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Fundamental accounting principles john wild 24th edition exam guide
Fundamental accounting principles john wild 24th edition exam guide
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,Fundamental Accounting Principles, 24e (Wild)Chapter 1 Accounting in Business
1) Accounting is an information and measurement system that identifies, records, and
communicates an organization's business activities.
Answer: TRUE
Difficulty: 1 Easy
Topic: Importance of Accounting
Learning Objective: 01-C1 Explain the purpose and importance of accounting.
Bloom's: Remember
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Critical Thinking; FN Decision Making
2) Recordkeeping, or bookkeeping, is the recording of transactions and events, either manually
or electronically. This is just one part of accounting.
Answer: TRUE
Difficulty: 1 Easy
Topic: Importance of Accounting
Learning Objective: 01-C1 Explain the purpose and importance of accounting.
Bloom's: Remember
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Critical Thinking; FN Decision Making
3) An accounting system captures relevant data about transactions and then classifies, records,
and reports data.
Answer: TRUE
Difficulty: 1 Easy
Topic: Importance of Accounting
Learning Objective: 01-C1 Explain the purpose and importance of accounting.
Bloom's: Remember
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Critical Thinking; FN Decision Making
4) Financial accounting is the area of accounting aimed at serving external users by providing
them with general-purpose financial statements.
Answer: TRUE
Difficulty: 1 Easy
Topic: Users of Accounting Information
Learning Objective: 01-C2 Identify users and uses of, and opportunities in, accounting.
Bloom's: Remember
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Critical Thinking; FN Decision Making
1
Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
,5) Internal users of accounting information do not directly run the organization and have limited
access to its accounting information.
Answer: FALSE
Difficulty: 1 Easy
Topic: Users of Accounting Information
Learning Objective: 01-C2 Identify users and uses of, and opportunities in, accounting.
Bloom's: Remember
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Critical Thinking; FN Decision Making
6) Auditors verify the effectiveness of internal controls.
Answer: TRUE
Difficulty: 1 Easy
Topic: Users of Accounting Information
Learning Objective: 01-C2 Identify users and uses of, and opportunities in, accounting.
Bloom's: Remember
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Critical Thinking; FN Decision Making
7) External auditors examine financial statements to verify that they are prepared according to
generally accepted accounting principles.
Answer: TRUE
Difficulty: 1 Easy
Topic: Users of Accounting Information
Learning Objective: 01-C2 Identify users and uses of, and opportunities in, accounting.
Bloom's: Remember
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Critical Thinking; FN Decision Making
8) External users include lenders, shareholders, customers, and regulators.
Answer: TRUE
Difficulty: 2 Medium
Topic: Users of Accounting Information
Learning Objective: 01-C2 Identify users and uses of, and opportunities in, accounting.
Bloom's: Understand
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Critical Thinking; FN Decision Making
2
Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
,9) Regulators often have legal authority over certain activities of organizations.
Answer: TRUE
Difficulty: 1 Easy
Topic: Users of Accounting Information
Learning Objective: 01-C2 Identify users and uses of, and opportunities in, accounting.
Bloom's: Remember
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Legal; FN Decision Making
10) Internal users include lenders, shareholders, brokers and nonexecutive employees.
Answer: FALSE
Difficulty: 2 Medium
Topic: Users of Accounting Information
Learning Objective: 01-C2 Identify users and uses of, and opportunities in, accounting.
Bloom's: Understand
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Industry; FN Decision Making
11) Opportunities in accounting include auditing, consulting, market research, and tax planning.
Answer: TRUE
Difficulty: 2 Medium
Topic: Users of Accounting Information
Learning Objective: 01-C2 Identify users and uses of, and opportunities in, accounting.
Bloom's: Understand
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Industry; FN Decision Making
12) Ethics is defined as maximizing personal wealth, regardless the cost.
Answer: FALSE
Difficulty: 2 Medium
Topic: Ethics
Learning Objective: 01-C3 Explain why ethics are crucial to accounting.
Bloom's: Understand
AACSB/Accessibility: Ethics / Keyboard Navigation
AICPA: BB Industry; FN Decision Making
3
Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
,13) The Sarbanes-Oxley Act (SOX) requires documentation and verification of internal controls.
