Question :
38. The basic purpose of an audit to: A. Assure financial statements in : 1229336
38. The basic purpose of an audit is to:
A. Assure financial statements are in conformity with GAAP.
B. Provide as much useful information to decision makers as possible, regardless of cost.
C. Record changes in the financial position of an organization by applying the concepts of double entry accounting.
D. Meet an organization’s need for accounting information as efficiently as possible.
39. The accounting systems of most business organizations:
A. Are tailored to meet the organization’s needs for accounting information and the resources available for operating the system.
B. Are similar in design to the journals, ledgers, and worksheets illustrated in this text.
C. Utilize data bases, rather than ledger accounts.
D. Are designed by the CPA firm that performs the annual financial audit.
40. Which of the following is not a basic function of an accounting system?
A. To interpret and record the effects of business transactions.
B. To classify the effects of similar transactions in a manner that permits determination of various totals and subtotals useful to management.
C. To ensure that a business organization will be managed profitably.
D. To summarize and communicate information to decision makers.
41. Information is cost effective when:
A. The information aids management in controlling costs.
B. The information is based upon historical costs, rather than upon estimated market values.
C. The value of the information exceeds the cost of producing it.
D. The information is generated by a computer based accounting system.
42. The body created by the Sarbanes Oxley Act and charged with oversight of the accounting profession is the:
A. Public Company Accounting Oversight Board.
B. Auditing Standards Board.
C. International Accounting Standards Board.
D. Security and Exchange Commission.
43. Which of the following is generally not considered an external user of accounting information?
A. Stockholders of a corporation.
B. Bank lending officers.
C. Financial analysts.
D. Factory managers.
44. Although accounting information is used by a wide variety of external parties, financial reporting is primarily directed toward the informational needs of:
A. Investors and creditors.
B. Government agencies such as the Internal Revenue Service.
C. Customers.
D. Trade associations and labor unions.
45. Investors may be described as:
A. Individuals and enterprises that have provided credit to a reporting entity.
B. Individuals and enterprises that own a reporting entity business.
C. Anyone that has an interest in the results of the operations of the reporting entity.
D. Those whose primary economic activity consists of buying and selling stocks and bonds.
46. Investors and creditors are interested in the probability that their original investment or loan will eventually be returned, and that they will receive a reasonable return while their funds are invested or borrowed. These expectations are collectively referred to as:
A. Expected profitability.
B. The objectives of financial reporting.
C. Cash flow prospects.
D. Financial position.
47. The FASB takes on a responsibility to do the following, except:
A. Set the objectives of financial reporting.
B. Describe the elements of financial statements.
C. Judge disputes between management and the CPA.
D. Determine the criteria for deciding what information to include in financial statements.
