81) Ending capital reported on the statement of owner's equity is calculated by adding owner investments and net losses and subtracting net income and withdrawals.
82) The cost-benefit constraint prescribes that only information with benefits of disclosure less than the costs of providing it, need be disclosed.
83) The cost-benefit constraint says that information disclosed must have benefits to the user that are greater than the costs of providing it.
84) Net income is sometimes called earnings or profit.
85) Accounting is an information and measurement system that does all of the following except:
A) Identifies business activities.
B) Records business activities.
C) Communicates business activities.
D) Eliminates the need for interpreting financial data.
E) Helps people make better decisions.
86) Technology:
A) Has replaced accounting.
B) Has not improved the clerical accuracy of accounting.
C) Reduces the time, effort and cost of recordkeeping.
D) In accounting has replaced the need for decision makers.
E) In accounting is only available to large corporations.
87) The primary objective of financial accounting is to:
A) Serve the decision-making needs of internal users.
B) Provide accounting information that serves external users.
C) Monitor consumer needs, tastes, and price concerns.
D) Provide information on both the costs and benefits of looking after products and services.
E) Know what, when, and how much product to produce.
88) The area of accounting aimed at serving the decision making needs of internal users is:
A) Financial accounting.
B) Managerial accounting.
C) External auditing.
D) SEC reporting.
E) Bookkeeping.
89) External users of accounting information include all of the following except:
A) Shareholders.
B) Customers.
C) Purchasing managers.
D) Government regulators.
E) Creditors.
90) Which of the following is not true regarding a Certified Public Accountant?
A) Must meet education and experience requirements.
B) Must pass an examination.
C) Must exhibit ethical character.
D) May also be a Certified Management Accountant.
E) Cannot hold any certificate other than a CPA.
91) Which of the following factors is not a component of the fraud triangle?
A) Opportunity
B) Pressure
C) Rationalization
D) All of the above are components of the fraud triangle.
92) Which of the following is not true regarding ethics:
A) Ethics are beliefs that distinguish right from wrong.
B) Good ethics are good business.
C) Ethics do not affect the operations or outcome of a company.
D) Are critical in accounting.
E) Ethics are accepted standards of good and bad behavior.
93) A corporation is:
A) A business legally separate from its owners.
B) Controlled by the FASB.
C) Not responsible for its own acts and own debts.
D) The same as a limited liability partnership.
E) Not subject to double taxation.
94) The group that sets international preferred accounting practices is called the:
A) AICPA.
B) IASB.
C) CAP.
D) SEC.
E) FASB.
95) The Securities and Exchange Commission (SEC) has given the task of setting GAAP to the:
A) APB.
B) FASB.
C) AAA.
D) AICPA.
E) IASB.
96) The accounting concept that requires every business to be accounted for separately from other business entities, including its owner or owners is known as the:
A) Time-period assumption.
B) Business entity assumption.
C) Going-concern assumption.
D) Revenue recognition principle.
E) Measurement (Cost) principle.
97) The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue, is the:
A) Going-concern assumption.
B) Business entity assumption.
C) Objectivity principle.
D) Measurement (Cost) Principle.
E) Monetary unit assumption.
98) If a company is considering the purchase of a parcel of land that was acquired by the seller for $85,000, is offered for sale at $150,000, is assessed for tax purposes at $95,000, is considered by the purchaser as easily being worth $140,000, and is purchased for $137,000, the land should be recorded in the purchaser's books at:
A) $95,000.
B) $137,000.
C) $138,500.
D) $140,000.
E) $150,000.
99) To include the personal assets and transactions of a business's owner in the records and reports of the business would be in conflict with the: