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Unformatted text preview: ECON 3A, FALL 2007 MIDTERM #1 PLEASE REMEMBER TO WRITE YOUR VERSION # ON YOUR SCANTRON!!! Name: __________________________ Perm #: _____________ 1. What body is primarily responsible for the statements which comprise GAAP? A) PCAOB B) FASB C) SEC D) AICPA 2. Every transaction in the history of a company is reflected in the ending balance of the accounts on which statement? A) Statement of cash flows B) Statement of independence from taxation without representation C) Balance sheet D) Income statement 3. Which of the following groups uses accounting information to determine whether the company can pay its obligations? A) Creditors C) Marketing managers B) Chief Financial Officer D) Investors in common stock 4. The group of users of accounting information charged with achieving the goals of the business is its A) creditors. B) auditors. C) investors. D) managers. 5. What body is primarily responsible for the rules governing audits, those rules commonly referred to as GAAS? A) PCAOB B) SEC C) FASB D) AICPA 6. It was established in class that auditors lend credibility to financial statements. After completion of an audit, who has primary responsibility for the financial statements, and how much assurance does an auditor provide? A) Management remains responsible and the auditors provide reasonable assurance in the form of an opinion. B) The auditors are primarily responsible but only provide reasonable assurance. C) The auditors are primarily responsible and provide positive assurance. D) Management remains responsible and the auditors provide absolute assurance. 7. Which of the following groups uses accounting information to determine whether the company's net income will result in a stock price increase? A) Marketing managers C) Chief Financial Officer B) Creditors D) Investors in common stock Version 1 Page 1 8. The liability created by a business when it purchases coffee beans and coffee cups on credit from suppliers is termed a(n) A) revenue. B) account payable. C) expense. D) account receivable. 9. Which group ultimately controls a company, and through what activity is this accomplished? A) The shareholders through dat to day decision-making B) The shareholders through voting C) The Board of Directors through appointment of management D) Management through day to day decision-making 10. Current assets and current liabilities will be satisfied within: A) One year or the operating cycle, whichever is shorter B) One year C) The operating cycle D) One year or the operating cycle, whichever is longer 11. Which statement is true with respect to compliance with GAAP....
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- Winter '07
- Balance Sheet