1: Question Score 20/20
Identify the external users of accounting information. Select all that apply.
Choice Creditors Investors Regulators Plant managers Business unit managers Customers
Selected Yes Yes Yes No No Yes
Points +1 +1 +1
+1
Total correct answers: 0
Partial Grading Explained
Question 2: Score 20/20
Your response
Correct response Choose the appropriate term for the descriptions given below:
Description Term a. Identifying, analyzing, and managing those risks that pose a threat to the achievement of the organization's objectives.
Risk assessment
(20%)
b. A process, involving both ongoing activities and separate evaluations, that enables an organization to evaluate the effectiveness of its system of internal control over time.
Monitoring
(20%)
c. The process of capturing and communicating operational, financial, and compliance-related information.
Information and communication
(20%)
d. The foundation for all the other elements of internal control, setting the overall tone for the organization.
Control environment
(20%)
e. Policies and procedures put in place by management to address the risks identified during the risk assessment process.
Control activities
(20%)
Choose the appropriate term for the descriptions given below:
Description Term a. Identifying, analyzing, and managing those risks that pose a threat to the achievement of the organization's objectives.
Risk assessment
b. A process, involving both ongoing activities and separate evaluations, that enables an organization to evaluate the effectiveness of its system of internal control over time.
Monitoring
c. The process of capturing and communicating operational, financial, and compliance-related information.
Information and communication
d. The foundation for all the other elements of internal control, setting the overall tone for the organization.
Control environment
e. Policies and procedures put in place by management to address the risks identified during the risk assessment process.
Control activities
Question 3: Score 20/20
Your response Correct response Exercise 1.6: Investment Return You recently invested $12,000 of your savings in a security issued by a large company. The security agreement pays you 7 percent per year and has a maturity two years from the day you purchased it. What is the total cash flow you expect to receive from this investment, separated into the return on your investment and the return of your investment? Ex. 1.6 You expect two cash flows from your investment: Return of investment (at $12,000 (10%) maturity) Return on investment (periodically, as stated in your 1,680 (10%) investment agreement) $12,000 (10%) x 7% x 2 years $13,680 (10%) Total expected cash flow The return of your investment will come at one timetwo years later at the maturity date. The return on the investment can come in different patterns. For example, if it is semiannually, you would receive $420 (10%) ($12,000 (10%) x 7% x 1/2 year) four times. If it is annually, you would receive $840 (10%) ($12,000 (10%) x 7%) two times. If it is monthly, you would receive $70 (10%). ($12,000 (10%) x 7% x 1/12) 24 times.
Exercise 1.6: Investment Return You recently invested $12,000 of your savings in a security issued by a large company. The security agreement pays you 7 percent per year and has a maturity two years from the day you purchased it. What is the total cash flow you expect to receive from this investment, separated into the return on your investment and the return of your investment? Ex. 1.6 You expect two cash flows from your investment:
Return of investment (at maturity) Return on investment (periodically, as stated in your investment agreement) $12,000 x 7% x 2 years
$12,000
1,680
$13,680 Total expected cash flow The return of your investment will come at one timetwo years later at the maturity date. The return on the investment can come in different patterns. For example, if it is semi-annually, you would receive $420 ($12,000 x 7% x 1/2 year) four times. If it is annually, you would receive $840 ($12,000 x 7%) two times. If it is monthly, you would receive $70. ($12,000 x 7% x 1/12) 24 times.
Question 4: Score 20/20
Your response Correct response Exercise 1.7: Accounting Terminology Match the terms on the left with the descriptions on the right. Each description should be used only once. Term Financial accounting Management accounting Financial reporting Financial statements Description
General-purpose assumption Integrity Internal control Public accounting Bookkeeping
a. The procedural aspect of accounting that involves keeping detailed records of business transactions, much of which is done
today by computers.
b. A broad term that describes all information provided to external users, including but not limited to financial statements. c. An important quality of accounting information that allows investors, creditors, management, and other users to rely on the
information.
d. The segment of the accounting profession that relates to providing audit, tax, and consulting services to clients. e. Procedures and processes within an organization that ensure the integrity of accounting information. f.
Statement of financial position (balance sheet), income statement, statement of flows.
g. cash The fact that the same information is provided to various external users, including investors and creditors. h. The area of accounting that refers to providing information to support internal management decisions. i.
The area of accounting that refers to providing information to support external investment and credit decisions. (11%) Financial accounting h (11%) Management accounting b (11%) Financial reporting f (11%) Financial statements g (11%) General purpose assumption c (11%) Integrity e (11%) Internal control d (11%) Public accounting a (11%) Bookkeeping
i
Ex. 1.7
Exercise 1.7: Accounting Terminology Match the terms on the left with the descriptions on the right. Each description should be used only once. Term Financial accounting Management accounting Financial reporting Financial statements General-purpose assumption Integrity Internal control Public accounting Bookkeeping
a. The procedural aspect of accounting that involves keeping detailed records of business transactions, much of which is done
Description
today by computers.
b. A broad term that describes all information provided to external users, including but not limited to financial statements. c. An important quality of accounting information that allows investors, creditors, management, and other users to rely on the
information.
d. The segment of the accounting profession that relates to providing audit, tax, and consulting services to clients. e. Procedures and processes within an organization that ensure the integrity of accounting information. f.
Statement of financial position (balance sheet), income statement, statement of cash flows.
g. The fact that the same information is provided to various external users, including investors and creditors.
h. The area of accounting that refers to providing information to support internal management decisions. i.
The area of accounting that refers to providing information to support external investment and credit decisions. Financial accounting h Management accounting b Financial reporting f Financial statements g General purpose assumption c Integrity e Internal control d Public accounting a Bookkeeping
i
Ex. 1.7
Question 5: Score 20/20
Your response Correct response Exercise 1.8: Accounting Organizations Match the organizations on the left with the functions on the right. Each function should be used only once. Organization Institute of Internal Auditors Securities and Exchange Commission Function
American Institute of CPAs Institute of Management Accountants Financial Accounting Standards Board American Accounting Association Public Company Accounting Oversight Board International Accounting Standards Board
a. Government agency responsible for financial reporting by publicly held companies. b. International organization dedicated to the advancement of internal auditing. c. Organization dedicated to providing members personal and professional development opportunities in the area of management
accounting.
d. The body charged with setting auditing standards for audits of public companies. e. Organization consisting primarily of accounting educators that encourages improvements in teaching and research. f.
The group that creates and promotes International Financial Reporting Standards (IFRSs).
g. Professional association of Certified Public Accountants. h. Private-sector organization that establishes accounting standards.
Ex. 1.8
(13%) Institute of Internal Auditors a (13%) Securities and Exchange Commission g (13%) American Institute of CPAs c (13%) Institute of Management Accountants h (13%) Financial Accounting Standards Board e (13%) American Accounting Association d (13%) Public Company Accounting Oversight Board f (13%) International Accounting Standards Board
b
Exercise 1.8: Accounting Organizations Match the organizations on the left with the functions on the right. Each function should be used only once. Organization Institute of Internal Auditors Securities and Exchange Commission American Institute of CPAs Institute of Management Accountants Financial Accounting Standards Board American Accounting Association Public Company Accounting Oversight Board International Accounting Standards Board
a. Government agency responsible for financial reporting by publicly held companies. b. International organization dedicated to the advancement of internal auditing. c. Organization dedicated to providing members personal and professional development opportunities in the area of management
Function
accounting.
d. The body charged with setting auditing standards for audits of public companies. e. Organization consisting primarily of accounting educators that encourages improvements in teaching and research. f.
The group that creates and promotes International Financial Reporting Standards (IFRSs).
g. Professional association of Certified Public Accountants. h. Private-sector organization that establishes accounting standards.
Ex. 1.8
Institute of Internal Auditors a Securities and Exchange Commission g American Institute of CPAs
b
Institute of Management Accountants Financial Accounting Standards Board e American Accounting Association d Public Company Accounting Oversight Board f International Accounting Standards Board
c h