14.1 Discuss the impacts information technology is having on the business world.

Which of the following is the BEST definition of e-commerce?

A. The use of the Internet and other electronic means for retailing and business-to-business
transactions
B. Computers linked over a long distance through long-distance telephone wires, microwave
signals, or satellite communications
C. Internet-based wholesalers who collect information about sellers, present it to consumers, and
help deliver online products to buyers
D. The application of statistics and electronic technologies for searching, sifting, and reorganizing
pools of data to uncover useful information
E. An information system for organizing and managing a firm's activities across product lines,
departments, and geographic locations.

_______ is used by a firm to organize and manage activities (such as manufacturing, purchasing, sales,
and delivery) across all product lines and even geographic activities.

A. Decision support system (DSS)

B. Computer-aided design
C. Hypertext transfer protocol
D. Enterprise resource planning (ERP)
E. Computer-aided manufacturing

In creating a company based on mass customization, which of the following would be the greatest
barrier?

F. Online design capabilities

G. Integrated network of information
H. Standardized assembly line
I. Speedy delivery
J. Flexible manufacturing systems

What allows a manager to check on the status of an order, analyze delivery performance, review
productivity status, and manage company activities using real-time information?

A. Wide area network (WAN)

B. Computer-aided manufacturing (CAM)
C. Computer-aided design (CAD)
D. Enterprise resource planning (ERP)
E. Local area network (LAN)
What allows companies to produce in large quantities while still providing their customers the
opportunity to select individual features and options?

A. Hypertext transfer protocol (HTTP)

B. Computer-aided design (CAD)
C. Enterprise resource planning (ERP)
D. Mass customization
E. Decision support system (DSS)

Jason uses the Internet to sell his products to customers. They can view all the design options, choose
colors, order, and pay online. Jason is participating in ________.

A. decision support system (DSS)

B. computer-aided design (CAD)
C. e-commerce
D. hypertext transfer protocol (HTTP)
E. enterprise resource planning (ERP)

How does technology create more efficient organizations?

A. It allows for a higher pay scale as skills become more specific.

B. It allows companies to provide data to a larger audience.
C. It allows for a lower pay scale as employees need fewer specific skills, and more general
skills.
D. It allows companies to better protect consumer and user data.
E. It allows companies to employ fewer people.

14.2 Identify the IT resources businesses have at their disposal and how these
resources are used.

Jonah bought a new grill and had difficulty assembling it. He was able to download a more
detailed user manual from the manufacturer's website through use of its _______.
A.
intranet
B.
extranet
C.
local area network
D.
super Wi-Fi network
E.
wireless wide area network
Hypertext transfer protocol is used to connect which of the following?
A.
Outsiders such as customers and suppliers to a firm's internal information network
B.
Client server networks
C.
Documents or Web pages on the World Wide Web
D.
Ground-station computers to satellites
E.
Shared network printers

Your company is considering switching from a client-server based accounting system to a

cloud-based system. Which of the following would be the greatest advantage of such a
switch?
A.
Enhanced user flexibility
B.
No Internet connectivity required
C.
Upgraded system software
D.
Added local area network servers
E.
Fewer geographic access points

Information, Inc. employees can access all sorts of company information from their
computers, including production data, product design details, marketing activities, and even
company benefits. Only employees and those suppliers that are granted special access can
view this information. What BEST describes Information, Inc.'s system?
A.
Hypertext transfer protocol (HTTP)
B.
Enterprise resource planning (ERP)
C.
Computer-aided design (CAD)
D.
Intranet
E.
Decision support system (DSS)
What BEST describes a "client" in a client-server network?
A.
A "cloud"
B.
A print server
C.
A wide area network that provides the services shared by users
D.
An application server
E.
A laptop or desktop computer used to request information

Terrific Technology has linked all of its computers throughout the United States. What is
Terrific Technology using to accomplish this?
A.
Hypertext transfer protocol (HTTP)
B.
Enterprise resource planning (ERP)
C.
Wide area network (WAN)
D.
Local area network (LAN)
E.
Decision support system (DSS)

How is data conferencing used?

A.
It allows users to access the network from remote locations.
B.
It allows a company total control over communication among its facilities, regardless of
location.
C.
It allows people to see one another on video screens while the conference is in progress.
D.
It allows two or more computers to link together to share data or resources.
E.
It allows people in remote locations to work on a document at the same time.
 Java Jones, the local coffee spot, was the first in the community to sell Fair Trade coffee and
teas, allowing them to build a strong clientele in the community. Recently, some
competition has introduced Fair Trade items, luring some customers away. The manager at
Java Jones wants to encourage local businesspeople to visit the coffee shop and even host
small group meetings there. What should the manager at Java Jones add to entice
businesspeople to meet at Java Jones?
A.
Application software
B.
Data warehousing
C.
Local area networks
D.
VSAT communications
E.
Cloud computing

14.3 Describe the role of information systems, the different types of information systems, and
how businesses use such systems.
A chain of grocery stores analyzes the buying patterns of its customers using data collected
on customers' loyalty cards and uses this information to send e-coupons to customers that
target the purchases they have made over the past 90 days. This is an example of _______.
A.
data warehousing
B.
data mining
C.
mass customization
D.
an extranet
E.
Spyware

Grant Industries has invested in a sophisticated system that uses computer software and
machinery to automate its manufacturing processes, helping it to increase production
speeds, consistency, and tooling accuracy. This is an example of _______.
A.
enterprise resource planning (ERP)
B.
an encryption system
C.
a knowledge information system
D.
computer-aided manufacturing (CAM)
E.
computer-aided design (CAD)
 You have been given a detailed IT report of sales by division, by product, and by day
covering a span of five years. You have been asked to report back on seasonal trends in order to help
management implement a more efficient supply chain management and inventory system. This is an
example of converting _______ into _________.

A.

data; information

B.

dollars; units

C.

software; hardware

D.

sales; prospects

E.

charts; data

Marcus would like to increase the capacity of his production line. Before he makes any investment, he
would like to know what it would cost to operate at a higher capacity, how much product he would have
to sell, and other information to help him decide if this is a good idea. What would help Marcus make
this decision?

A.

Decision support system (DSS)

B.

Local area network (LAN)

C.

Hypertext transfer protocol (HTTP)

D.

Computer-aided design (CAD)

E.

Wide area network (WAN)

Always Analyzing, Inc. has gathered a great deal of information and now needs to make sense of the
data. What would help Always Analyzing to organize its information in a useful way?

A.

Data warehousing

B.

Computer-aided manufacturing (CAM)

C.

Hypertext transfer protocol (HTTP)

D.

Computer-aided design (CAD)

E.

Data mining

Mitchell used to be required to leave the cool, air-conditioned plant control room to add
chemicals to the process every hour or so. Now he adds the chemicals using a machine on the plant
floor, with just a push of a couple of buttons on his computer without leaving his chair! What has
provided Mitchell with this advantage?

A.

Computer-aided design (CAD)

B.

Hypertext transfer protocol (HTTP)

C.

Data mining

D.

Data warehousing

E.

Computer-aided manufacturing (CAM)

 Our company just purchased a system that allows us to design new products through simulation
and show these products in 3D graphics. What type of system did we purchase?

A.

Hypertext transfer protocol (HTTP)

B.

Computer-aided design (CAD)

C.

Computer-aided manufacturing (CAM)

D.

Decision support system (DSS)

E.

Enterprise resource planning (ERP)

Evergrow has just purchased a company in Canada, and is now working to integrate the
Canadian systems with the U.S.-based systems. These systems include areas such as cash flow, sales,
production scheduling, and shipping. Which of the following systems will help Evergrow better integrate
the newly acquired facility with existing ones?

A.

Enterprise resource planning (ERP)

B.

Management information system (MIS)

C.

Data mining system

D.

Decision support system (DSS)

E.

Knowledge information system (KIS)

14.4 Identify the threats and risks information technology poses to businesses.

Danielle receives an email, supposedly from the college, telling her that her email account has exceeded
its mail quota on their server database and her account will become inactive in 24-48 hours unless she
clicks on a link and verifies her account by providing her password and student ID number. This is likely
an example of _______.

A.

wireless mooching

B.

a denial of service attack

C.

a computer virus

D.

spam

E.

phishing

The fraudulent acquisition and use of another person's private and personal information, usually for
financial gain, is known as _______.

A.

spam

B.

identity theft

C.

phishing

D.

encryption

E.

hacking
Using a file-sharing service, your sister just gave you copies of 14,000 songs she copied from CDs she
owns. This is probably ________.

A.

a right

B.

a patent violation

C.

a copyright violation

D.

a patent violation

E.

ethical

If you receive an e-mail asking for your bank information or social security number, check out the
website carefully. Someone is likely trying to get your personal information in order to empty your bank
accounts. What is this scheme known as?

A.

Data warehousing

B.

Electronic conferencing

C.

Data mining

D.

A worm

E.

Phishing
Which of the following can travel through a computer network and spread infected files without you
having to open any software?

A.

Virus

B.

Worm

C.

Trojan horse

D.

Spyware

E.

Firewall

Unwanted e-mail messages that include advertising or inappropriate content are known as ________.

A.

encryption systems

B.

viruses

C.

spyware

D.

spam

E.

Trojan horses
Hackers use phishing, pharming, spyware, or spamming to collect personal information to________.

A.

engage in better data mining based on government records

B.

block access to specific targeted websites

C.

steal their target's identity for monetary gain

D.

illegally download and share movies, music, and other resources

E.

develop anti-virus software

14.5 Describe the ways in which businesses protect themselves from the threats and risks information
technology poses.

The process of changing text so that it is no longer easy to read to anyone without the translation key or
code is known as _______.

A.

spyware

B.

data warehousing

C.

spam

D.

phishing

E.

encryption
Part of a computer system or network that is designed to block unauthorized access while still
permitting communication is known as a(n) _______.

A.

firewall

B.

router

C.

encryption system

D.

intranet switch

E.

VSAT

The IT director of your company has identified three boxes of credit reports and other customer data
that have been marked as expired and ready for disposal. She should _______.

A.

dump the sealed boxes in the nearest dumpster

B.

dump them in the office recycling bin

C.

scatter them in a few different dumpsters

D.

take them home for scratch paper

E.

shred the documents

A security system that protects computers from hackers is known as ________.

A.

an encryption system

B.

anti-virus software

C.

a Trojan horse

D.

a firewall

E.

a worm

Totally Technical, Inc. utilizes a system wherein only the intended recipient can open an e-mail. If
someone else tries to open the e-mail, all he or she will see is a bunch of letters and numbers that don't
make any sense. What is Totally Technical using?

A.

Encryption system

B.

Firewall

C.

Router

D.

Spyware

E.

Anti-virus software
Which of the following protects a computer against hackers by searching incoming e-mail and looking
for dangers?

A.

Webroot Spy Sweeper

B.

Encryption system

C.

Spear-phishing software

D.

FACTA

E.

Anti-virus software

Viruses, worms, Trojan horses, and other infectious software are known as ________.

A.

malware

B.

spam

C.

encryption systems

D.

anti-virus software

E.

CAN-SPAM

During an interview, Jane was asked for her Facebook user name and password. Caught off guard, Jane
provided the information. When she had a chance to think about this, Jane decided this was an invasion
of her privacy and she was not interested in working for companies that seek this type of information.
Yet, companies have a right to ask and often get this information. What type of issue has been created
for Jane and the organization where she interviewed because of IT and the potential consequences of
using IT?

A.
Increased use of data mining

B.

Ethical concerns

C.

