Workbook - Financial Accounting – ACC 621

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My Name is Iqbal
Identification 349-2018
Due Date 7th October, 2018

SELF TEST (MCQs)

1. Which of the following doesn’t describe accounting?

Ans. (b) Is an end rather than a means to an end.

2. To understand and use of accounting information in making economic decisions, you

must understand.

Ans. (a) the nature of economic activities that accounting information describes.
(b) the assumption and measurement technique involved in developing information.
(c) Information is relevant is particular type of decision that being made.

3. Purposes of an accounting system include all of the following except:

Ans. (d) Dictate the specific types of business transactions that the enterprise may engage in.

4. External users of financial accounting information except?

Ans. (c) Line Manager.

5. Objectives of financial reporting to external investors and creditors including preparing

information about all the following except?

Ans. (a) Information used to determine which products to produce.

6. Financial account information is characterized by all of the following except:

Ans. (B) it sometimes results from inexact and appropriate measures.

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7. Which of the following is not a user of internal accounting information?

Ans. (c) Creditor

8. Characteristics of internal accounting information include of the following except?

Ans. It’s audited by CPA.

9. Which of the following are important factors in ensuring the integrity of accounting
information?

Ans. All below.

(a) Institutional factors, such as standard for preparing information.
(b) Professional Organizations, such as the American institutions of CPAs.
(c) Judgments, competence and ethical behavior of individual accountants.

10. The code of conduct of the American Institute of Certified Public Accountants including
requirements in which of the following areas?

Ans. All of them a, b, c.

The public interest
Objectivity
Independence
Discussion Questions

Q1 Accounting is sometimes describe as the language of business, what is meant by this

description?

Ans. Accounting is a process of recording transactions and because of its role in maintaining
and processing all related financial information that an entity or company requires for
managing and reporting purposes.

Q2 When you invest your saving in a company? What is the difference between the return
on your investment and the return of your investment?

Ans. As an individual everybody would like to invest he/she gets reasonable profit on
investment and that amount has to be returned to investor by investee within the agreed
period of time.

Return of investment is an amount which the person invest and gets return in agreed
time.
Return on investment like an amount which you earn as profit on your investment, paid
the investee to the investor as a profit or whatever % agreed between them.

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Q3 Going from general to specific, what are the three primary objectives of financial
accounting information?

Ans. 1. The purpose of accounting is to provide the information that is needed for sound
economic decision making.

2. To maintain full and systematic records of business transactions.

3. To represent financial information of the business/organization.

Q4 What are three primary financial statements with which we communicate financial
accounting information?

Ans. 1. Balance Sheet (which shows where the company stands financially.

2. Cash Flow/Inflow statements it represents details of the company’s which involves

cash/payments expected to receive on sales/shipments.

3. Income Statement: it shows company financial performance of the company for the
specific accounting period, giving summary how the business experiences its revenue and
expenses.

Q5 Is externally reported financial information always precise and accurate?

Ans. It is mainly depends on the assumptions and reports presented by external auditors but
it does not mean that they are always precise and accurate.

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