Management

Chapter 1: Uses of Accounting Information and the Financial Statements

TRUE/FALSE

1. The intentional preparation of misleading financial statements is referred to as fraudulent financial reporting.

ANS: T PTS: 1 OBJ: LO1 NAT: AACSB correlation: ethics

LOC: Learning Type: Recall KEY: ethical reporting

2. Fraudulent financial reporting can result from the misapplication of accounting principles.

ANS: T PTS: 1 OBJ: LO1 NAT: AACSB correlation: ethics

LOC: Learning Type: Recall KEY: ethical reporting

3. Criminal penalties cannot be imposed on those who prepare fraudulent financial statements.

ANS: F PTS: 1 OBJ: LO1 NAT: AACSB correlation: ethics

LOC: Learning Type: Recall KEY: ethical reporting

4. The Sarbanes-Oxley Act orders the SEC to hold chief executives and CFOs responsible for the accuracy of their company's financial statements.

ANS: T PTS: 1 OBJ: LO1 NAT: AACSB correlation: ethics

LOC: Learning Type: Recall KEY: business ethics| ethical reporting

5. Responsibility for ethical financial reporting rests solely with the accountant.

ANS: F PTS: 1 OBJ: LO1 NAT: AACSB correlation: ethics

LOC: Learning Type: Recall KEY: professional ethics

6. Earned income is a measure of profitability.

ANS: T PTS: 1 OBJ: LO1 NAT: AACSB correlation: ethics

LOC: Learning Type: Recall KEY: profitability

7. Obtaining funds from a bank is an example of an investing activity.

ANS: F PTS: 1 OBJ: LO1 NAT: AACSB correlation: analytic

LOC: Learning Type: Comprehension KEY: statement of cash flows

8. Paying taxes to the government is an example of an operating activity.

ANS: T PTS: 1 OBJ: LO1 NAT: AACSB correlation: analytic

LOC: Learning Type: Comprehension KEY: statement of cash flows

9. Management accounting focuses on external decision making.

ANS: F PTS: 1 OBJ: LO1

NAT: AACSB correlation: technology LOC: Learning Type: Recall

KEY: management functions

10. The processing stage of accounting is accomplished by...