Lack of knowledge workers

D.

Hacking

E.

Increased use of management information systems

15.1 Explain the role of accountants and distinguish among the kinds of work done by public
accountants, private accountants, management accountants, and forensic accountants.

Accountants who are employed directly by a firm and prepare financial information for external users
such as consumer groups, stockholders, creditors, and government agencies work in _______
accounting.

A.

forensic

B.

public

C.

financial

D.

managerial

E.

investigative

Sally works as an accountant in a large manufacturing firm. In this role, she records income and
expenses, tracks the company's tax liabilities, and prepares income statements and cash flow
statements to help the company budget and perform more efficiently. Which of the following BEST
describes Sally's role?

A.
Forensic accounting

B.

Managerial accounting

C.

Bookkeeping

D.

Financial accounting

E.

Public accounting

You would like to become an auditor for Ernst & Young, examining financial statements for publicly
traded companies in order to independently ensure their reports reliably represent their operations.
Which of the following professional designations do you need to obtain?

A.

Certified Fraud Examiner (CFE)

B.

Certified Public Accountant (CPA)

C.

Enrolled Agent (EA)

D.

Chief Financial Officer (CFO)

E.

Certified Managerial Accountant (CMA)

Providing accounting information within the company so that managers can make good departmental
decisions is known as ________.

A.

bookkeeping

B.
financial accounting

C.

forensic accounting

D.

managerial accounting

E.

full disclosure

Who of the following might investigate and provide litigation support?

A.

Certified management accountant (CMA)

B.

Controller

C.

Forensic accountant

D.

Bookkeeper

E.

Noncertified public accountant

Stacey is preparing financial documents and reports for her U.S.-based company. Stacey must ensure
that everything she provides conforms to which of the following?

A.

Leverage

B.

Core competencies for accounting

C.

Revenue recognition
D.

Solvency ratios

E.

Generally accepted accounting principles (GAAP)

Under the CPA Vision Project, which of the following is NOT a core competency for CPAs?

A.

Critical thinking skills

B.

Leadership skills

C.

Technology skills

D.

Persuasive skills

E.

Communication skills

In the past few years, Ajax has experienced tremendous growth. During this time, Ajax relied on annual
independent audits by the CPA firm they use. However, the scope of customer projects has become
increasing complex and the leadership at Ajax would like to be able to monitor the daily financial
activities of these projects instead of waiting until the end of the year for an audit. What type of
accountant should Ajax hire?

A.

Certified fraud examiner

B.

Private managerial accountant

C.

Forensic accountant
D.

Financial accountant

E.

Investigative accountant

15.2 Explain how the accounting equation is used.

The accounting equation _______.

A.

displays the relationship of profits to losses

B.

is used to calculate what the firm owes in taxes

C.

determines the firm's return on investments

D.

measures the company's liquidity and its ability to pay immediate debts

E.

represents the relationship between a firm's assets, liabilities, and owners' equity

Debts or monetary obligations owed by a firm to an outside party are known as _______.

A.

owners' equity

B.

assets

C.

depreciation

D.

liabilities

E.
chattels

You own a small company that has $30,000 in assets and owes $4,000 to creditors. How much equity do
you have in the company?

A.

$34,000

B.

Negative $4,000

C.

$26,000

D.

$0

E.

$30,000

George and his partners have a business valued at $500,000, and have less than $100,000 in debt and
liabilities. The $400,000 difference is known as ________

A.

owners' equity

B.

depreciation

C.

a liability

D.

retained earnings

E.

an asset

Which of the following is the accounting equation?

A.

Liabilities = Owners Equity + Assets

B.

Owners' Equity = Assets + Liabilities

C.

Liabilities = Assets + Owners Equity

D.

Assets = Liabilities + Owners Equity

E.

Assets Liabilities Owners Equity

Suzy's business has been booming, and she hasn't had time to contact clients who haven't yet paid for
her services. The amount of money owed to her company is growing. Which of the terms below
classifies the money owed to Suzy's company?

A.

Depreciation

B.

Retained earnings

C.

Assets

D.

Liabilities

E.

Owners' equity

Which of the following is true about the accounting equation?

A.
If the numbers balance, the company has broken even.

B.

If the numbers don't balance, the company has suffered a loss.

C.

If the numbers don't balance, an accounting error has occurred.

D.

If the numbers balance, the company has earned a profit.

E.

If the numbers balance, there is an increase is assets.

15.3 Describe the three basic financial statements and show how they reflect the activity and financial
condition of a business.

Which of the following financial statements provides a "snapshot" of a firm's financial condition at a
specific point in time?

A.

Profit-and-loss statement

B.

Income statement

C.

Balance sheet

D.

Statement of cash flows

E.

Operating budget

You would like to know the financial results for a publicly traded company for last year. Which report
would you download?

A.

Historical stock prices

B.
Letter to shareholders

C.

Income statement

D.

Budget

E.

Balance sheet

A firm's statement of cash flows reflects the flow of cash into and out of the business from three
different aspects: its operating activities, its financing activities, and its _______ activities.

A.

managerial

B.

banking

C.

budgetary

D.

functional

E.

investing

Which of the following is like a "snapshot" because it shows the financial condition of a company at one
point in time?

A.

Statement of cash flows

B.

Balance sheet
C.

Owners' equity

D.

Income statement

E.

Liquidity

Which of the following shows operating activities, investing activities, and financial activities and is
considered by investors and creditors to be extremely important?

A.

Owners' equity

B.

Statement of cash flows

C.

Income statement

D.

Balance sheet

E.

Liquidity

Patents, trademarks, and copyrights are classified as ________.

A.

retained earnings

B.

fixed assets

C.

owners' equity
D.

intangible assets

E.

current assets

How is net income determined?

A.

By subtracting income taxes from operating income

B.

By subtracting cost of revenue from revenue obtained by sales

C.

By subtracting expenses from revenues

D.

By adding costs of materials to net income

E.

By subtracting gross profits from operations against operating expenses

Joan is trying to decide if she wants to open her own hair salon, or buy an existing one. Curl Up and Dye
is a very popular salon in town, and Joan knows the owner wants to retire soon. After approaching the
owner of Curl Up and Dye, Joan was asked to pay an amount greater than the current value of the assets
for the business. In addition to the value of the assets, the current owner thinks there is value in the
name of the salon and the established client base. What is the current owner of Curl Up and Dye
expecting Joan to pay for?

A.

Paid-in capital

B.

Goodwill

C.

Revenue recognition
D.

Full disclosure information

E.

Liabilities

15.4 Explain the key standards and principles for reporting financial statements.

A landscape company completes the mowing of a large commercial property for its standard fee of $300
in June but does not expect payment from the customer until September. According to the revenue
recognition principle, when can the landscape company record and report the revenue?

A.

When the money is received from the customer

B.

When the customer acknowledges receipt of the bill

C.

When the landscaper bills the customer

D.

Only if it has received payment in advance

E.

Immediately

As the sales manager for a publicly traded manufacturing company, you are faced with a dilemma. The
sales force year-end bonuses are based on gross sales recorded by the accounting department, which
appear to be much less than the gross sales your staff is reporting because some of the products had not
yet been delivered at year-end. Which of the following concepts might BEST explain the difference
between the financial accounting records and the sales staff reports?

A.

Full disclosure

B.

Accounts payable
C.

Revenue recognition

D.

Historical cost

E.

Gross profit

The principle that you should include in an entity's financial statements all information that would affect
the reader's understanding of those statements is known as the _______ principle.

A.

matching

B.

materiality

C.

revenue recognition

D.

cost

E.

full disclosure

What would prompt a forensic accountant to suspect possible fraudulent practices?

A.

High levels of retained earnings

B.

Large management bonuses

C.

Liquidity shortages

D.
Deviations from GAAP

E.

Activity ratios

Which of the following is the formal recording and reporting of income at the appropriate time in the
earnings cycle?

A.

Full disclosure

B.

Long-term solvency

C.

Leverage

D.

Revenue recognition

E.

Goodwill

Jason, the CFO of Entertainment Enterprises, Inc., is preparing the company's financial statements.
Along with the data, Jason is composing a report that explains the numerical information and provides
insight into the company's performance. What BEST describes Jason's actions?

A.

Goodwill

B.

Revenue recognition

C.

Leverage

D.

Full disclosure

E.
Long-term solvency

Which is the correct order for the earnings cycle?

A.

Sale price collected/collectible, delivered product, completed sale, revenue recognition

B.

Delivered product, completed sale, sale price collected/collectible, revenue recognition

C.

Delivered product, sale price collected/collectible, completed sale, revenue recognition

D.

Completed sale, sale price collected/collectible, revenue recognition, delivered product

E.

Completed sale, delivered product, sale price collected/collectible, revenue recognition

15.5 Describe how computing financial ratios can help users get more information from financial
statements to determine the financial strengths of a business.

Which of the following financial ratios is sometimes referred to as the banker's ratio because it is often
used to evaluate a company's liquidity?

A.

Current ratio

B.

Long-term solvency

C.

Profitability ratio

D.

Earnings per share

E.

Inventory turnover ratio

On January 29, 2017, Home Depot reported a $6.45 earnings per share and was trading at
approximately $138 per share. What was Home Depot's price earnings ratio?

A.

21.4

B.

$6.45

C.

$138

D.

$131.55

E.

0.05

If an investor wants some indication of the returns he or she can expect, which of the following ratios
would be MOST appropriate?

A.

Short-term solvency

B.

Profitability ratios

C.

Activity ratio

D.

Banker's ratio

E.

Current ratio
The board of directors of Fancy Financials, Inc. wants to review how management is using company
assets. What would provide them with the information they seek?

A.

Leverage

B.

Solvency ratios

C.

Profitability ratios

D.

Activity ratios

E.

Liquidity

What measures whether a company is able to sell enough products and collect payments for products
sold to pay its current debts?

A.

Leverage

B.

Goodwill

C.

Profitability ratios

D.

Solvency ratio

E.

Current ratio
 Julia is considering investing in several companies and would like to determine which does a
better job of utilizing its resources. What will provide Julia with this information?

A.

Goodwill

B.

Activity ratios

C.

Solvency ratios

D.

Leverage

E.

Profitability ratios

How does borrowing funds provide a company leverage?

A.

It allows the company to plan for long-term solvency.

B.

It increases earnings per share.

C.

It allows the company to make otherwise unaffordable investments.

D.

It increases the assets to liabilities ratio.

E.

It allows the company to lower its current ratio.

Now that Irma has graduated from college and is working full time, she has found that she is
able to save some money. Irma would like to invest some of her savings in the stock market with the
goal of buying her own home in a few years. As she studies various companies before investing, Irma
looks closely at the dividends paid by each company. Which of the following determined the size of the
dividend a firm can pay shareholders?

A.

Activity ratios

B.

Current ratio

C.

Long-term solvency

D.

Leverage ratios

E.

Earnings per share

15.6 Discuss the role of ethics in accounting.

Which of the following is responsible for the maintenance and enforcement of the code of
ethics for public accountants in the United States?

A.

International Accounting Standards Board (IASB)

B.

American Institute of CPAs (AICPA)

C.

Financial Reporting Council (FRC)

D.

Financial Accounting Standards Board (FASB)

E.

National Association of Accountants (NAA)

A certified public accountant (CPA) is pressured by his brother, the CEO of a company, to audit the
company's financial statements. If the CPA agrees to do so, which portion of the AICPA's code of ethics
might this violate?

A.

Serving the public interest

B.

Professional conduct

C.

Due care

D.

