Question :
41.Suppose a number of your friends have organized a company : 1237421
41.Suppose a number of your friends have organized a company to develop and sell a new software product. They have asked you to loan them $8,000 to help get the company started, and have promised to repay your $8,000 plus 10% interest in one year. Of the following, which amount may be described as the return on your investment?
A.$8,000
B.$800
C.$8,800
D.$7,200
Return on investment is payment for usage of the money—interest in this setting. 10% × $8,000 = $800.
42.Which of the following is generally not considered one of the general purpose financial statements issued by a corporation?
A.Income statement forecast for the coming year.
B.Balance sheet.
C.Statement of financial position.
D.Statement of cash flows.
43.Which of the following is considered a return “on” investment?
A.Dividends.
B.Repayment of a loan.
C.Purchase of an asset.
D.Securing a loan.
44.The financial statements of a business entity:
A.Include the balance sheet, income statement, and income tax return.
B.Provide information about the cash flow prospects of the company.
C.Are the first step in the accounting process.
D.Are prepared for a fee by the Financial Accounting Standards Board.
45.Which of the following are not considered “external” users of financial statements?
A.Owners.
B.Creditors.
C.Labor unions.
D.Managers.
46.Financial statements are designed primarily to:
A.Provide managers with detailed information tailored to the managers’ specific information needs.
B.Provide people outside the business organization with information about the company’s financial position and operating results.
C.Report to the Internal Revenue Service the company’s taxable income.
D.Indicate to investors in a particular company the current market values of their investments.
47.The principal difference between management accounting and financial accounting is that financialaccounting information is:
A.Prepared by managers.
B.Intended primarily for use by decision makers outside the business organization.
C.Prepared in accordance with a set of accounting principles developed by the Institute of Certified Management Accountants.
D.Oriented toward measuring solvency rather than profitability.
48.Which financial statement is prepared as of a specific date?
A.The balance sheet
B.The income statement
C.The statement of cash flows
D.The balance sheet, income statement, and statement of cash flows are all for a period of time rather than at a specific date.
49.In comparison with a financial statement prepared in conformity with generally accepted accounting principles, a management accounting report is more likely to:
A.Be used by decision makers outside of the business organization.
B.Focus upon the operation results of the most recently completed accounting period.
C.View the entire organization as the reporting entity.
D.Be tailored to the specific needs of an individual decision maker.
50.Which of the following decision makers is least likely to be among the users of management accounting reports developed by Sears Roebuck and Co.?
A.The chief executive officer of Sears.
B.The manager of the Automotive Department in a Sears’ store.
C.The manager of a mutual fund considering investing in Sears’ common stock.
D.Internal auditors within the Sears organization.
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