Question 1

Exchanges of capital stock and bonds that occur between investors take place in

Accepted Answer

A) primary markets 
B) open markets 
C) secondary markets 
D) private markets 
A) primary markets 
B) open markets 
C) secondary markets 
D) private markets

Question 2

The four major financial statements of a corporation consist of the

Accepted Answer

A) income statement, balance sheet, statement of cash flows, and statement of changes in stockholders' equity 
B) balance sheet, statement of cash flows, statement of retained earnings, and income statement 
C) income statement, statement of cash flows, and balance sheet 
D) statement of cash flows, balance sheet, income statement, and statement of capital equity 
A) income statement, balance sheet, statement of cash flows, and statement of changes in stockholders' equity 
B) balance sheet, statement of cash flows, statement of retained earnings, and income statement 
C) income statement, statement of cash flows, and balance sheet 
D) statement of cash flows, balance sheet, income statement, and statement of capital equity

Question 3

Match between columns
                        Premises: Focuses on external users.
Uses a present and future timeframe.
Uses qualitative and quantitative data.
Reports are concerned primarily with the total company.
Is governed by GAAP.
Focuses on internal users.
Uses report formats prescribed by GAAP.
Reports are concerned with individual departments.
Uses quantitative data.
Is governed by the internal needs of a company.
Uses report formats best suited for the specific decisions being made.
Uses an historical timeframe.

Accepted Answer

The Answer of financial and managerial is...

Question 4

Certain U.S.accounting standards have been, and will be, amended to aid in the international convergence process.The process of changing these standards usually involves

Accepted Answer

A) a short deliberation followed by a vote of the U.S.Congress 
B) acceptance of the change by the Internal Revenue Service 
C) rejecting all existing standards and developing an entirely new concept 
D) selecting the best standard between existing U.S.and international standards 
A) a short deliberation followed by a vote of the U.S.Congress 
B) acceptance of the change by the Internal Revenue Service 
C) rejecting all existing standards and developing an entirely new concept 
D) selecting the best standard between existing U.S.and international standards

Question 5

Assume that authoritative support regarding GAAP for a particular transaction is needed.A correct hierarchy of authority to be followed (highest, second, third)would be

Accepted Answer

A) FASB Statements, AICPA Accounting Interpretations, FASB Technical Bulletins 
B) FASB Technical Bulletins, AICPA Accounting Interpretations, FASB Statements 
C) AICPA Accounting Interpretations, FASB Technical Bulletins, FASB Statements 
D) FASB Statements, FASB Technical Bulletins, AICPA Accounting Interpretations 
A) FASB Statements, AICPA Accounting Interpretations, FASB Technical Bulletins 
B) FASB Technical Bulletins, AICPA Accounting Interpretations, FASB Statements 
C) AICPA Accounting Interpretations, FASB Technical Bulletins, FASB Statements 
D) FASB Statements, FASB Technical Bulletins, AICPA Accounting Interpretations

Question 6

The primary reason that financial accounting and managerial accounting have somewhat different objectives is because they

Accepted Answer

A) need information in different formats 
B) provide information for different decisions 
C) need information in different geographic locations 
D) need information at different times 
A) need information in different formats 
B) provide information for different decisions 
C) need information in different geographic locations 
D) need information at different times

Question 7

The FASB has undertaken six key initiatives to help attain the goal of convergence of U.S.accounting standards with international accounting standards.
Required:
Identify the FASB initiatives and briefly discuss each of the six initiatives.

Accepted Answer

The answer of The FASB has undertaken six key initiatives...

Question 8

Which organization has the most legal authority?

Accepted Answer

A) Financial Accounting Standards Board 
B) Accounting Standards Executive Committee 
C) Governmental Accounting Standards Board 
D) Securities and Exchange Commission 
A) Financial Accounting Standards Board 
B) Accounting Standards Executive Committee 
C) Governmental Accounting Standards Board 
D) Securities and Exchange Commission

Question 9

Which characteristic applies more to financial accounting than to managerial accounting?

Accepted Answer

A) primarily segmented reports 
B) primarily quantitative information 
C) Internal-decision focus 
D) statement format determined by company information needs 
A) primarily segmented reports 
B) primarily quantitative information 
C) Internal-decision focus 
D) statement format determined by company information needs

Question 10

Which of the following statements is true?

Accepted Answer

A) In order to remain impartial, the FASB discourages public input during development of standards. 
B) FASB accounting standards are the result of clearly defined objectives, an integrated body of theory, and the known consequences of actions. 
C) The FASB deliberates and issues accounting standards only after receiving a formal letter of request from the SEC. 
D) Accounting standards, which reflect social decisions, are often the result of compromise. 
A) In order to remain impartial, the FASB discourages public input during development of standards. 
B) FASB accounting standards are the result of clearly defined objectives, an integrated body of theory, and the known consequences of actions. 
C) The FASB deliberates and issues accounting standards only after receiving a formal letter of request from the SEC. 
D) Accounting standards, which reflect social decisions, are often the result of compromise.

Question 11

Match between columns
                        Premises: Establishes a theoretical foundation upon which to base financial accounting and reporting standards.
Provides clarification of conflicting or unclear issues relating to previously issued pronouncements.
FASB Q's and A's.
Establishes generally accepted accounting principles.
Provides guidance on accounting and reporting problems related to an underlying standard.

Accepted Answer

The Answer of Statements of Financial Accounting Standards and Interpretations is...

Question 12

The Sarbanes-Oxley Act of 2002 established the Public Company Accounting Oversight Board (PCAOB).The PCAOB was established to

Accepted Answer

A) bring to justice public companies such as Enron and WorldCom for committing fraud 
B) oversee the standards promulgated by the SEC related to public companies 
C) protect the interests of investors by overseeing auditors of public companies 
D) establish GAAP for use by public companies 
A) bring to justice public companies such as Enron and WorldCom for committing fraud 
B) oversee the standards promulgated by the SEC related to public companies 
C) protect the interests of investors by overseeing auditors of public companies 
D) establish GAAP for use by public companies

Question 13

Concerning FASB membership, which statement is not true?

Accepted Answer

A) Not all members are CPAs from public practice. 
B) All members are full time and fully paid. 
C) All members are also members of the Financial Accounting Foundation. 
D) All members must sever organizational ties with their previous employer. 
A) Not all members are CPAs from public practice. 
B) All members are full time and fully paid. 
C) All members are also members of the Financial Accounting Foundation. 
D) All members must sever organizational ties with their previous employer.

Question 14

Which of the following is not a decision that external users of a company's financial information would make?

Accepted Answer

A) whether or not to extend credit to the company 
B) whether or not to hold the company's stock 
C) whether or not the company should add a new product line 
D) whether or not to ask for an increase in employees' benefits during union contract negotiations 
A) whether or not to extend credit to the company 
B) whether or not to hold the company's stock 
C) whether or not the company should add a new product line 
D) whether or not to ask for an increase in employees' benefits during union contract negotiations

Question 15

Critical thinking is most important in which of the following problem-solving steps?

Accepted Answer

A) recognizing a problem 
B) identifying alternative solutions 
C) evaluating the alternatives 
D) selecting a solution from among the alternatives 
A) recognizing a problem 
B) identifying alternative solutions 
C) evaluating the alternatives 
D) selecting a solution from among the alternatives

Question 16

Listed below are several types of pronouncements that the FASB issues.Following the list is a series of descriptive statements.
     Required:
Match each pronouncement with its descriptive statement by placing the appropriate letter in the space provided.

Accepted Answer

The answer of Listed below are several types of pronouncements...

Question 17

Three major organizations in the private and public sector develop U.S.and international GAAP.They include all of the following except the

Accepted Answer

A) EU (European Union) 
B) SEC (Securities and Exchange Commission) 
C) FASB (Financial Accounting Standards Board) 
D) IASB (International Accounting Standards Board) 
A) EU (European Union) 
B) SEC (Securities and Exchange Commission) 
C) FASB (Financial Accounting Standards Board) 
D) IASB (International Accounting Standards Board)

Question 18

The FASB Emerging Issues Task Force issues which of the following?

Accepted Answer

A) Statements of Position to influence the development of principles 
B) Consensus Positions on the implementation of standards 
C) Financial Reporting Releases on guidelines for reporting issues 
D) Technical Bulletins on accounting and reporting problems 
A) Statements of Position to influence the development of principles 
B) Consensus Positions on the implementation of standards 
C) Financial Reporting Releases on guidelines for reporting issues 
D) Technical Bulletins on accounting and reporting problems

Question 19

Agency theory suggests that managers' behavior

Accepted Answer

A) may be to enhance the owners' financial interests at the expense of their self-interests 
B) will always follow classic agency law 
C) may not always be in the best interests of the owners (stockholders) 
D) as agents will always be in the best interests of the owners (stockholders) 
A) may be to enhance the owners' financial interests at the expense of their self-interests 
B) will always follow classic agency law 
C) may not always be in the best interests of the owners (stockholders) 
D) as agents will always be in the best interests of the owners (stockholders)

Question 20

How many FASB members are there?

Accepted Answer

A) 5 
B) 7 
C) 21 
D) 33 
A) 5 
B) 7 
C) 21 
D) 33

Exam 1: The Environment of Financial Reporting

Exchanges of capital stock and bonds that occur between investors take place in

The four major financial statements of a corporation consist of the

Certain U.S.accounting standards have been, and will be, amended to aid in the international convergence process.The process of changing these standards usually involves

Assume that authoritative support regarding GAAP for a particular transaction is needed.A correct hierarchy of authority to be followed (highest, second, third)would be

The primary reason that financial accounting and managerial accounting have somewhat different objectives is because they

The FASB has undertaken six key initiatives to help attain the goal of convergence of U.S.accounting standards with international accounting standards. Required: Identify the FASB initiatives and briefly discuss each of the six initiatives.

Which organization has the most legal authority?

Which characteristic applies more to financial accounting than to managerial accounting?

Which of the following statements is true?

The Sarbanes-Oxley Act of 2002 established the Public Company Accounting Oversight Board (PCAOB).The PCAOB was established to

Concerning FASB membership, which statement is not true?

Which of the following is not a decision that external users of a company's financial information would make?

Critical thinking is most important in which of the following problem-solving steps?

Listed below are several types of pronouncements that the FASB issues.Following the list is a series of descriptive statements. Required: Match each pronouncement with its descriptive statement by placing the appropriate letter in the space provided.

Three major organizations in the private and public sector develop U.S.and international GAAP.They include all of the following except the

The FASB Emerging Issues Task Force issues which of the following?

Agency theory suggests that managers' behavior

How many FASB members are there?

Financial Reporting: Its Conceptual Framework

Review of a Companys Accounting System

The Balance Sheet and the Statement of Changes in Stockholders Equity

The Income Statement and the Statement of Cash Flows

Additional Aspects of Financial Reporting and Financial Analysis

Cash and Receivables

Inventories: Cost Measurement and Flow Assumptions

Inventories: Special Valuation Issues

Property, Plant, and Equipment: Acquisition and Disposal

Depreciation and Depletion

Intangibles

Current Liabilities and Contingencies

Long-Term Liabilities and Receivables

Investments

Contributed Capital

Earnings Per Share and Retained Earnings

Income Recognition and Measurement of Net Assets

Accounting for Income Taxes

Accounting for Postemployment Benefits

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Time Value of Money Module

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