Introduction to Accounting Ch 03 Answer Key

Introduction to Accounting Question type: Multiple Choice 1. ____________ is concerned with recording the financial impacts of business processes as they are executed. a. b. c. d. e. Management accounting Financial accounting (Fl) Controlling (CO) Bank ledger accounting None of the above Answer: b 2. Which of the following is a key process in financial accounting? a. b. c. d. e. Sales order processing Accounts receivable accounting Credit management Income verification All of the above Answer: b 3. Which process is used to manage money owed by customers for goods and services purchased from the company? a. b. c. d. e. General ledger accounting Accounts receivable accounting Fixed asset accounting Bank ledger accounting All of the above Answer: b 4. Which process is concerned with recording data associated with bank statements? a. b. c. d. e. Bank ledger accounting Fixed asset accounting General ledger accounting Accounts receivable accounting None of the above Answer: a 5. ____________ are internal divisions of an enterprise that are used to define areas of responsibility or to meet the external reporting requirements of an enterprise segment. a. b. c. d. e. Cost centers Depreciation areas Business areas Sub-ledgers None of the above Answer: c 6. Which term refers to an ordered listing of accounts that comprise a company’s general ledger? a. b. c. d. e. General ledger Balance sheet Bank ledger Chart of accounts (COA) None of the above Answer: d 7. Which term represents what a company owns, such as cash, inventory of materials, and buildings? a. b. c. d. e. Liabilities Equity Assets Revenues None of the above Answer: c 8. Which term represents what a company owes to others, including money owed to vendors and loans from financial institutions? a. b. c. d. e. Liabilities Equity Assets Revenues None of the above Answer: a 9. Which term represents the monies a company earns by selling its products and services? a. b. c. d. e. Liabilities Assets Expenses Revenue Equity Answer: d 10. Which term represents the costs associated with creating and selling products and services? a. b. c. d. e. Assets Expenses Liabilities Equity None of the above Answer: b 11. Which element is not a part of the typical company code data in general ledger accounts? a. b. c. d. e. Tax-related data Field status groups Line item display Reconciliation account data None of the above Answer: e 12. Which term is a general ledger account that consolidates data from a group of related sub-ledger accounts? a. b. c. d. e. Subsidiary ledger Sub-ledger Reconciliation account Line item display None of the above Answer: c 13. Which of the following records the impact of a transaction step on financial accounting? a. Financial accounting document b. c. d. e. Parallel accounting document Sub-ledger Subsidiary ledger None of the above Answer: a 14. Which of the following is used to implement multiple ledgers and use each ledger for different purposes? a. b. c. d. e. Financial accounting document Subsidiary ledger Sub-ledger Parallel Accounting None of the above Answer: d 15. Which type of asset has a physical form? a. b. c. d. e. Master asset Tangible asset Informal asset Intangible asset None of the above Answer: b 16. Which type of asset has a non-physical form? a. b. c. d. e. Master asset Tangible asset Informal asset Intangible asset None of the above Answer: d 17. Which of the following is used to report data needed to meet legal and regulatory requirements? a. b. c. d. e. Assets Equity Tangible document Financial statement None of the above Answer: d 18. Which of the following best describes the operative chart of accounts? a. Contains the operational accounts that are used to record the financial impact of an organization’s day-to-day transactions b. Used to enable companies to meet special country-specific reporting requirements c. Contains accounts that are used by multiple companies to consolidate their financial reporting d. Contains only accounts payable transactions e. Contains only accounts receivable transaction Answer: a 19. Which of the following is not a mode of acquiring an asset for a company? a. b. c. d. e. Acquiring internally via the production process Acquire from a vendor using the purchasing process Acquire from a vendor without using the purchasing process Selling equipment Acquiring without a vendor Answer: d 20. All of the following are transaction types that occur during the life of an asset except ___________ . a. b. c. d. Acquisition Depreciation Allocation Retirement Answer: c 21. Financial statements can be generated from which of the following? a. b. c. d. Operative COA Country-specific COA Both operative and country-specific COAs Neither operative nor country-specific COAs Answer: c Question type: Multiple Answers 22. Balance sheet accounts are grouped into which of the following categories? a. b. c. d. e. Revenue Assets Liabilities Equity Expenses Answer: b, c, d 23. An organization can possess which of the following types of assets? a. b. c. d. e. Tangible Intangible Financial Economic Virtual Answer: a, b, c 24. Tangible assets can include which of the following? a. b. c. d. e. Computers Bonds Production Machinery Real Estate Mortgage Answer: a, c, d 25. What are the most common transaction types that occur during the life of an asset? a. Production b. Allocation Answer: c, d, e 26. What are the primary ways in which an asset can be acquired? b. Internally by inventory tracking e. By asset liquidation Answer: a, c, d 27. Which of the following are common depreciation areas used in the US? a. b. c. d. e. Book depreciation Cost accounting depreciation Legal depreciation Special depreciation Physical depreciation Answer: a, b, c. d 28. Reporting in financial accounting is broadly divided into which of the following two categories? a. b. c. d. e. Posting goods issue Displaying account information Generating financial statements Recording transactions Automatic posting of accounts Answer: b, c 29. From which of the following can financial statements be generated? a. b. c. d. e. Operative chart of accounts