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 principles based approach while the IFRS employs a rules based approach.

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

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

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

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:

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

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

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

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

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

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

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

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