FINAL REVISION 2

LSP ACCOUNTING
INSTRUCTIONS: There are 05 topics. Each topic includes 10 questions
(3Q: provide the definition, 3Q: provide the term and 4Q:T/F). Work in
groups:
- Prepare a sheet of paper
- See each question in 5’’ and write your answer on the paper in 2
minutes.
- Swap your paper with another group in clockwise rotation
- Check the group’s answer after each topic
- Calculate the number of correct answers and record it.
TOPIC 8. BUDGETING
1. Budgeting: an estimation of revenue and expenses over a specified
future period of time
2. a surplus budget means profits are anticipated
3. a balanced budget means revenues are expected to equal
expenses
4. Expenses will exceed revenues: a deficit budget
5. This type of budget remains unchanged over its life: a static budget
6. Useful in managing an individual's or family's finances over both the
short and long term horizon: personal budgets
T/F: BUDGETING
1. Businesses use budgets to measure their progress T
2. Forecasts determine outlook T
3. Budgets are tighter when the economic expansion is predicted T
4. A budget is a model based on plans and forecasts F
TOPIC 9. FRAUD

1. Bribery: the offer or acceptance of anything of value in exchange for

influence on a government/public official or employee.
2. Money – laundering: process of making large amounts of money
generated by a criminal activity: drug trafficking or terrorist funding
3. Making false entries: sales skimming
4. Taking revenue from one’s employer: kickbacks/under-the-table payoffs
5. The manipulation of accounting records to hide the theft of funds:
accounting embezzlement
6. Manipulating accounts to conceal fraud, illegal activities, and
embezzlement: juggling the accounts
T/F: FRAUD
1. Money laundering is a type of embezzlement. F
2. People can hide illegal activity by making false entries T
3. Sales skimming is not common in large businesses T
4. Individuals or companies may accept kickbacks or under – the –
table payoffs from suppliers T
TOPIC 10: REPORTING EXTRAORDINARY GAINS
AND LOSSES

1. Gains/ losses : some of a company’s transactions which occur outside

of the company’s main business activities or non-operating activities
2. Expense: money a business spends on the general operation of
business
3. Downsize: to reduce the size of a business
4. To end someone's employment: layoff
5. A formal legal proceeding: lawsuit
6. To stop selling a product that you that you still have in inventory:
abandoning product lines
T/F: REPORTING EXTRAORDINARY
GAINS AND LOSSES
1. Gross Profit minus Operating Expenses is best defined as operating
income T
2. A Net Profit occurs if Expenses are greater than Gross Profit T
3. When creating an income statement, the interest on a loan is
liability T
4. Rent paid is not a type of revenue F
TOPIC 11: AUDITING
1. Audit: is the examination or inspection of various books of accounts by an
audit.
2. An audit report: a written opinion of an auditor regarding an entity’s
financial statements.
3. Clean opinion: a statement by an auditor saying that a company’s records
have no improprieties.
4. The level that must be reached in order to receive some reward: cutoff point
5. an unintentional mistake made while doing paperwork: clerical error
6. an entry that is recorded to correct an incorrect or false entry: material
adjustments
T/F: AUDITING
1. There are 2 main types of audits: Internal, and External audits: F
2. 3 primary types of audit performed by CPAs are (1) financial audit,
(2) operational audit, and (3) compliance audit T
3. Auditor responsibilities include: professional scepticism,
professional judgement, and professional conservatism: F
4. The typical audit report contains two paragraphs: scope of the audit
and the auditor’s opinion: F
 TOPIC 12: DIRECT AND INDIRECT COSTS

1. Indirect cost: any expense not tied to production.

2. Cost drivers: units involved in production.
3. Variable overhead: other costs that increase or decrease with
production.
4. A method for allocating fixed costs: activity-based costing.
5. The cost of paying workers on production line: direct labor.
6. They are easily attributed to a specific product or activity: variable
costs.
T/F: DIRECT AND INDIRECT COSTS
1. An executive's bonus is fixed overhead
2. Cost for material handlers is manufacturing
3. depreciation of nonmanufacturing equipment is direct cost
4. interest expenses are direct expenses