Business Essentials 8th Canadian Edition By Ronald J. Ebert – Test Bank

Chapter 11 Understanding Accounting

11.1 Multiple-Choice Questions

1) ________ is the comprehensive information system for collecting, analyzing, and communicating financial information, while ________ is the recording of financial transactions.
A) Financial accounting; managerial accounting
B) Managerial accounting; financial accounting
C) Bookkeeping; accounting
D) Accounting; bookkeeping
E) Controlling; accounting
Answer: D
Diff: 2 Type: MC Page Ref: 257
Skill: Knowledge
Objective: 11.1

2) 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 Type: MC Page Ref: 257
Skill: Comprehension
Objective: 11.1

3) 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 Type: MC Page Ref: 257
Skill: Comprehension
Objective: 11.1

4) The field of accounting that is concerned with external users of a company’s financial information is called
A) managerial accounting.
B) bookkeeping.
C) public accounting.
D) financial accounting.
E) auditing.
Answer: D
Diff: 1 Type: MC Page Ref: 258
Skill: Knowledge
Objective: 11.1
5) The field of accounting that serves internal users of a company’s financial information is
A) financial accounting.
B) auditing.
C) public accounting.
D) bookkeeping.
E) managerial accounting.
Answer: E
Diff: 1 Type: MC Page Ref: 258
Skill: Knowledge
Objective: 11.1

6) David is an accountant who calls attention to problems and helps managers carry out the planning, decision making, and controlling functions. David is involved in ________ accounting.
A) budgeting
B) financial
C) auditing
D) managerial
E) generally accepted accounting principles
Answer: D
Diff: 1 Type: MC Page Ref: 258
Skill: Comprehension
Objective: 11.1

7) Marshall is preparing a statement of estimated profits and losses for a new product that has just been introduced by his company. The field of accounting that Marshall is working in is
A) managerial accounting.
B) auditing.
C) public accounting.
D) financial accounting.
E) bookkeeping.
Answer: A
Diff: 1 Type: MC Page Ref: 258
Skill: Comprehension
Objective: 11.1

8) Arthur’s primary responsibility as an auditor is
A) publishing the audit report results in the Financial Post.
B) preparing budgets for the forthcoming year.
C) ensuring the firm’s accounting practices adhere to generally accepted accounting principles.
D) collecting taxes.
E) determining that the company actually has the inventory that it says it has.
Answer: C
Diff: 1 Type: MC Page Ref: 259
Skill: Comprehension
Objective: 11.1
9) Which of the following is correct with respect to generally accepted accounting principles?
A) Public and private businesses can no longer use generally accepted accounting principles.
B) They are used in many foreign countries but not in Canada.
C) Public companies in Canada have moved away from using generally accepted accounting principles and have adopted adopted International Financial Reporting Standards (IFRS).
D) Private companies must use the new International Financial Reporting Standards (IFRS).
E) None of these statements is correct.
Answer: C
Diff: 1 Type: MC Page Ref: 259
Skill: Comprehension
Objective: 11.1

10) ________ calls attention to problems and helps managers carry out the planning, decision making, and controlling functions.
A) Budgeting
B) Financial accounting
C) Auditing
D) Managerial accounting
E) Generally accepted accounting principles
Answer: D
Diff: 1 Type: MC Page Ref: 258
Skill: Knowledge
Objective: 11.1