question

Financial accounting is the process of identifying, measuring, analyzing, and communicating financial information needed by management to plan, evaluate, and control a company's operations

answer

False

question

Financial statements are the principal means through which a company communicates its financial information to those outside it

answer

True

question

Users of financial reports of a company use the information provided by these reports to make their capital allocation decisions

answer

True

question

An effective process of capital allocation promotes productivity and provides an efficient market for buying and selling securities and obtaining and granting credit

answer

True

question

The objective of financial reporting is to report the plans made by a company to improve the productivity of its employees

answer

False

question

Investors are interested in financial reporting because it provides information that is useful for making decisions

answer

True

question

Users of financial accounting statements have both coinciding and conflicting needs for information of various types

answer

True

question

The Securities and Exchange Commission appointed the Committee on Accounting Procedure

answer

False

question

The passage of a new FASB Accounting Standards Update requires the support of five of the seven board members

answer

False

question

Statements of Financial Accounting Concepts set forth fundamental objectives and concepts that are used by the FASB in developing future standards of financial accounting and reporting

answer

True

question

The AICPA created the Accounting Principles Board in 1959

answer

True

question

The FASB's Codification creates a new set of GAAP

answer

False

question

The AICPA's Code of Professional Conduct requires that members prepare financial statements in accordance with generally accepted accounting principles

answer

True

question

GAAP is a product of careful logic or empirical findings and is not influenced by political action

answer

False

question

The Public Company Accounting Oversight Board has oversight and enforcement authority and establishes auditing and independence standards and rules

answer

True

question

The expectations gap is due to the difference between what the public thinks accountants should do and what accountants think they can do

answer

True

question

Financial reports in the early 21st century did not provide any information about a company's soft assets (intangibles)

answer

False

question

Accounting standards are now less likely to require the recording or disclosure of fair value information

answer

False

question

U.S. companies that list overseas are required to use International Financial Reporting Standards, issued by the International Accounting Standards Board

answer

False

question

Ethical issues in financial accounting are governed by the AICPA

answer

False

question

IFRS includes both International Financial Reporting Standards and International Accounting Standards

answer

True

question

International Financial Reporting Standards preceded International Accounting Standards

answer

False

question

The standard-setting structure used by the International Accounting Standards Board is very similar to that used by the Financial Accounting Standards Board

answer

True

question

The rules-based standards of IFRS are more detailed than the simpler, principles-based standards of U.S. GAAP

answer

False

question

The International Accounting Standards Board has seven members

answer

False

question

The internal control standards applicable to Sarbanes-Oxley (SOX) apply only to large public companies listed on U.S. exchanges

answer

True

question

General-purpose financial statements are the product of

answer

financial accounting

question

Which of the following is not a user of financial reports

answer

Creditors Government agencies Unions All user of financial reports

question

The financial statements most frequently provided include all of the following except the

answer

statement of retained earnings

question

The information provided by financial reporting pertains to

answer

individual business enterprises, rather than to industries or an economy as a whole or to members of society as consumers

question

All the following are differences between financial and managerial accounting in how accounting information is used except to

answer

plan and control company's operations, decide whether to invest in the company, evaluate borrowing capacity to determine the extent of a loan to grant.(all correct)

question

Which of the following represents a form of communication through financial reporting but not through financial statements

answer

President's letter

question

The process of identifying, measuring, analyzing, and communicating financial information needed by management to plan, evaluate, and control an organization's operations is called

answer

managerial accounting

question

How does accounting help the capital allocation process attract investment capital

answer

By providing timely, relevant information

question

Which of the following helps in determining whether a business thrives

answer

Markets. Free enterprise. Competition(all correct)

question

Which of the following is related to an effective capital allocation

answer

Promoting productivity. Encouraging innovation. Providing an efficient market for buying and selling securities(all correct)

question

Financial statements in the early 2000s provide information related to

answer

hard assets (inventory and plant assets)

question

Which of the following is not a major challenge facing the accounting profession

answer

Accounting for hard assets

question

What is the objective of financial reporting

answer

Provide information about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors

question

Primary users for general-purpose financial statements include

answer

both creditors and investors

question

Which of the following will be of interest to investors in decision-making

answer

Both assessing the company's ability to generate net cash inflows and assessing management's ability to protect and enhance the capital provider's investments

question

Accrual accounting is used because

answer

it provides a better indication of a company's ability to generate cash flows than the cash basis

question

Which perspective is adopted as a part of the objective of general-purpose financial reporting

answer

An entity perspective

question

Which of the following is a requirement for an accounting principle to be called "generally accepted

answer

An authoritative accounting rule-making body has established it and it has been accepted because of its universal application

question

A common set of accounting standards and procedures are called

answer

generally accepted accounting principles

question

Which of the following is a general limitation of "general purpose financial statements

answer

General purpose financial statements may not be the most informative for a specific enterprise

question

What is the relationship between the Securities and Exchange Commission and accounting standard setting in the United States

answer

The SEC has a mandate to establish accounting standards for enterprises under its jurisdiction

question

What is due process in the context of standard setting at the FASB

answer

The FASB operates in full view of the public. Public hearings are held on proposed accounting standards. Interested parties can make their views known(all correct)

question

Which of the following organizations has been responsible for setting U.S. accounting standards

answer

The Accounting Principles Board. The Committee on Accounting Procedure. The Financial Accounting Standards Board(all correct)

question

Why did the AICPA create the Accounting Principles Board

answer

The previous standard setting organization did not provide a structured set of accounting principles

