Accounting : Accounting and the Business Environment

Study concepts, example questions & explanations for Accounting

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Example Questions

Example Question #1 : Accounting

If the Alpha Corporation's 2015 alternative minimum taxable income was . Which of the following properly identifies the exempt portion of the Alpha Corporation's 2015 alternative minimum taxable income? 

Possible Answers:

Correct answer:

Explanation:

This problem asks us to determine the exempt portion of the Alpha Corporation's alternative minimum taxable income (AMTI). A corporation is allowed an exemption of up to  in computing it AMTI; however, this exemption is reduced by twenty-five percent of the corporation's AMTI in excess of . We can write this by using the following equation:

Substitute and solve.

Example Question #2 : Accounting

Which of the following is not an accurate difference between the International Financial Reporting Standards (IFRS) and the Generally Accepted Accounting Principles (US GAAP)?

Possible Answers:

The US GAAP uses a two-step impairment approach while the IFRS uses a one-step approach.

The US GAAP uses a principles based approach while the IFRS employs a rules based approach.

The US GAAP has no requirement regarding comparative information while the IFRS does.

The IFRS permits the reevaluation of intangible assets other than goodwill while the US GAAP does not.

Correct answer:

The US GAAP uses a principles based approach while the IFRS employs a rules based approach.

Explanation:

"The US GAAP uses a principles based approach while the IFRS employs a rules based approach" is the correct answer. This is not an accurate difference between the IFRS and the USGAAP. The US GAAP typically employs a rules based approach while the IFRS follows a principles based approach. The other choices represent accurate differences between the IFRS and US GAAP according to the International Accounting Standards Committee. 

Example Question #3 : Accounting

__________ accounting provides information for __________ decision makers (e.g. outside investors and lenders); however, __________ accounting focuses on information for __________ decision makers (e.g. supervisors). 

Possible Answers:

Financial. . . internal. . . managerial. . . external 

Managerial. . . internal. . . financial. . . external

Financial. . . external. . . managerial. . . internal

Managerial. . . external. . . financial. . . internal

Correct answer:

Financial. . . external. . . managerial. . . internal

Explanation:

"Financial. . . external. . . managerial. . . internal" is the correct choice. Accounting can be required into two fields: financial and managerial. Financial accounting provides data for outsiders, while managerial accounting provides data for insiders. 

Example Question #4 : Accounting

__________ accounting provides information for __________ decision makers (e.g. outside investors and lenders); however, __________ accounting focuses on information for __________ decision makers (e.g. supervisors). 

Possible Answers:

Managerial. . . internal. . . financial. . . external

Financial. . . external. . . managerial. . . internal

Financial. . . internal. . . managerial. . . external 

Managerial. . . external. . . financial. . . internal

Correct answer:

Financial. . . external. . . managerial. . . internal

Explanation:

"Financial. . . external. . . managerial. . . internal" is the correct choice. Accounting can be required into two fields: financial and managerial. Financial accounting provides data for outsiders, while managerial accounting provides data for insiders. 

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