It also emphasizes effective internal controls.
Answer: TRUE
Difficulty: 1 Easy
Topic: Ethics
Learning Objective: 01-C3 Explain why ethics are crucial to accounting.
Bloom's: Remember
AACSB/Accessibility: Ethics / Keyboard Navigation
AICPA: BB Legal; FN Reporting
14) The fraud triangle asserts that the three factors that must exist for a person to commit fraud
are opportunity, pressure, and rationalization.
Answer: TRUE
Difficulty: 2 Medium
Topic: Ethics
Learning Objective: 01-C3 Explain why ethics are crucial to accounting.
Bloom's: Understand
AACSB/Accessibility: Ethics / Keyboard Navigation
AICPA: BB Industry; BB Legal; FN Decision Making
15) Management is not responsible for implementing internal controls and does not need to issue
a report on internal controls.
Answer: FALSE
Difficulty: 2 Medium
Topic: Generally Accepted Accounting Principles
Learning Objective: 01-C4 Explain generally accepted accounting principles and define and
apply several accounting principles.
Bloom's: Understand
AACSB/Accessibility: Ethics / Keyboard Navigation
AICPA: BB Legal; FN Reporting
16) A partnership is a business owned by two or more people.
Answer: TRUE
Difficulty: 1 Easy
Topic: Generally Accepted Accounting Principles
Learning Objective: 01-C4 Explain generally accepted accounting principles and define and
apply several accounting principles.
Bloom's: Remember
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Legal; FN Decision Making
4
Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
,17) Owners of a corporation are called shareholders or stockholders.
Answer: TRUE
Difficulty: 1 Easy
Topic: Generally Accepted Accounting Principles
Learning Objective: 01-C4 Explain generally accepted accounting principles and define and
apply several accounting principles.
Bloom's: Remember
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Legal; FN Decision Making
18) In the partnership form of business, the owners are called stockholders.
Answer: FALSE
Difficulty: 1 Easy
Topic: Generally Accepted Accounting Principles
Learning Objective: 01-C4 Explain generally accepted accounting principles and define and
apply several accounting principles.
Bloom's: Remember
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Legal; FN Decision Making
19) The balance sheet shows a company's net income or loss over a period of time.
Answer: FALSE
Difficulty: 2 Medium
Topic: Financial Statements
Learning Objective: 01-P2 Identify and prepare basic financial statements and explain how they
interrelate.
Bloom's: Understand
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Industry; FN Reporting
20) The Financial Accounting Standards Board (FASB) is a group tasked with setting generally
accepted account principles (GAAP).
Answer: TRUE
Difficulty: 2 Medium
Topic: Generally Accepted Accounting Principles
Learning Objective: 01-C4 Explain generally accepted accounting principles and define and
apply several accounting principles.
Bloom's: Understand
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Legal; FN Reporting
5
Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
,21) The business entity principle means that accounting information reflects a presumption that
the business will continue operating instead of being closed or sold.
Answer: FALSE
Difficulty: 2 Medium
Topic: Generally Accepted Accounting Principles
Learning Objective: 01-C4 Explain generally accepted accounting principles and define and
apply several accounting principles.
Bloom's: Remember
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Industry; FN Decision Making
22) GAAP aims to make information relevant, reliable, and comparable.
Answer: TRUE
Difficulty: 1 Easy
Topic: Generally Accepted Accounting Principles
Learning Objective: 01-C4 Explain generally accepted accounting principles and define and
apply several accounting principles.
Bloom's: Remember
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Industry; FN Decision Making
23) The business entity assumption means that a business is accounted for separately from other
business entities, including its owner or owners.
Answer: TRUE
Difficulty: 1 Easy
Topic: Generally Accepted Accounting Principles
Learning Objective: 01-C4 Explain generally accepted accounting principles and define and
apply several accounting principles.
Bloom's: Remember
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Industry; FN Measurement
24) As a general rule, revenues should not be recognized in the accounting records when earned,
but rather when cash is received.