question

Which organization was responsible for issuing Accounting Research Bulletins

answer

The Committee on Accounting Procedure

question

A characteristic of generally accepted accounting principles include

answer

a common set of standards and principles

question

Characteristics of generally accepted accounting principles include all of the following except

answer

each principle is approved by the SEC

question

Why was it believed that accounting standards that were issued by the Financial Accounting Standards Board would carry more weight

answer

Due process

question

The passage of a new FASB Accounting Standards Update requires the support of

answer

four Board members

question

What is the purpose of Emerging Issues Task Force

answer

Provide a consensus on how to account for new and unusual financial transactions

question

Which organization is responsible for issuing Emerging Issues Task Force Statements

answer

The FASB

question

The role of the Securities and Exchange Commission in the formulation of accounting principles can be best described as

answer

sometimes primary and sometimes secondary

question

The body that has the power to prescribe the accounting practices and standards to be employed by companies that fall under its jurisdiction is the

answer

SEC

question

Companies that are listed on a stock exchange are required to submit their financial statements to the

answer

SEC

question

The Financial Accounting Standards Board (FASB) was proposed by the

answer

Study Group on establishment of Accounting Principles (Wheat Committee)

question

Which of the following is true of the Financial Accounting Standards Board

answer

The members of the FASB are appointed by the Financial Accounting Foundation

question

The Financial Accounting Foundation

answer

oversees the operations of the FASB

question

The major distinction between the Financial Accounting Standards Board (FASB) and its predecessor, the Accounting Principles Board (APB), is

answer

all members of the FASB are fully remunerated, serve full time, and are independent of any companies or institutions

question

The Financial Accounting Standards Board employs a "due process" system which

answer

enables interested parties to express their views on issues under consideration

question

Which of the following is not a publication of the FASB

answer

Accounting Research Bulletins

question

FASB Technical Bulletins

answer

are not expected to have a significant impact on financial reporting in general and provide guidance when it does not conflict with any broad fundamental accounting principle

question

The purpose of the Emerging Issues Task Force is to

answer

issue statements which reflect a consensus on how to account for new and unusual financial transactions that need to be resolved quickly

question

The American Institute of Certified Public Accountants (AICPA) continues to be involved in all of the following except

answer

developing auditing standards for public companies

question

Which of the following pronouncements were issued by the Accounting Principles Board

answer

APB Opinions

question

Which of the following organizations has not been instrumental in the development of financial accounting standards in the United States

answer

IASB

question

Which of the following organizations has not published accounting standards

answer

American Institute of Certified Public Accountants. Securities and Exchange Commission. Financial Accounting Standards Board(all correct)

question

The purpose of Statements of Financial Accounting Concepts is to

answer

form a conceptual framework for solving existing and emerging problems

question

Members of the Financial Accounting Standards Board are

answer

independent of any other organization

question

Which of the following is true of generally accepted accounting principles

answer

GAAP includes detailed practices and procedures as well as broad guidelines of general application. GAAP is influenced by pronouncements of the SEC and IRS. GAAP changes over time as the nature of the business environment changes(all correct)

question

The most significant current source of generally accepted accounting principles is the

answer

FASB

question

Which of the following is not a part of generally accepted accounting principles

answer

The FASB Interpretations The CAP Accounting Research Bulletins The APB Opinions(all correct)

question

Which of the following publications does not qualify as a statement of generally accepted accounting principles

answer

Accounting research studies issued by the AICPA

question

Rule 203 of the Code of Professional Conduct addresses

answer

financial statements being based on generally accepted accounting principles

question

What is the purpose of a FASB Staff Position

answer

Provide interpretive guidance

question

Which of the following is not considered a component of generally accepted accounting principles

answer

Articles published in CPA journals

question

Financial accounting standard-setting in the United States

answer

can be described as a social process which reflects political actions of various interested user groups as well as a product of research and logic

question

The purpose of the International Accounting Standards Board is to

answer

promote uniform accounting standards among countries of the world

question

Which of the following is a source of pressure that may influence the accounting standard setting process

answer

Congress. Lobbyist. CPA firms(all correct)

question

What is a possible danger if politics plays too big a role in accounting standard setting

answer

Accounting standards that are not truly generally accepted

question

What is the "expectations gap"

answer

The difference between what the public thinks the accountant should do and what the accountant thinks they can do

question

What is not a reason that accounting standards may differ across countries

answer

Language

question

What would be an advantage of having all countries adopt and follow the same accounting standards

answer

Comparability

question

Which of the following is an ethical concern of accountants

answer

Earnings manipulation

question

Authoritative standards for IFRS include

answer

International Financial Reporting Standards and International Accounting Standards only

question

Which of these statements regarding the IFRS and U.S. GAAP is correct

answer

IFRS is considered to be "principles-based" and less detailed than U.S. GAAP

question

The IASB's standard-setting structure includes all of the following except

answer

the Standards Comparison Committee

question

Which of the following organizations have committed to develop high-quality, compatible accounting standards that could be used for domestic and cross-border financial reporting

answer

The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB)

question

Which of the following organizations is not among the four international standard-setting organizations

answer

The Financial Executives Institute (FEI)

question

Which of the following organizations selects members for the IASB

answer

The International Accounting Standards Committee Foundation

question

The IASB consists of _________ part-time members

answer

two

question

The purpose of the International Accounting Standards Board is to

answer

develop a single set of high-quality financial reporting standards

Intermediate Accounting 15th editon Chapter 1 – Flashcards

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