a. Forecasts of cash needs for next year, but not financial comparisons of operating activity alternatives.
b. Financial comparisons of operating activity alternatives, but not forecasts of cash needs for next year.
c. Both forecasts of cash needs and financial comparisons are internal reports.
d. Neither forecasts of cash needs nor financial comparisons are internal reports.
Ans: C, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
57. Which of the following is the best definition of an internal user of accounting information?
a. Investors who use accounting information to decide whether to buy or sell stock.
b. Creditors like banks that use accounting information to evaluate the risk of lending money.
c. Labor unions who use accounting information to examine the ability of the company to pay increased wages and benefits.
d. Managers who use accounting information to plan, organize, and run a business.
Ans: D, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
58. The Internal Revenue Service is an external user of accounting information and a
a. taxing authority.
b. labor union.
c. customer.
d. regulatory agency.
Ans: A, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
59. Which of the following statements is not true regarding the Sarbanes-Oxley Act (SOX)?
a. The Act calls for increased oversight responsibilities for boards of directors.
b. The Act has resulted in increased penalties for financial fraud by top management.
c. The Act calls for decreased independence of outside auditors reviewing corporate financial statements.
d. The Act is meant to decrease the likelihood of unethical corporate behavior.
Ans: C, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Ethics, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
60. Which of the following is not a step for solving an ethical dilemma?
a. Identifying the alternatives and weighing the impact of each alternative on various stakeholders.
b. Certifying the ethical accuracy of the financial information.
c. Identifying and analyzing the principal elements in the situation.
d. Recognizing the ethical situation and issues involved.
Ans: B, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Ethics, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: Professional Demeanor, IMA: Reporting
61. Which of the following is the most appropriate definition of accounting?
a. The information system that identifies, records, and communicates the economic events of an organization to interested users.
b. A means of collecting information.
c. The interconnected network of subsystems necessary to operate a business.
d. Electronic collection, organization, and communication of vast amounts of information.
Ans: A, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
62. Which of the following would not be considered an internal user of accounting data for the Xanadu Company?
a. President of the company
b. Production manager
c. Merchandise inventory clerk
d. President of the employees' labor union
Ans: D, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
63. Which of the following groups uses accounting information primarily to insure the entity is operating within prescribed rules?
a. Taxing authorities
b. Regulatory agencies
c. Labor Unions
d. Management
Ans: B, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: Professional Demeanor, IMA: Reporting
64. The group of users of accounting information charged with achieving the goals of the business is its