Answer: FALSE
Difficulty: 2 Medium
Topic: Generally Accepted Accounting Principles
Learning Objective: 01-C4 Explain generally accepted accounting principles and define and
apply several accounting principles.
Bloom's: Understand
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Industry; FN Measurement
6
Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
,25) Specific accounting principles are basic assumptions, concepts, and guidelines for preparing
financial statements and arise out of long-used accounting practice.
Answer: FALSE
Difficulty: 2 Medium
Topic: Generally Accepted Accounting Principles
Learning Objective: 01-C4 Explain generally accepted accounting principles and define and
apply several accounting principles.
Bloom's: Remember
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Industry; FN Measurement
26) Limited liability and indefinite business life are characteristics of a corporation.
Answer: TRUE
Difficulty: 2 Medium
Topic: Generally Accepted Accounting Principles
Learning Objective: 01-C4 Explain generally accepted accounting principles and define and
apply several accounting principles.
Bloom's: Understand
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Legal; FN Decision Making
27) A sole proprietorship is a business with multiple owners.
Answer: FALSE
Difficulty: 1 Easy
Topic: Generally Accepted Accounting Principles
Learning Objective: 01-C4 Explain generally accepted accounting principles and define and
apply several accounting principles.
Bloom's: Remember
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Legal; FN Decision Making
28) Unlimited liability and separate taxation of the business are advantages of a sole
proprietorship.
Answer: FALSE
Difficulty: 2 Medium
Topic: Generally Accepted Accounting Principles
Learning Objective: 01-C4 Explain generally accepted accounting principles and define and
apply several accounting principles.
Bloom's: Understand
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Legal; FN Decision Making
7
Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
,29) A partnership must pay an additional business income tax.
Answer: FALSE
Difficulty: 2 Medium
Topic: Generally Accepted Accounting Principles
Learning Objective: 01-C4 Explain generally accepted accounting principles and define and
apply several accounting principles.
Bloom's: Understand
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Legal; FN Decision Making
30) Objectives, qualitative characteristics, elements, and recognition and measurement are
components of the FASB conceptual framework.
Answer: TRUE
Difficulty: 1 Easy
Topic: Generally Accepted Accounting Principles
Learning Objective: 01-C4 Explain generally accepted accounting principles and define and
apply several accounting principles.
Bloom's: Remember
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Industry; FN Measurement
31) Objectivity means that financial information is supported by independent, unbiased evidence;
it demands more than a person's opinion.
Answer: TRUE
Difficulty: 1 Easy
Topic: Generally Accepted Accounting Principles
Learning Objective: 01-C4 Explain generally accepted accounting principles and define and
apply several accounting principles.
Bloom's: Remember
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Industry; FN Measurement
32) The going-concern assumption presumes that a business will continue operating instead of
being closed or sold.
Answer: TRUE
Difficulty: 1 Easy
Topic: Generally Accepted Accounting Principles
Learning Objective: 01-C4 Explain generally accepted accounting principles and define and
apply several accounting principles.
Bloom's: Remember
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Industry; FN Measurement
8
Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
, 33) The measurement principle prescribes that accounting information is based on subjective
opinion rather than cost.
Answer: FALSE
Difficulty: 2 Medium
Topic: Generally Accepted Accounting Principles
Learning Objective: 01-C4 Explain generally accepted accounting principles and define and
apply several accounting principles.
Bloom's: Understand
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Industry; FN Measurement
34) The monetary unit assumption means that companies should express transactions in terms
such as "a lot" or "very little".
Answer: FALSE
Difficulty: 2 Medium
Topic: Generally Accepted Accounting Principles
Learning Objective: 01-C4 Explain generally accepted accounting principles and define and
apply several accounting principles.
Bloom's: Understand
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Industry; BB Global; FN Measurement
35) The International Accounting Standards Board (IASB) issues International Financial
Reporting Standards (IFRS) that identify preferred accounting practices.
Answer: TRUE
Difficulty: 2 Medium
Topic: Generally Accepted Accounting Principles
Learning Objective: 01-C4 Explain generally accepted accounting principles and define and
apply several accounting principles.
Bloom's: Understand
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Industry; BB Global; FN Measurement
9
Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
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