Sample Question 5312 Fall 2009
1. Corporate governance include concerns about:
A. business ethics and social responsibility.
B. the responsibilities of the board of directors.
C. equitable treatment of stakeholders.
D. disclosures and transparency.
E. all of the above.
2. The most powerful corporate governance legislation to date has been: A. the Sarbanes-Oxley Act (SOX) of 2002.
B. the creation of the American Institute of Certified Public Accountants. C. Corporate Ethics Code of 2005.
D. the regulation of inventory management practices by the SEC.
3. The Sarbanes-Oxley Act (SOX) of 2002 does not specifically prohibit an independent auditor from performing the following non-audit function(s) for an audit client: A. financial information systems design and implementation. B. internal audit outsourcing services.
C. tax services.
D. "expert" services.
E. SOX specifically prohibits an independent auditor from performing all of all of the non-audit services for an audit client.
4. Which is the following descriptions is not one of the "Seven Financial Shenanigans" identified by Howard Schilit and listed in Exhibit 10-1: A. recording revenue too soon or that is of a questionable quality. B. boosting income with one-time gains.
C. failing to record intangible assets which the company has ownership rights to. D. shifting future expenses to the current period as a special charge. E. failing to record or improperly reducing liabilities.
5. The explanatory notes to the financial statements:
A. should be referred to if more than a cursory, and perhaps misleading impression of a firm's financial position and its results of operations is to be achieved. B. are not an integral part of the financial statements.
C. include a great deal of detailed information that is potentially useful only to a financial analyst making a detailed appraisal of the future prospects of the entity. D. are used by many entities to hide information from the reader of the financial statements by including in the explanatory notes information that should be shown in detail on the financial statements themselves.
6. The nature and content of disclosures relate to all of the following except: A. accounting changes.
B. segment information.
C. fair market value.
D. contingencies and commitments.
E. events subsequent to the balance sheet date.
7. Which of the following is nota topic that is likely to be discussed as a significant accounting policy? A. Depreciation method.
B. Earnings per share of common stock calculation details. C. Inventory valuation method.
D. Method of estimating uncollectible accounts receivable.
8. The explanatory notes to the financial statements:
A. are not an integral part of the financial statements.
B. explain the significant accounting policies of the company. C. usually disclose the amount of the company's bad debts expense. D. describe management's product development plans for the coming year.
9. Significant accounting policies are described in the explanatory notes to the financial statements because: A. there isn't enough space for them to be included in the captions of the financial statements. B. if the accrual basis of accounting is used, "matching" of revenues and expenses may not take place. C. the reader must be aware of which of the alternative generally accepted accounting practices have been used. D. none of the above.
10. When an entity changes its accounting from one generally accepted method to another generally accepted method: A. financial statements of all prior years are changed to maintain comparability. B. an explanatory note stating that the change was approved by the Financial Accounting Standards Board is required. C. the dollar effect of the change on both the balance sheet and income...
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