Business Essentials 6th Canadian Edition By Ebert – Test Bank

CHAPTER 11
UNDERSTANDING ACCOUNTING ISSUES

MULTIPLE CHOICE QUESTIONS. Choose the one alternative that best completes the statement or answers the question.

1)Which of the following is correct with regard to the opening case entitled “What’s the Latest on Pension Accounting”?
A)Historically, pension plans have been of the defied contribution type
B)During the recession of 2008, private pension plans declined in value, but the Canada Pension Plan did not
C)The crisis in defined benefit pension plans has motivated employers to move toward defined contribution pension plans
D)Canadian pension plans cannot use “smoothing”
E)All of these are correct
Answer: C
Diff: 1
Skill: Recall
Objective: 11.1
A-Heading: What Is Accounting?

2)What is bookkeeping?
A)The same as accounting
B)The recording of accounting transactions
C)The financial statements of a company
D)A system for measuring business performance
E)Internal procedures that alert managers to problems
Answer: B
Diff: 1
Skill: Recall
Objective: 11.1
A-Heading: What Is Accounting?

3)________ is a system for measuring business performance and translating those measures into information for management decisions.
A)Accounting
B)Auditing
C)Budgeting
D)Bookkeeping
E)Controlling
Answer: A
Diff: 2
Skill: Recall
Objective: 11.1
A-Heading: What Is Accounting?

4)________ is the recording of financial transactions.
A)Controlling
B)Auditing
C)Accounting
D)Bookkeeping
E)Budgeting
Answer: D
Diff: 1
Skill: Recall
Objective: 11.1
A-Heading: What Is Accounting?

5)Which one of the following is not one of the users of accounting information?
A)Business managers
B)Customers
C)Government regulatory agencies
D)Investors and creditors
E)Employees and unions
Answer: B
Diff: 1
Skill: Recall
Objective: 11.1
A-Heading: What Is Accounting?

6)Employees and unions use accounting information
A)to plan for tax inflows.
B)to set goals, develop plans, set budgets and evaluate future prospects.
C)to estimate returns.
D)to decide if the company is a good credit risk.
E)to plan for benefits.
Answer: E
Diff: 1
Skill: Recall
Objective: 11.1
A-Heading: What Is Accounting?

7)Which of the following is not a potential user of accounting information?
A)Unions
B)Managers
C)Investors
D)Employees
E)All are potential users of accounting information.
Answer: E
Diff: 2
Skill: Recall
Objective: 11.1
A-Heading: What Is Accounting?

8)_____ is a comprehensive system for collecting, analyzing, and communicating financial information.
A)Bookkeeping
B)Accounting
C)Controlling
D)Auditing
E)Forensic accounting
Answer: B
Diff: 1
Skill: Recall
Objective: 11.1
A-Heading: What Is Accounting?

9)Janice is a bookkeeper. Her primary function would be to
A)generate financial statements.
B)measure business performance.
C)record accounting transactions.
D)complete the same tasks as accountants do.
E)determine the value of the firm to investors.
Answer: C
Diff: 1
Skill: Application
Objective: 11.1
A-Heading: What Is Accounting?

10)What is a primary purpose of accounting?
A)To determine when to sell the company
B)To determine the most effective plan to avoid a hostile takeover
C)To determine the value of the company before it is sold
D)To summarize the results of business transactions so that the resulting reports can be used in the decision-making process
E)To provide information for tax authorities
Answer: D
Diff: 1
Skill: Application
Objective: 11.1
A-Heading: What Is Accounting?