Country-specific chart of accounts Revenue accounts Assets Liability accounts Answer: a, b 30. What is true about a business area? b) It helps management monitor performance c) It is used for external reporting d) It is associated with one company code Answer: a, b, c 31. Which of the following are types of chart of accounts? a) Operative COA b) Country specific COA c) Active COA d) Group COA Answer: a, b, d 32. What does the COA data include? a) Client segment b) Storage location segment c) Plant segment d) Company code segment Answer: a, d 33. The COA segment of the COA data includes which of the following? a) Account currency b) Account number c) Account group d) Short text Answer: b, c 34. Which of the following does the balance sheet include? a) Revenue b) Expenses c) Assets d) Liabilities Answer: c, d 35. Which of the following statements concerning reconciliation accounts are true? a) Reconciliation account for customers is accounts payable b) Reconciliation account for customers is accounts receivable c) Reconciliation account for vendors is accounts payable d) Reconciliation account for vendors is accounts receivable Answer: b, c 36. Which of the following statements regarding reconciliation accounts are not true? b) Data are automatically posted into them after they are posted to the corresponding sub-ledger c) The reconciliation account includes the sum of the postings of the sub-ledgers. d) None of the above Answer: a 37. Which attributes are present in the FI document items? a) Amount b) Document type c) Posting date d) Currency e) Posting key Answer: a, e 38. Which attributes are present in the FI document a) Amount b) Document type c) Posting date d) Currency e) Posting key Answer: b, c, d 39. Which of the following statements concerning the leading ledger are true? a) It is a type of sub-ledger b) Global accounting principles are consolidated into it c) Having a leading ledger is optional d) All transaction data are posted to it Answer: b, d 40. A cost center: a) Absorbs costs b) Can be associated with a department c) Is similar to a cost object d) Is associated with locations where costs are incurred Answer: a, b, c, d 41. When does a debit take place? a) When assets and expenses decrease b) When assets and expenses increase c) When revenue and liabilities decrease d) When revenue and liabilities increase Answer: b, c 42. Balance sheet accounts are grouped into: a) Assets b) Liabilities c) Equity d) Revenue Answer: a, b, c 43. When does a credit take place? a) When assets and expenses decrease b) When assets and expenses increase c) When revenue and liabilities decrease d) When revenue and liabilities increase Answer: a, d, 44. In accounts payable, which general ledger accounts are affected? a) Accounts payable reconciliation b) Vendor c) Supplies expense d) Bank Answer: a, c, d 45. In accounts receivable, which general ledger accounts are affected? a) Accounts receivable reconciliation b) Sales revenue c) Bank d) Supplies expense Answer: a, b, c Question type: True or False 46. Accounting processes are broadly divided into two main categories: financial accounting and management accounting. Answer: True 47. Financial accounting (Fl) is concerned with recording the financial impacts of business processes as they are executed. Answer: True 48. Management accounting, or controlling (CO), is intended primarily for audiences outside the organization. Answer: False 49. Accounts payable accounting is not associated with the procurement process. Answer: False 50. The general ledger is used to record the financial impacts of business process steps. Answer: True 51. The balance sheet is a snapshot of the organization at a point in time. Answer: True 52. A segment is a division of an enterprise for which management monitors performance separately from other segments. Answer: True 53. Business areas are external departments of an enterprise that are used to define areas of responsibility or to meet the internal requirements of a division. Answer: False 54. A list of accounts that can be included in a general ledger is called master data. Answer: False 55. A chart of accounts (COA) is an ordered listing of accounts that comprise a company’s general ledger. Answer: True 56. Liabilities are what the company owns, such as cash, land, and buildings. Answer: False 57. Assets are monies the company earns by selling its products and services. Answer: False 58. Expenses are what the company owes to others, including money owed to vendors and loans from financial institutions. Answer: False 59. Account currency determines the currency in which all the transactions are recorded. Answer: True 60. A reconciliation account records the impact of a transaction step on financial accounting. Answer: False 61. A financial accounting document is a general ledger account that consolidates data from a group of sub-ledger accounts, such as customers and vendors. Answer: False 62. Parallel accounting consists of implementing multiple ledgers and using each ledger for different purposes. Answer: True 63. An increase in an asset account or an expense account results in a credit posting. Answer: False 64. An increase in revenue or liability results in a debit posting. Answer: False 65. Accounts payable accounting is concerned with vendors. Answer: True 66. Accounts receivable accounting is concerned with customers. Answer: True 67. Within accounts receivable accounting, when a payment is made the bank account is debited and the appropriate customer account is credited. Answer: True 68. Intangible assets are physical items such as buildings, machinery, and computers. Answer: False 69. Tangible assets are non-physical items such as trademarks and patents. Answer: False 70. Financial accounting is affected any time money either leaves or comes into the company. Answer: True 71. Reporting within financial accounting is divided into two categories: generating financial statements and displaying account information. Answer: True 72. Financial statements can be generated for different organizational levels including one or more company codes and business areas. Answer: True