Page 429 - Introduction to Business

CHAPTER 11 Accounting for Decision Making 403

should be designed to prevent unintentional errors can be categorized as preventive controls or as feed-
and intentional irregularities from occurring and to back controls. Both categories of accounting controls
identify errors and irregularities after they occur so are essential in a company’s control structure.
that corrective action may be taken. Thus, controls

Chapter Questions Interpreting Business News

1. What is accounting? 1. A news story recounted the questionable
2. List some of the external users of accounting accounting practices and financial collapses of
information and the specific types of information major corporations such as Enron, WorldCom,
they require. and other firms. Do you think accounting rules
3. What is the function of generally accepted can be developed and applied in a way that will
accounting principles? prevent future corporate failures?
4. Briefly describe the history of the East India Com- 2. In a news article regarding the Foreign Corrupt
pany. Practices Act (FCPA), the writer said that the FCPA
5. Contrast management accounting with financial hurt the ability of U.S. firms to compete with non-
accounting. U.S. firms. For example, U.S. companies find it dif-
6. Describe the role of the management informa- ficult to compete in countries where bribery is a
tion system (MIS) and the role of the accounting common business practice. The writer said that the
information system within the MIS. time had come for Congress to repeal the FCPA so
7. What causes accounting rules and regulations to that U.S. firms would be better able to compete in
be different among countries? the global marketplace. What do you think?
8. Can ethics be taught? 3. A news story described how a hurricane wiped out
9. What is the role of an internal control homes and businesses on the U.S. Gulf Coast. How
structure? do you think the firms with a computer contingency
10. International trade has been around a long time. plan fared compared to those without a plan?
How do you think the world would be different if
there had never been international trade? Web Assignments
11. The East India Company faced some peculiar
problems. Contrast problems faced by the East 1. Go to the website for the International Federation
India Company with problems faced by modern of Accountants and from there, go to the webpage
corporations. for the International Auditing and Assurance Stan-
12. Examine the list of International Accounting dards Board. What are International Auditing Prac-
Standards in Exhibit 11.5. Pick one and describe tice Statements (IAPSs)? List several of the topics
why you think this information would be useful covered by IAPSs.
to stockholders. 2. Use a Web search tool to investigate accounting
13. Describe the advantages and disadvantages of ethics. List and briefly describe some websites that
computerized processing of accounting infor- concern accounting ethics.
mation. 3. McDonald’s is the world’s leading food service
14. What are the components of a computer contin- retailer. Go to the website for MacDonald’s,
gency plan for accounting information? Describe a www.mcdonalds.com. How many restaurants
situation or event in which a business firm would does the firm have? In how many countries is the
have major problems if it did not have a contin- firm located? How many customers are served
gency plan. each day?

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