Exam (elaborations)
AC 300 Quiz Bank
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Exam of 100 pages for the course nursing course at nursing course (AC 300 Quiz Bank)
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Quiz OneQuestion 1
pts
Businesses earn profits by converting financial, physical, and labor resources
into goods and services that satisfy consumer demands. This statement is
Correct!
True
Businesses add value by converting financial, physical, and labor resources into
goods and services that consumers want. For example, a homebuilder may borrow
$150,000 from a bank and spend the money to buy labor and materials to build a
house. The house may sell for $180,000 because a completed house is more
valuable than unconverted labor and materials. In this case, the profit is $30,000
($180,000 sales price of the house minus $150,000 cost of labor and materials).
False
Question 2
pts
Resource owners want to provide resources to businesses with high profit
potential because those businesses will pay higher taxes. This statement is
You Answered
True
Correct Answer
False
See LO 1 Video
Question 3
pts
Accounting provides a service to society by gathering and reporting
information about a company's profit potential. This statement is
Correct!
True
Businesses that efficiently produce products customers want are rewarded with high
profits. For example, the invention and production of the IPhone generated billions
of dollars of profit for Apple Inc. Resource owners prefer to provide resources to
,businesses with high earnings potential because such companies are better able to
compensate them. Accounting provides a valuable service to society because it
provides information that investors, creditors, owners of physical resources, and
workers rely on to evaluate which businesses are worthy of receiving their
resources.
False
Question 4
pts
The primary purpose of managerial accounting is to prepare financial
statements in accordance with a reporting framework (e.g. GAAP).
True
Correct!
False
The primary purpose of managerial accounting is to assist mangers within the
Company in determining how much it costs to acquire resources and convert them
into saleable goods and services. There are no official rules for managerial
accounting; the type and quantity of information collected and used by
management is at their discretion. In contrast, financial accounting information is
prepared in accordance with a reporting framework (e.g. G.A.A.P.) and primarily
utilized by investors and creditors that are external to the Company. These parties
rely on financial information to assist them in deciding whether to provide resources
to the Company.
Question 5
pts
Generally Accepted Accounting Principles (GAAP) are designed to provide
guidance for
Correct!
financial accounting
Financial accounting reports are prepared for external users. Since the users
operate outside the confines of a company they are not privy to the way
management chooses to report accounting events. For example, suppose a
company provides a service to a customer in year one but does not collect cash
from its customer until year two. One company may decide to report revenue when
the company earned it while another company may decide it is better to wait until
the company receives the cash in year two. An external user would need to know
how each company chooses to report its earnings in order to make comparisons
between the companies. This is just one example of many alternative reporting
,methods that may be used to report on a variety of accounting transactions. To
promote comparisons between companies, users need a standardized set of
reporting rules. The rules that have evolved over time are called Generally Accepted
Accounting Principles (GAAP). Since internal users are familiar with their company’s
reporting practices, there is no need to establish a set of rules for reporting
managerial accounting practices. Tax rules are established by laws not GAAP and
audit rules cover audit practice not financial reporting.
tax accounting
managerial accounting
audit service accounting
Question 6
pts
Which of the following types of businesses require financial information to
operate effectively?
For profit businesses
Governmental entities
Non-profit businesses
Correct!
All of these businesses require financial information
Financial information is required for all types of businesses. Governmental and non-
profit business types differ from a for-profit business in regards to their profit
motives. However, all business entities require financial information to monitor the
cost of acquiring resources and converting them into saleable goods or services.
Question 7
pts
Public accountants perform which of the following functions to ensure that
financial information provided by a Company to investors is in accordance
with G.A.A.P.?
Prepare a budget
, Correct!
Conduct an audit
One of the jobs of a public accountant is to conduct an audit of a Company’s
financial information. An audit ensures that financial information provided by the
Company is in compliance with G.A.A.P. Investors rely on an audit to ensure the
accuracy of financial information in order to make informed financial decisions.
Tax return preparation
None of the above
Question 8
pts
Paul Savage purchased a restaurant named Burger Haven from Larry Jones.
The purchase would cause the number of reporting entities to
Increase
Decrease
Correct!
Remain Constant
There are three reporting entities Paul Savage, Burger Haven, and Larry Jones.
These same entities existed before and after the purchase of the restaurant.
the answer cannot be determined from the information provided.
Question 9
pts
How accounting transactions are recorded will vary depending on the entity
perspective taken. This statement is
Correct!
True
How you record accounting transactions will vary depending on the perspective you
take. For example, if cash is exchanged for a building, the seller will record an
increase in cash but the buyer will record a decrease in cash.
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