
this include procedures used in conducting an audit to help auditors form an opinion about the fairness of the audited statemetns |
auditing standards
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T or F
auditors examine 100% of the co finanical statemetns |
false-to time consuming
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do auditors examine 100% of the co finanical statements?
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no-too time consuming
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T or F
unqualifed opnion states means that the co is prosperous and growing--a overall sucess |
false- not means they followed GAAP and could not find a error
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what are internal controls?
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are procedures a company uses to protects it assets and ensure the accuracy of the accounting info
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NAME
these are procedures a co uses to protect its assets and ensure the accuracy of the accounting info |
internal controls
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NAME
this part of the co is responisble for recieving accounting info from the indpedent auditors and from those incorporation who implement and eval intenral controls |
audit committe
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what are some big internal control a co should have? (3)
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(1)management philosophy- a strong philopshy that encouraes appropraite security and behavior in the co and enforce policies and encourage employees to take action.....if top management takes a lax so will others (2)buisiness ethics- should havea code of ethics (3)computer system controls- (4)human resources controls- hire qualifed employess and have esgregation of duties (not acess to other stuff not needed), and employees should be supervised (5)physical controls such as hard tags
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what is a major purpose of business ethics?
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to ensure compliance with laws and regulations
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NAME
a major purpose of this is to ensure compliance with the laws and regulations |
intenral control
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what do computer system controls do?
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controls a, protects, an co's info resources from unauthorized access, impropor use and destruction
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what are some examples of how computer system controls you can implement? (6)
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(1)appropriate id and passwords to log on/off (2)not allowing other access to info they do not need (3)check for data errors (4)auto numbering - to id transactions and sources of doc such as sales order (5)back up systemsn and data (6)diaster recovery plan- (if computer goes down)
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what are some internal controls that can people in human resources can do?
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(1)hire qualifed employees (2)have segration of duties-should not have access to resources that are easy to misuse (3)background checks (4)employee should be supervised
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what are internal auditors?
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work for business and reponisble for developing and monitoring a co division for complaiance with gAAP
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T or F
the SEC and FASB do not estbalish new accounting standards |
false
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computerized accounting systems usually contain (1)divided up into these
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modules
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what are some common types of modules?(5)
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are commonly associated with business acitvties-- (1)sales (2) customer relations, (3)purchasing and inventory, (4)production, and (5) human resources
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what does ERP stand for?
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enterprise resource planning
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what is ERP?
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systems that integrate most of the business info fxs based for management decisions
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NAME
systems that integrate most of the business info fxs based for management decisions |
ERP
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what are some common ex of modules? (7)
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(1)sales module (2)purchases and inventory mangement (3)human resources (4)production module (5)asset management module (6)finanical management module (7)general ledger/finanical reporting module
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what are subsidiary accounts?
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are the computerized system records for finanical data about individual items of importance to a co
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NAME
these are are the computerized system records for finanical data about individual items of importance to a co |
subsidiary accounts
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records for all subsidary accounts of a particulat type are maintained in a (1)
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subsidiary legder
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what are control accounts?
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are summary accounts that maintain totals for all subsidiary accounts of a particular type
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NAME
these are summary accounts that maintain totals for all subsidiary accounts of a particular type |
control accounts
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what is the general ledger?
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records for each control account
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NAME
this contains records for each co's control account |
general ledger
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what is a E-business?
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using computer networks such as intenret to make customer sales
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NAME
this are business that use computer networks such as the internet to make customer sales |
E-business
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what is an application software?
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includes the computer programs that permit data to be records and processed
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NAME
these includes the comptuer programs that permit data to be recorded and processed |
application software
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what is database?
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is a set of computirized files in which a co data are stored in a form that faciltiates retrieval and updating of data
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NAME
this is a is a set of computirized files in which a co data are stored in a form that faciltiates retrieval and updating of data |
database
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what is a database management system?
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controls database fxs to ensure data are recorded properly and are accessed only by authorized users
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NAME
these are controls database fxs to ensure data are recorded properly and are accessed only by authorized users |
database management system
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what is a computer network?
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is a set of hardware devices that are linked so they can exchange data among themselves using software
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NAME
this is is a set of hardware devices that are linked so they can exchange data among themselves using software |
computer network
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application software usally rsides on one or more (1)
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application servers or networks
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application servers are connected to the (1)
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database servers
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application software usually reside on one or more (1)and the application servers are connected to the (2)
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(1)application server or network (2)database server
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what are database server?