Being objective and independent

E.

Continuing accounting education

A CPA has been asked to audit the financial statements of a company in which she has a sizeable
investment. Which of the following options best describes this ethical dilemma?

A.

Integrity

B.

Due care

C.

Commitment

D.

Conflict of interest

E.

Personal competence

What is key to public belief in businesses, financial institutions, and the information provided by
accountants?

A.
Accounting information systems

B.

Core competencies for accounting

C.

Accounting ethics

D.

Management advisory services

E.

Leverage

Avoiding conflicts of interest is part of which obligation under the CPA Code of Ethics?

A.

Maintaining technical and ethical standards through due care

B.

Maintaining integrity

C.

Being objective and independent

D.

Serving the public interest

E.

Responsibilities as a professional

Who is the body responsible for setting accounting rules for state and local governments?

A.

GASB

B.

AICPA

C.

IASB
D.

IMA

E.

GAAP

What was the impetus for the passage of the Sarbanes-Oxley Act of 2002 (Sarbox or SOX)?

A.

A crackdown by the Attorney General of the United States on white-collar crime

B.

A single whistle-blower, who served as a model for all accountants

C.

International recognition of the critical role accountants play in a global economy

D.

A wave of unethical and illegal accounting violations

E.

A grassroots movement by accountants to improve the public view of their profession

15.7 Describe the purpose of the International Accounting Standards Board and explain why it
exists.

Who must approve IASB proposals before they are accepted in the United States?

A.

Financial Accounting Standards Board (FASB) and the Internal Revenue Service (IRS)

B.

National Association of Accountants (NAA) and the Financial Accounting Standards Board (FASB)

C.

Financial Accounting Standards Board (FASB) and the Securities Exchange Commission (SEC)
D.

International Financial Reporting Society (IFRS) and the Financial Accounting Standards Board (FASB)

E.

Securities Exchange Commission (SEC) and the Internal Revenue Service (IRS)

The independent, nonprofit organization responsible for developing global accounting standards is the
_______.

A.

International Accounting Standards Board (IASB)

B.

Global Accounting Principles Board (GAPB)

C.

International Financial Reporting Society (IFRS)

D.

Association of International Financial Institutions (AIFI)

E.

International Organization for Standardization (IOS)

You own and operate a small bread company in Portland, Oregon. In preparing financial statements for
your local bank, you should follow rules established by the ___________.

A.

International Accounting Standards Board

B.

Financial Accounting Standards Board

C.

Internal Revenue Code

D.

Sarbanes-Oxley Act of 2002

E.

banking regulations

Which of the following is allowable by IASB standards, but NOT by U.S. GAAP standards?

A.

Writing down bad loans

B.

Writing up the value of an asset if its actual value has increased

C.

Recognizing revenue in the amounts that are expected to be received from the customer.

D.

Recognizing revenue at the time the goods and services are transferred to the customer.

E.

Writing down the value of an asset if its value decreases

What is one of the main goals of IASB?

A.

Setting accounting rules for state and local governments

B.

Identifying ethics-related areas with which accountants must comply to maintain certification

C.

Protecting against inconsistencies in reporting

D.

Restoring and maintaining public trust in corporate accounting practices

E.

Setting a code of professional conduct

What created the impetus for more uniformity among accounting practices around the world?

A.

Discrepancies in the accounts of multinational companies following multiple local standards

B.

The upsurge in multinational organizations and expansion of the global economy

C.

The increased number of international students in U.S. accounting courses

D.

A lawsuit filed against a multinational company for using "foreign" accounting practices

E.

A number of well-publicized fights among accountants from different regions

What does IASB have to do before U.S. companies are required to use its standards for financial
reporting?

A.

Change several of its practices to match U.S. GAAP current practice

B.

Demonstrate that its standards have been adequately developed

C.

Provide all materials necessary for updating accounting education

D.

Make a formal presentation to the SEC and receive its approval

E.

Receive approval from more than 125 countries