C213 Accounting for Decision Makers (VAC2 Terms)

Q1. Which information does a balance sheet provide about a company?

   A. Cash collections and cash expenditures for a period of time

   B. Revenues and expenses for a period of time

   C. Assets and liabilities for a specific point in time

   D. Cash collections and cash expenditures at a specific point in time

Q2. Which user group evaluates the ability to repay loans?

   A. Investors

   B. Suppliers

   C. Lenders

   D. Management

Q3. Which organization establishes rules U.S. companies use to record and report accounting transactions?

   A. Securities and Exchange Commission

   B. Financial Accounting Standards Board

   C. Accounting Principles Board

   D. Internal Revenue Service

Q4. Which body regulates a CPA firm’s audit practices when auditing a large publicly traded company?

   A. Financial Accounting Standards Board (FASB)

   B. Public Company Accounting Oversight Board (PCAOB)

   C. Internal Revenue Service (IRS)

   D. Financial Accounting Standards Advisory Council (FASAC)

Q5. What is true regarding the use of IFRS?

   A. IFRS are required by the SEC

   B. IFRS are commonly required to be used in Asia

   C. IFRS may be used instead of GAAP by any U.S. corporation

   D. IFRS are seldom used by non‑U.S. companies

Q6. Which act was implemented as a result of corporate scandals such as Enron and WorldCom?

   A. Securities Exchange Act

   B. Sarbanes‑Oxley Act

   C. Corporate Accountability Act

   D. Auditing Accountability Act

Q7. Which financial statement determines a company’s income and expenses for a specific period?

   A. Income statement

   B. Statement of cash flows

   C. Statement of retained earnings

   D. Balance sheet

Q8. Which balance sheet category reflects what a company owns that can generate cash?

   A. Liabilities

   B. Assets

   C. Owners’ equity

   D. Revenues

Q9. If liabilities are $100M and equity is $40M, what are assets?

   A. $60 million

   B. $140 million

   C. $80 million

   D. $2.5 million

Q10. Where should cash payments to acquire long‑term fixed assets appear on the cash flow statement?

   A. Cash flows from investing activities

   B. Cash flows from business activities

   C. Cash flows from financing activities

   D. Cash flows from operating activities

Q11. What purpose do notes to financial statements serve?

   A. Disclosing financial statistics

   B. Providing a summary of accounting policies

   C. Providing supplementary information as needed

   D. Summarizing totals of financial statements

Q12. What can an external audit determine?

   A. Whether the company must pay income taxes

   B. Whether the statements were prepared by a trained bookkeeper

   C. Whether the company made a profit

   D. Whether the financial statements fairly reflect financial position

Q13. Which user group evaluates loan repayment ability?

   A. Investors

   B. Suppliers

   C. Lenders

   D. Management

Q14. Which costs are found in manufacturing rather than service companies?

   A. Indirect labor costs

   B. Raw materials costs

   C. Direct labor costs

   D. Selling costs

Q15. What are costs associated with two or more business units called?

   A. Indirect costs

   B. Product costs

   C. Direct costs

   D. Variable costs

Q16. What is a cost incurred as part of the production process?

   A. Raw materials cost

   B. Period cost

   C. Opportunity cost

   D. Sunk cost

Q17. Which two are product costs?

   A. Selling & administrative expenses

   B. Raw materials

   C. Period expenses

   D. Direct labor

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