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which store and manage data
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NAME
these recieve and stores and manages this data |
database server
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what is a firewall?
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is special software running on a co making it diffucilt for unauthorized users to gain acess to the co
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NAME
this is is special software running on a co making it diffucilt for unauthorized users to gain acess to the co |
firewall
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draw a pic of the comptuer network works
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scanner and client workstation=application server=database server=firewall=webserver=intenret=customers
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what are most obligations?
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reported as laibitlies
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NAME
this refers to an organizations obligations to deliver payments, goods or services in the future |
liabilties
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what is liabilties?
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refers to an organizations obligation to devlier payments, or goods and services in the future
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what are (3)attributes of a liabiltiy?
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(1)a present responsibility to exists to transfer resources to anotehr entity at some future time (2)the orgnaization cannot choose to avoid the transfer (3)the event creating the responisbiltiy has already occured
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what is a short term debt?
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debt to be paid off during the coming fiscal period
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NAME
this refers to a debt to paid off in the coming fiscal period |
short term debt
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what is a long term debts?
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refers to notes and bonds payable
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NAME
these are notes and bonds payable |
long term debts
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what are notes?
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an agreement btwn the co and a finanical instution that lends money to the co
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NAME
these usally refers to an agreement btwn the co and a finanical insitution that lends money to the co |
notes
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what are bonds?
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refers to a debt in the form of a certifciate in which the issuer (borrower) agrees to pay the maturity value of the bond at the predetermined date
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NAME
this refers to a debt in the form of a certifciate in which the issuer (borrower) agrees to pay the maturity value of the bond at the predetermined date |
bonds
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what is the differ btwn a bond and note payable? (2)
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(1)notes-btwn a financial inst and co (2)bonds payable refers to a debt in the form of a certifciate in which the issuer (borrower) agrees to pay the maturity value of the bond at the predetermined date
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when it comes to bonds? who is the borrower?
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person issuing the bond
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Most coroprate bonds have a maturity rate of (1)
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1,000 dollars
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secured debt are also called (1)
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secured loans
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(1)are also called secured loans
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secured debts
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what is a secured debt?
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a debt issued that is sceured by a specfiic assset such as land or building.....if co does not have cash to pay back then the co gest those assets
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NAME
this is a debt issued that is sceured by a specfiic assset such as land or building.....if co does not have cash to pay back then the co gest those assets |
secured debt
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what are some types of debt? (4)
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(1)short term (2)long term (3)secured debt (3)debentures
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what are debentures?
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are unsecured bonds....if the co canot pay can be forced to liquidate
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NAME
these are unsecured bonds....if the co canot pay can be forced to liquidate |
debentures
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how long does it take MOST bonds to mature?
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10, 20 or 30 years from date issued
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what are some characteristics of debt obligations?
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some require periodic interest and principil payments while some pay out at the maturaity date
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what are serial bonds?
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bonds issues that require a portion of the bonds to be repaid each year
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NAME
these bonds are comonly issued by the govt |
serial bonds
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NAME
these are bonds that require a portion of the bonds to be repaid each yaer |
serial bonds
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why might a co want to refiance?
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when the general leve of intrest rates in the economy goes down. a co then cna issue a new debt at lower interest rate then its existing debt
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what are callable bonds?
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are bonds that co reqacuires after the bonds have been oustanding for a spefifc period
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NAME
these are bodns that the co reqauires after the bonds have been outstanding for a spefic period |
callable bonds
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what is the differ btwn serial and callable bonds? (2)
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serial bonds- bonds issued that require a portion of the bodns to be repaid each year
(2)callable bonds-a co can reaquire after the bonds have been oustanding for a spefic period of time |
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maturity value is also known as the (1)
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face value
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(1)is also know as the face value
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maturity value
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what is the stated rate of interst?
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the annual interest rate paid on the debt
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NAME
this is the annual interest rate that paid on the debt |
stated rate
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what is the effective rate?
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is determined by the amount that creditors are willing to pay for the bonds and effects the amount of cash the co recieves ffrom its bonds when they are sold
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NAME
this is the is determined by the amount that creditors are willing to pay for the bonds and effects the amount of cash the co recieves ffrom its bonds when they are |
effective rate
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what is the differ btwn the effective rate and stated rate?
