Managerial Accounting for IE

1. The process that involves recording of cost data in books of accounts. It contains a great deal more data and when summarized there is much information available to the management of the company.

(1 Point)

a. Auditing

b. Bookkeeping

c. Cost Accounting

d. Financial Accounting

e. Financial Management

f. Management Accounting

g. Taxation

h. Government Accounting

2. The accounting profession which is most significant service to the public.

(1 Point)

a. Auditing

b. Bookkeeping

c. Cost Accounting

d. Financial Accounting

e. Financial Management

f. Management Accounting

g. Taxation

h. Government Accounting

3. Values assets at their current replacement cost rather than at the price originally paid for them

(1 Point)

a. Historical Cost

b. Current Cost

c. Realizable Value

d. Present Value

4. It is a form of business whose main purpose is for the benefit of its members.

(1 Point)

a. Sole Proprietorship

b. Partnership

c. Corporation

d. Cooperative

5. The information must be readily clear to users of the financial statements. This means that information must be clearly presented, with additional information supplied in the supporting footnotes as needed to assist in clarification

(1 Point)

a. Relevance

b. Reliability (Faithful Representation)

c. Comparability

d. Timeliness

Option 5

f. Understandability

6. It requires that financial information must be comprehensible or intelligible if it is to be useful

(1 Point)

a. Relevance

b. Reliability (Faithful Representation)

c. Comparability

d. Timeliness

e. Verifiability

f. Understandability

7. The information must be related to the needs of the users, which is the case when the information influences the economic decisions of users. This may involve reporting particularly relevant information, or information whose omission or misstatement could influence the economic decisions of users.

(1 Point)

a. Relevance

b. Reliability (Faithful Representation)

c. Comparability

d. Timeliness

e. Verifiability

f. Understandability

8. It requires financial information to be related to an economic decision. Otherwise, the information is useless.

(1 Point)

a. Relevance

b. Reliability (Faithful Representation)

c. Comparability

d. Timeliness

e. Verifiability

f. Understandability

9. It pertains to the capacity of the information to influence a decision.

(1 Point)

a. Relevance

b. Reliability (Faithful Representation)

c. Comparability

d. Timeliness

e. Verifiability

f. Understandability

10. The information must be comparable to the financial information presented for other accounting periods, so that users can identify trends in the performance and financial position of the reporting entity.

(1 Point)

a. Relevance

b. Reliability (Faithful Representation)

c. Comparability

d. Timeliness

Option 5

f. Understandability

12. It means the ability to bring together for the purpose of noting points of likeness and difference

(1 Point)

a. Relevance

b. Reliability (Faithful Representation)

c. Comparability

d. Timeliness

e. Verifiability

f. Understandability

13. The financial information in the financial reports should represent what it purports to represent. Meaning, it should show what really are present and what really happened, as the case may be.

(1 Point)

a. Relevance

b. Reliability (Faithful Representation)

c. Comparability

d. Timeliness

e. Verifiability

f. Understandability

14. When comparisons are made within the entity, information is compared from one accounting period to another. For example: income is compared for the years 2020, 2021, and 2022.

(1 Point)

a. True

b. False

15. Comparability of information across entities enables analysis of similarities and differences between different companies.

(1 Point)

a. True

b. False

16. It requires that transactions and events should be accounted for in a manner that represents their true economic substance rather than the mere legal form. This concept is known as Substance Over Form.

(1 Point)

a. Relevance

b. Reliability (Faithful Representation)

c. Comparability

d. Timeliness

e. Verifiability

f. Understandability

17. Substance over form requires that if substance of transaction differs from its legal form than such transaction should be accounted for in accordance with its substance and economic reality.

(1 Point)

a. True

b. False

18. If financial information can be audited then it satisfies the qualitative characteristic which is:

(1 Point)

a. Relevance

b. Reliability (Faithful Representation)

c. Comparability

d. Timeliness

e. Verifiability

f. Understandability

19. It means that different knowledgeable and independent observers could reach consensus.

(1 Point)

a. Neutrality

b. Reliability (Faithful Representation)

c. Comparability

d. Timeliness

e. Verifiability

f. Understandability

20. This means that the financial statements should not be prepared so as to favor one party to the detriment of another party.

(1 Point)

a. Neutrality

b. Reliability (Faithful Representation)

c. Completeness

d. Timeliness

e. Verifiability

f. Understandability

21. Simply means fairness and freedom from bias.

(1 Point)

a. Neutrality

b. Reliability (Faithful Representation)

c. Completeness

d. Timeliness

e. Verifiability

f. Understandability

22. It requires that relevant information should be presented in a way that facilitates understanding and avoids erroneous implication.

(1 Point)

a. Neutrality

b. Reliability (Faithful Representation)

c. Completeness

d. Timeliness

e. Consistency

f. Understandability

23. Information contained in the financial statements must be complete in all material respects in order to present a true and fair view of the affairs of the company.

(1 Point)

a. Neutrality

b. Reliability (Faithful Representation)

c. Completeness

d. Timeliness

e. Consistency

f. Understandability

24. Incomplete information reduces not only the relevance of the financial statements, it also decreases its reliability since users will be basing their decisions on information which only presents a partial view of the affairs of the entity.

(1 Point)

a. True

b. False

24. The accounting methods and practices should be applied on a uniform basis from period to period.

(1 Point)

a. Neutrality

b. Reliability (Faithful Representation)

c. Completeness

d. Timeliness

e. Consistency

f. Understandability

25. It refers to the principle that companies should use the same accounting methods to record similar transactions over time.

(1 Point)

a. Neutrality

b. Reliability (Faithful Representation)

c. Completeness

d. Timeliness

e. Consistency

f. Understandability

26. It pertains to the trustworthiness of the financial statements.

(1 Point)

a. Neutrality

b. Reliability (Faithful Representation)

c. Completeness

d. Timeliness

Option 5

f. Understandability

27. Prudence requires that accountants should exercise a degree of caution in the adoption of policies and significant estimates such that the assets and income of the entity are not overstated whereas liability and expenses are not under stated.

(1 Point)

a. True

b. False

28. Accounting information provides value that can help decision makers forecast more accurately the outcome of past or present events.

(1 Point)

a. Predictive value

b. Feedback value

c. Materiality

d. Cost-benefit analysis

29. Accounting information has its value when it enables decision makers to confirm or correct prior expectations.

(1 Point)

a. Predictive value

b. Feedback value

c. Materiality

d. Cost-benefit analysis

30. It depends on the size and nature of the item judged in the particular circumstances of its omission.

(1 Point)

a. Predictive value

b. Feedback value

c. Materiality

d. Cost-benefit analysis