Chapter 1: Introduction to accounting and business decision making
Learning objectives
1. Explain the process of accounting
Q1, Q2, Q3, Q52, Q53
2. Outline the importance of accounting and its role in decision making by various users
Q4, Q5, Q6, Q7, Q8, Q9
3. Explain the differences between financial accounting and management accounting
Q10, Q11, Q12, Q13, Q54, Q55
4. Explain the role of accounting information in the business planning process.
Q14, Q15, Q16, Q56, Q57
5. Discuss the globalisation of financial reporting
Q17, Q18, Q19, Q58
6. Identify the sources of company regulation in Australia
Q20, Q21, Q22, Q23, Q24, Q59
7. Explain the current standard setting framework and the role of the professional accounting associations in the standard-setting process
Q25, Q26, Q27, Q28, Q29, Q60, Q61
8. Evaluate the role of the Conceptual Framework and illustrate the qualitative characteristics of financial statements
Q30, Q31, Q32, Q33, Q34, Q35, Q36, Q37, Q38, Q39, Q40, Q41, Q42, Q62, Q63, Q64, Q65
9. Give examples of the limitations of accounting information
Q43, Q44, Q45, Q46, Q66, Q67
10. Provide examples of exciting opportunities for careers in accounting
Q47, Q48, Q49, Q50, Q51, Q68
Multiple-choice questions
Which of the following is not a business transaction?
a. Incurring interest on a business loan.
*b. A business owner purchasing a new home.
c. Purchasing inventory.
d. Receiving cash payment for services provided.
Correct answer: b
Learning Objective 1.1 ~ Explain the process of accounting
Which of the following is not an accounting report?
*a. Statement of employee job satisfaction .
b. Balance sheet.
c. Income statement.
d. Statement of cash flows.
Correct answer: a
Learning Objective 1.1 ~ Explain the process of accounting
The steps in the process of accounting take place in the following order:
a. measuring, identifying, decision making, communicating.
*b. identifying, measuring, communicating, decision making.
c. identifying, communicating, measuring, decision making.
d. identifying, decision making, measuring, communicating.
Correct answer: b
Learning Objective 1.1 ~ Explain the process of accounting
A supplier, when considering offering credit to a new customer, is most interested in the customer’s:
*a. ability to pay off debts as they fall due.
b. annual dividends.
c. taxable income.
d. compliance with accounting standards.
Correct answer: a
Learning Objective 1.2 ~ Outline the importance of accounting and its role in decision making by various users
The internal user of accounting information is the:
a. customer.
b. local council.
c. auditor from the Australian Tax Office.
*d. office manager.
Correct answer: d
Learning Objective 1.2 ~ Outline the importance of accounting and its role in decision making by various users
The information that would be of most interest to an organisation’s production manager is:
a. the ability to pay off debts as they fall due.
b. annual dividends.
*c. continuity of orders for the factory.
d. the company tax rate.
Correct answer: c
Learning Objective 1.2 ~ Outline the importance of accounting and its role in decision making by various users
Learning objectives
1. Explain the process of accounting
Q1, Q2, Q3, Q52, Q53
2. Outline the importance of accounting and its role in decision making by various users
Q4, Q5, Q6, Q7, Q8, Q9
3. Explain the differences between financial accounting and management accounting
Q10, Q11, Q12, Q13, Q54, Q55
4. Explain the role of accounting information in the business planning process.
Q14, Q15, Q16, Q56, Q57
5. Discuss the globalisation of financial reporting
Q17, Q18, Q19, Q58
6. Identify the sources of company regulation in Australia
Q20, Q21, Q22, Q23, Q24, Q59
7. Explain the current standard setting framework and the role of the professional accounting associations in the standard-setting process
Q25, Q26, Q27, Q28, Q29, Q60, Q61
8. Evaluate the role of the Conceptual Framework and illustrate the qualitative characteristics of financial statements
Q30, Q31, Q32, Q33, Q34, Q35, Q36, Q37, Q38, Q39, Q40, Q41, Q42, Q62, Q63, Q64, Q65
9. Give examples of the limitations of accounting information
Q43, Q44, Q45, Q46, Q66, Q67
10. Provide examples of exciting opportunities for careers in accounting
Q47, Q48, Q49, Q50, Q51, Q68
Multiple-choice questions
Which of the following is not a business transaction?
a. Incurring interest on a business loan.
*b. A business owner purchasing a new home.
c. Purchasing inventory.
d. Receiving cash payment for services provided.
Correct answer: b
Learning Objective 1.1 ~ Explain the process of accounting
Which of the following is not an accounting report?
*a. Statement of employee job satisfaction .
b. Balance sheet.
c. Income statement.
d. Statement of cash flows.
Correct answer: a
Learning Objective 1.1 ~ Explain the process of accounting
The steps in the process of accounting take place in the following order:
a. measuring, identifying, decision making, communicating.
*b. identifying, measuring, communicating, decision making.
c. identifying, communicating, measuring, decision making.
d. identifying, decision making, measuring, communicating.
Correct answer: b
Learning Objective 1.1 ~ Explain the process of accounting
A supplier, when considering offering credit to a new customer, is most interested in the customer’s:
*a. ability to pay off debts as they fall due.
b. annual dividends.
c. taxable income.
d. compliance with accounting standards.
Correct answer: a
Learning Objective 1.2 ~ Outline the importance of accounting and its role in decision making by various users
The internal user of accounting information is the:
a. customer.
b. local council.
c. auditor from the Australian Tax Office.
*d. office manager.
Correct answer: d
Learning Objective 1.2 ~ Outline the importance of accounting and its role in decision making by various users
The information that would be of most interest to an organisation’s production manager is:
a. the ability to pay off debts as they fall due.
b. annual dividends.
*c. continuity of orders for the factory.
d. the company tax rate.
Correct answer: c
Learning Objective 1.2 ~ Outline the importance of accounting and its role in decision making by various users