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(1)stated rate-the annual interest paid on the debt (2) effective rate-is determined by the amount that creditors are willing to pay for the bonds and effects the amount of cash the co recieves ffrom its bonds when they are
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(1)determine the interest paid on a bond while the (2)set the price of the bonds to earn on the interest rate they require
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(1)borrower (2)creditor
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what does PV stand for?
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present value
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what is the PV?
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is the present value or the value at the BEGINING of the time span
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NAME
this is is the present value or the value at the BEGINING of the time span |
PV
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what does FV stan dfor?
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future value
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what does N stand for?
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number
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what does PMT stand for or refer to
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annual annuity
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what is the FV?
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is the future value or the value at the END of the time span
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NAME
this refers to the value at the END of the time span |
FV
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what is the N?
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the number of interest or commpounds period interest is paid
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what is PMT?
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annuity- is a series of EQUAL ammount of payments
(2)recieved or paid over a EQUAL time period |
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NAME
this refers to annuity- is a series of EQUAL ammount of payments (2)recieved or paid over a EQUAL time period |
PMT
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Organizations engage in acitvties that (1)
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obligate them to make future payments of cash to provide goods and services
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Most obiligations are reported as(1) on a co (2)
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liabilties (2)balance sheet
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Long term debts consits of (1) and (2)
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notes and bonds payable
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NAME
this is debt backed by specfic assets |
securd debt
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co often issued (1)
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debentures bonds
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NAME
these are bonds backed by the general co NOT specific assets |
debenture bodns
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T or F
debenture bonds are backed by the co's specfic assets |
false GENERAL CO
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T or F
collable bonds may be re-purchased by the co after a certian period |
true
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what are convertiable bonds?
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bonds that can be converted into a co's common stock
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NAME
these are bonds that can be converted into a co's common stock |
convertiable bonds
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the maturity or face value of bonds is always that (1)
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FV
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(1)or (2)of the bonds is always the FV
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face value or maturity
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the PMT is always based on the (1)
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face value of the *the stated interest rate
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the I factor i based on the (1)
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market or effective rate of interest at the time of the issue of sale
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NAME
this is based on the market or effective rate of the interest at the timeo f the issue sale |
I factor
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NAME
this is based on the face value* the state interest rate |
PMT
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the effective rate is also caleld the (1)
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market rate
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(1)is also called the market rate
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effective rate
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when the market rate of interest is higher than the state rate then the bond sell at a (1)
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discounet
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when the market rate of interest is lower than the stated rate the bonds sell at a (1
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premium
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NAME
this is the present value + the interes earned for period of the investment |
FV
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FV is determined or specficed by
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the presentvalue + the interest paid of the period of the investment
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FV and PV consider timing differences (1)
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btwn when the cash is recived and then present periods
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the difference the future and present values depends onthe (1)
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rate of interest paid during the time period
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what is compound interest?
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when interest accumuatles on interest
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NAME
this is when when an investor earns compounds interest any time an investment extends beyonds one period and interest earned in other periods is NOT withdrawn |
compound interest
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NAME
this refers to when interest accumualtes on interest |
compoundi interest
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when using the calcutor, when must you make the a value a negative amount?
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when solving for N or I
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NAME
this is the value of the amount on a particular date prior to the time the amount is paid or recieved |
present value
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earning interest in one period on interest earned in an earlier period is (1)
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compound interest
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NAME
this is a series of equal amount recived or paid over a specfied number of equal time periods |
PMT
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how should you find/enter the unequal payments differ inthe cal?
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n should be once year less
first year no interest accumualted |
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NAME
this is a two fold promise to pay back the principil at the end of the bonds' life and to pay interest at regular intervals |
bond
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a bond is a two fold promise to (1)and (2)
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pay back the principil at the end of the bond's life (2)to pay interest at regular intervals
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NAME
these terms indicate the dollar amount pronted on the face of the bond. this is the amount that the corp will pay the buyer at maturity |
(1)par, face, principil, and matuirty
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coupan rates can also be called (1)
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nominal or stated rate
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nominal rate can also be called (1)or (2)
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stated or coupan rate
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stated rate can also be called (1)or (2)
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nominal or coupan rate
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NAME
this is the intterest rate printed on the face of the bonds...it determines the amount of interest payments |
stated rate
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the stated rate is the interest rate (1)
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printed on the bond
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NAME
this interest rate determines the amount of interest payments |
stated rate
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T or F
the stated rate and the market rate are the same thing |
false
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market rate, effective rate, and real rate yeild to (1)
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maturity
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NAME
this is the rate that most investmentsare currently paying |
effective rate
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the effective rate is also called the (1) or (2)
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market rate or real rate
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market rate is also called the (1)or (2)
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real or effective rate
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the real reat is also called the (1)or (2)
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effective or market rate
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bonds will usually sels for a price such as that, over the life of the bonds, the invester will earn the (1)
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market rate
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when you are buyer, what do you want to the PV to be?
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the lowest PV
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when you are seller, what do you want to the PV to be?
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highest PV
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when does a bond sell at face value?
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market value= stated rate
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when does the a bond sell at discount?
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market rate is > then the stated rate
(greater) |
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when does the bond sell at a premium?
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when the market rate is less than the stated rate
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compare contrast when a
bonds sells at face value discount premium |
(1)face value
market value= stated rate (2) discount market rate is greater than stated rate (3)premium when the market rate is less than the stated state |
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for bonds, how do you find the PMT?
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PMT= the face value * stated interest rate
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For bonds, what numbers do you put in the calc?
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FV=
PMT= (face value *stated rate) N= I= (market rate) NOTE: must use all option then solve for the PV to find worth or selling price of the bond |
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par value is also called (1)
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face value
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(1)is also called face value
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par value
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Which of the following is not a purpose of accounting regulation?
a. Protect the interests of external users of the financial statements b. Ensure every company reports information in the exact same way c. Improve the reliability of the financial statements d. Increase consistency in application of accounting principles across different businesses |
b
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The Sarbanes Oxley Act was a result of:
a. the Federal Tax Act of 1913 b. the collapse of the stock market in 1929 c. the formation of the New York Stock Exchange in 1792 d. major misstatements on the financial statements of several major companies in the early 2000's |
d
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The Securities and Exchange Commission (SEC) :
a. Financial information for all companies b. Financial information for publicly traded companies c. Tax laws and their effects on business d. provides oversight for audits of publicly traded companies |
b
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The GASB can be described as:
a. A private organization with the primary responsibility to set accounting standards for businesses within the United States. b. A private organization recommending accounting standards for a broad range of global activities. c. A private organization with the primary responsibility to set accounting standards for state and local government units. d. A private organization that oversees the financial audit activities of public companies. |
c
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Public hearings on accounting issues may be held:
a. After discussion memos are issued b. After exposure drafts are issued c. During the phase when accounting issues are identified and evaluated for consideration d. All of these choices |
d
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If the Financial Accounting Standards Board wanted to communicate a new, proposed accounting standard, they would issue:
a. a discussion memorandum b. a formal standard c. legislation to require compliance among public companies d. an exposure draft |
d
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The primary purpose of financial reports is to:
a. ensure compliance with legislation b. follow tax rules c. provide information useful to current and potential investors, creditors, and other users d. provide cash flow information to creditors |
c
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Which of the following qualitative characteristics is not a component of relevance?
a. timeliness b. neutral and free of bias c. predictive value d. feedback value |
b
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Recognition and measurement criteria:
a. identify information that should be contained in the financial statements b. provide definitions of the primary classes of items contained in the financial statements c. ensure that information presented fully represents the economic events d. are attributes that make accounting information useful |
a
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Which of the following would not normally be included in a corporate annual report?
a. Business summary data b. Notes to the financial statements c. Management discussion and analysis d. Budget information for the year |
d
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In which part of the corporate annual report would you expect to find a discussion of important events and changes during the years presented in the financial statements?
a. The auditors' report b. The Management's Discussion and Analysis section c. The Summary Business Data section d. The Report of Management Responsibility section |
b
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All of the following statements regarding an auditor's report is true except for:
a. the report states the auditor's opinion b. the audit report does not guarantee a company will not declare bankruptcy c. an audit report asserts that every financial transaction of the company is tested d. the audit report summarizes the audit process |
c
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A strong system of internal controls:
a. is essential for protecting any information system b. makes it impossible for fraud to occur c. relies more on the written procedure rather than what is truly practiced d. is not concerned with an assessment of risk |
a
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Important ethical issues associated with corporate conduct from an employee's point of view would include:
a. Quality and safety of products b. Providing superior returns c. Privacy of information about employees d. Compliance with antitrust laws |
c
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Internal controls designed for computer systems should:
a. protect company's information resources from unauthorized access. b. protect company's information resources from destruction. c. protect company's information resources from improper use. d. all of these choices. |
d
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The external auditors of a corporation:
a. may also provide bookkeeping or other service relating to accounting records or financial statements of the client company. b. must attest to and report on management's assessment of the company's internal control system. c. are allowed to become the CEO or CFO of a client company because they have such precise experience. d. do not interact with the audit committee of a company. |
b
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Under the Sarbanes Oxley Act of 2002, which of the following is not considered a responsibility of management?
a. Certification by the CEO and CFO that there are no errors on any of the financial statements. b. Certification by the CEO and CFO that the reports are not misleading. c. Certification by the CEO and CFO that the officers have disclosed to the audit committee and external auditors any significant deficiencies in controls. d. Certification by the CEO and CFO that they have reviewed the financial reports |
a
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The PCAOB (Public Companies Accounting Oversight Board) :
a. reports to the SEC b. establishes auditing standards for external audits of publicly traded companies c. is responsible to investigate potential violations of SOX rules d. all of these choices |
d
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Which of the following is true about the Financial Accounting Standards Board?
a. It is a private body, not a government agency b. FASB has been the primary organization for setting accounting standards for businesses in the United States c. The FASB also sets regulations for non-profit organizations other than government agencies d. All of these choices |
d
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Which agency would develop the rules and regulations for a county municipality?
a. FASB b. IASB c. GASB d. Congress |
c
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A discussion memorandum is:
a. a document that identifies accounting issues and alternative approaches to resolving the issues b. a document that describes a proposed accounting standard c. an official pronouncement of accounting standards by the FASB d. invitation to discuss accounting issues |
a
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Which of the following is not a component of the FASB conceptual framework?
a. Qualitative characteristics of accounting information b. Elements of the financial statements c. Recognition and measurement in financial statements d. The system of internal controls |
d
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The three components of reliability are:
a. timeliness, feedback value, and predictive value. b. fully representative, neutral, and verifiable. c. timeliness, relevance, and materiality. d. usefulness, neutral, and timely. |
b
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What qualitative characteristic may suffer in order to achieve the goal of timeliness?
a. Reliability b. elements of the financial statements c. predictive value d. recognition and measurement criteria |
a
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In what part of the corporate annual report might you expect to find information about how amounts reported in the financial statements were determined?
a. Management Discussion and Analysis b. Summary of business data c. The notes to the financial statements d. The auditors report |
c
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Which of the following issues might be addressed in the Management's Discussion and Analysis section of a corporate annual report?
a. Major business risks b. Strategic focus for the business c. Summary of the results for the period d. all of these choices |
d
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An unqualified audit opinion means that:
a. the auditor believes the financial statements fairly represent the company's actual economic events for the period covered by the audited statements. b. the auditor believes management is unqualified to lead the company. c. the auditor assumes responsibility for the preparation of the financial statements. d. all of these choices |
a
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Which of the following is considered a good internal control of a company's computer systems?
a. Automatic numbering of invoices, checks, purchase orders, etc. b. Having a disaster recovery plan in place and tested. c. Restricting user access to computer files. d. All of these choices. |
d
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Human resource internal controls include all of the following except:
a. segregating duties to prevent misuse of resources. b. performing background checks during the hiring process. c. controlling access to physical assets. d. proper supervision of employees. |
c
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Important ethical issues associated with corporate conduct from a customer's point of view would include:
a. Quality and safety of products b. Providing superior returns c. Privacy of information about employees d. Compliance with antitrust laws |
a
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In which module of an information system would you expect to find data about the flow of costs through the manufacturing process?
a. The inventory management module b. The asset management module c. The production module |
c
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All of the following are reasons for using a subsidiary ledger except:
a. they allow access to detailed information. b. they provide useful detail in an organized fashion. c. they can be used to verify control account balances. d. they ensure all entries are made to record transactions. |
d
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Systems that integrate most of the business information functions as a basis for management decisions are referred to as:
a. Enterprise Resource Planning systems (ERP) b. Interfaced Resource Planning systems (IRP) c. Consolidated financial systems d. Business Users Systems (BUS) |
a
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Application software is defined as:
a. a set of computerized files in which company data is stored. b. the computer programs that permit data to be recorded and processed. c. a set of hardware devices linked together to exchange data. d. the set of internal controls designed to protect data. |
b
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The computer that houses the services provided to client computers in a network environment is called a:
a. database b. e-ring c. server d. workstation |
c
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Which of the following would not be considered an internal control of an information processing system?
a. obligations of a business b. passwords c. backup of data d. disaster recovery plan |
a
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In which accounting system module would you expect to find customer files?
a. Inventory management module b. Production module c. Sales Processing module d. Production module |
c
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hich of the following would be considered documents in a purchasing/inventory management module?
a. Purchase order, invoice, checks or EFTs to vendors b. Purchase order, sales orders, checks or EFTs to vendors c. Purchase order, invoice, timecards d. Purchase order, sales orders, receiving reports |
a
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Which of the following is not normally considered as one of the normal modules of an accounting system?
a. Human resources module b. Financial management module c. Internal control module d. Inventory management module |
c
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A common example of a subsidiary account used in a company would be which of the following?
a. Cash b. Interest Payable c. Accounts Receivable d. All of these choices |
c
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Control accounts can be defined as:
a. subsidiary accounts maintained for the general ledger b. detailed customer accounts c. computerized records that provide financial data about individual items of importance d. summary accounts that maintain the totals for all subsidiary accounts of a particular type |
d
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A firewall is designed to:
a. back up critical files within a database. b. make it difficult for unauthorized users to access a company's internal network. c. make it easier for customers to place orders via the internet. d. exchange information between various computer hardware devices. |
b
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Which of the following is true about E-business?
a. E-business uses the internet to make customer sales. b. E-business systems can record sales, accounts receivable data, and cost of goods sold data. c. Systems that permit companies to order goods from vendors are referred to as business to business systems. d. All of these choices. |
d
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The ________ value is value of an amount on a particular date prior to the time the amount is received or must be paid.
a. Present b. Future c. Compound d. Cash |
a
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You just received a gift from your favorite uncle in the amount of $5,000. You want to know if you deposit it in the bank and let it earn interest for 5 years if it would be worth enough to buy a car on your 16th birthday. You want to calculate the:
a. Future value b. Present value c. Cash value d. Compound value |
a
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The relationship between future value and present value is:
a. the amount invested b. the tax rate c. interest d. none of these choices |
c
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How much would you have to invest today at 8% interest to have $25,000 at the end of three periods?
a. $19,846 b. $20,000 c. $25,000 d. $22,600 |
a
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Jennifer Rose has the opportunity to receive $20,000 a year at the end of each year for the next 5 years or take $90,000 today. Which option should she chose? Assume the current interest rate is 5%.
a. The 5 payments of $20,000 each b. The $90,000 payment today c. Either one is acceptable d. None of these choices. |
b
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The payment on a loan includes
a. A portion attributable to interest b. A portion attributable to principal c. Both "A portion attributable to interest" and "A portion attributable to principal" d. None of these choices |
c
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What is the approach to take when calculating an investment made from unequal amounts of payments?
a. Calculate the future value of each investment for the correct interest and number of periods invested and add each amount together. b. Calculate the lowest amount invested multiplied by the annuity factor for the total number of periods and correct interest rate. c. Calculate the future value of the lowest amount invested and the future value of the highest amount invested and calculate the average. d. None of these choices. |
a
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When recording the payment on a Note Payable, you would expect to see:
a. A decrease in cash and an increase in note payable and interest expense. b. A decrease in note payable and a decrease in cash. c. A increase to interest expense and an increase to cash. d. An increase in interest expense and a decrease in notes payable and cash. |
d
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A bond's contract rate of interest is also called the:
a. Discount rate b. Stated rate c. Effective rate d. Market rate |
b
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When amortizing a bond premium or a bond discount, interest expense is recorded:
a. at the real interest rate multiplied by the current present value of the bonds b. at the stated interest rate multiplied by the current present value of the bonds c. at the stated interest rate multiplied by the face value of the bonds d. at the state interest rate multiplied by the maturity value of the bonds |
b
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