Multiple Choice Questions (MCQs)

Questions: 1-38

1.   Which would be issued by auditors where there is a history of significant losses coupled with uncertain prospects?

2.   Which of the following would require the filing of Form 8-K?

3.   Which of the following is not considered part of GAAP?

4.   Which of the following is not considered a monitoring mechanism?

5.   Which of the following statements about directors of a company is true?

6.   Which of the following statements about accruals and cash flows is true?

7.   Which of the following statements about accruals and cash flows is false?

8.   The two primary qualities of accounting information to make it useful for decision making are:

9.   Financial accounting data has some inherent limitations. Which of the following are limitations?

10.  Audit risk represents a danger to users of audited financial statements. The following are attributes pointing to potential areas of vulnerability except

11.  If a company fails to record a material amount of depreciation in a previous year, this is considered:

12.  Which of the following are examples of judgements made in the accounting reporting process?

13.  Which of the following would affect the comparability of accounting information for a fiven company from one accounting period to the next?

14.  Which of the following would affect the comparison of financial statements across two different firms?

15.  10-K Reports are:

16.  The management of Finner Company believes that the statement of cash flows is not a very useful statement and does not include it with the company’s financial statements. As a result the auditors opinion should be:

17.  Which of the following statements is incorrect?

18.  When analyzing financial statements, it is important to recognize that accounting distortions can arise. Accounting distortions are those things that cause deviations in accounting information from the underlying economics. Which of the following statements is not correct? Accounting distortions:

19.  Which of the following is a change in an accounting estimate?

20.  Which of the following are changes in accounting principle?

21.  Which of the following is not a source of industry information?

22.  Which of the following information would not be filed with the SEC by a publicly traded company?

23.  Accounting Standards are best described as:

24.  The matching principle requires that:

25.  If a company changes auditors, it is required to file the following with the SEC:

26.  The primary responsibility for fair and accurate financial reporting rests with the:

27.  Which of the following is incorrect? When using the 10-Q, the analyst should be aware that the usefulness of the quarterly financial statements might be affected by:

28.  Voluntary disclosure by managers is becoming an increasingly important source of information. Which of the following is least likely to be a reason for this increased disclosure?

29.  The 2 secondary qualities of accounting information to make it useful for decision making are:

30.  Economic income measures change in:

31.  Which one of the following is not an example of a red flag, used to evaluate earnings quality?

32.  Economic income includes:

33.  For a  going concern, company value can be expressed by:

34.  Accounting income consists of all the following components except:

35.  To determine a company’s sustainable earning power, an analyst needs to first determine the recurring component of the current period’s accounting income by excluding nonrecurring components of accounting income. Such adjusted earnings are often referred to as:

36.  SFAS 157 defines fair value as the:

37.  SFAS prescribes that information about the level of inputs used for determining fair values must be reported in the:

38.  All of the following are basic approaches to valuation except: