© 2000 John Petroff
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© 2000 John Petroff |
Questions for Chapter 6 Accounting Systems
Review questions
Q-6.1
What does GAAP stand for?
Q-6.2 What is known as international
accounting?
Q-6.3 Do all countries abide
by the same accounting principles, or none? Discuss.
Q-6.4 What has been the role
of international organizations in promoting harmonization of accounting
system?
Q-6.5 What does IASC stand
for?
Q-6.6 Does the American government
support international accounting or GAAP accounting overseas?
Q-6.7 What branch of accounting
is also known as international accounting?
Q-6A.1
For whom are financial statements prepared?
Q-6A.2 Does the survival
of a firm depends on adequate information provided to those who
entrusted funds with the corporation? Explain.
Q-6A.3 What groups other
than owners and lenders are interested in financial statements
and results of operations?
Q-6A.4 What does SEC stands
for?
Q-6A.5 How has the SEC been
instrumental in improving the quality of accounting information
publicly made available by major American corporations?
Q-6A.6 What does AICPA stand
for?
Q-6A.7 What is the role of
AICPA?
Q-6A.8 Are the rules formulated
by AICPA and SEC mandatory?
Q-6A1.1
How does management use financial statements it publishes?
Q-6A1.2 What is the name
given to the branch of accounting that generates the data needed
for corporate decisions?
Q-6A1.3 Which of the two,
financial accounting or management accounting, produces the largest
volume of data?
Q-6A2.1
What is the branch of accounting which deals exclusively with
data necessary for filing tax returns?
Q-6A2.2 Are there significant
differences between tax accounting and financial accounting? Why
are there such differences?
Q-6A3.1
Does financial reporting serve only one group of individuals?
Q-6A3.2 What is meant by
"relevant" accounting?
Q-6A3.3 Why does financial
accounting have to be future oriented?
Q-6B1.1
List and explain each of the major five objectives of accounting.
Q-6B1.2 What additional objectives
are looked upon as secondary?
Q-6B2.1
List and comment on the six major accounting conventions.
Q-6B2.2 Should a firm discover
that an accounting method is more appropriate, what should it
do when changing method? What convention would be violated if
adequate care is not given to the change in accounting method?
Q-6B3.1
What are the different American organizations contribute to improving
the informational content of accounting numbers?
Q-6B3.2 Which is the organization
responsible for formulating American accounting standards since
1973?
Q-6C.1
Must the accounting period coincide with the calendar year for
American firms? If not, how is it decided?
Q-6C.2 What is the name given
to entries that are necessary after accounting books are closed
at the end of the year?
Q-6C.3 In what consists the
work of auditors?
Q-6C1.1
What is the name given to the process of recording transactions
throughout the year?
Q-6C2.1
List the different types of most common year-end adjusting entries,
and give examples for each.
Q-6C3.1
In what document do auditors report their conclusion of their
work?
Q-6C4.1
What written supporting materials accompany financial statements?
Q-6C5.1
What are the two major financial statements?
Q-6C5.2 What are other accounting
statements often present in annual reports?
Q-6C5.3 What are the three
parts of a statement of cash flows?
Q-6C5.4 What does the statement
of shareowners' equity report?
Q-6C6.1
What are the different type of auditor's opinion?
Q-6C6.2 Does a clean auditors'
opinion mean that all numbers are correct? If not, what does it
mean?
Q-6C6.3 What are the two
parts of an auditor's clean opinion?
Q-6C6.4 What are the two
types of qualified opinions?
Q-6C6.5 When will you find
auditors' opinions that do not express any opinion?
Q-6D.1
Why are projected results rarely stated in annual reports?
Q-6D.2 What precautions are
often taken by companies when forward-looking statements are made?
Q-6D.3 Why are accountants
reluctant to be involved in projections?
Q-6D.4 List four major sources
of problems in accounting numbers.
Q-6D.5 How common are instances
of outright fraud in American financial statements?
Q-6D.6 Do all firms try to
make their financial statements look good? If so, how?
Q-6D.7 Is the objective of
clarity sometimes making numbers less clear? Give examples.
Q-6D.8 What problem result
from a unit of operation that includes highly aggregated data
of different affiliates?
Q-6D.9 Is it always possible
to synchronize or match expenses with revenues?
Q-6D.10 How does seasonality
affect meaning of accounting numbers?
Q-6D.11 Is having a choice
accounting methods an invitation for manipulation of data?
Q-6D.12 How are estimations
affecting comparison between companies?
Q-6D.13 Isn't the argument
of objectivity for use of historical cost data a major source
of distortion in balance sheet numbers?
Q-6D.14 What are some of
the most valuable assets that American companies are not allowed
to show on their balance sheets?
Q-6D.15 How is quality entirely
omitted in accounting data?
Q-6E.1
List major differences between GAAP and other Western accounting
systems?
Q-6E.2 What do certain country
require "legal" reserves?
Q-6E.3 Give example of a
GAAP rule inspired by foreign accounting practice.
Q-6E.4 Give examples of efforts
of harmonization between GAAP and international accounting.
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