Question 1

The IASB consists of _________ part-time members.

Accepted Answer

A)  seven 
B)  two 
C)  three 
D)  five 
A)  seven 
B)  two 
C)  three 
D)  five

Question 2

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

Accepted Answer

A)  Balance sheet. 
B)  President's letter. 
C)  Income statement. 
D)  Notes to financial statements. 
A)  Balance sheet. 
B)  President's letter. 
C)  Income statement. 
D)  Notes to financial statements.

Question 3

Financial statements in the early 2000s provide information related to

Accepted Answer

A)  nonfinancial measurements. 
B)  forward-looking data. 
C)  hard assets (inventory and plant assets). 
D)  None of these answer choices are correct. 
A)  nonfinancial measurements. 
B)  forward-looking data. 
C)  hard assets (inventory and plant assets). 
D)  None of these answer choices are correct.

Question 4

Evolution of a statement of financial accounting standards.In establishing financial accounting standards, two basic premises of the FASB are (1) The FASB should be responsive to the needs and viewpoints of the entire economic community, not just the accounting profession. (2) It should operate in full view of the public through a "due process" system that gives interested persons ample opportunity to make their views known. To ensure achievement of these goals, what are the steps taken in the evolution of an FASB Statement of Financial Accounting Standards?

Accepted Answer

The steps in the evolution of an FASB Ac

Question 5

FASB Technical Bulletins

Accepted Answer

A)  are similar to FASB Interpretations in that they establish enforceable standards under the AICPA's Code of Professional Ethics. 
B)  are issued monthly by the FASB to deal with current topics. 
C)  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. 
D)  were recently discontinued by the FASB because they dealt with specialized topics having little impact on financial reporting in general. 
A)  are similar to FASB Interpretations in that they establish enforceable standards under the AICPA's Code of Professional Ethics. 
B)  are issued monthly by the FASB to deal with current topics. 
C)  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. 
D)  were recently discontinued by the FASB because they dealt with specialized topics having little impact on financial reporting in general.

Question 6

Which of the following is an ethical concern of accountants?

Accepted Answer

A)  Earnings manipulation. 
B)  Conservative accounting. 
C)  Industry practices. 
D)  None of these answers are correct. 
A)  Earnings manipulation. 
B)  Conservative accounting. 
C)  Industry practices. 
D)  None of these answers are correct.

Question 7

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

Accepted Answer

A)  FASB. 
B)  AICPA. 
C)  SEC. 
D)  APB. 
A)  FASB. 
B)  AICPA. 
C)  SEC. 
D)  APB.

Question 8

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

Accepted Answer

A)  The FASB operates in full view of the public. 
B)  Public hearings are held on proposed accounting standards. 
C)  Interested parties can make their views known. 
D)  All of the answer choices are correct. 
A)  The FASB operates in full view of the public. 
B)  Public hearings are held on proposed accounting standards. 
C)  Interested parties can make their views known. 
D)  All of the answer choices are correct.

Question 9

Accrual accounting is used because

Accepted Answer

A)  cash flows are considered less important. 
B)  it provides a better indication of a company's ability to generate cash flows than the cash basis. 
C)  it recognizes revenues when cash is received and expenses when cash is paid. 
D)  None of the answer choices are correct. 
A)  cash flows are considered less important. 
B)  it provides a better indication of a company's ability to generate cash flows than the cash basis. 
C)  it recognizes revenues when cash is received and expenses when cash is paid. 
D)  None of the answer choices are correct.

Question 10

The Financial Accounting Foundation

Accepted Answer

A)  oversees the operations of the FASB. 
B)  oversees the operations of the AICPA. 
C)  provides information to interested parties on financial reporting issues. 
D)  works with the Financial Accounting Standards Advisory Council to provide informa-tion to interested parties on financial reporting issues. 
A)  oversees the operations of the FASB. 
B)  oversees the operations of the AICPA. 
C)  provides information to interested parties on financial reporting issues. 
D)  works with the Financial Accounting Standards Advisory Council to provide informa-tion to interested parties on financial reporting issues.

Question 11

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

Accepted Answer

A)  the FASB issues exposure drafts of proposed standards. 
B)  all members of the FASB are fully remunerated, serve full time, and are independent of any companies or institutions. 
C)  all members of the FASB possess extensive experience in financial reporting. 
D)  a majority of the members of the FASB are CPAs drawn from public practice. 
A)  the FASB issues exposure drafts of proposed standards. 
B)  all members of the FASB are fully remunerated, serve full time, and are independent of any companies or institutions. 
C)  all members of the FASB possess extensive experience in financial reporting. 
D)  a majority of the members of the FASB are CPAs drawn from public practice.

Question 12

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

Accepted Answer

A)  Nonfinancial measurements. 
B)  Timeliness. 
C)  Accounting for hard assets. 
D)  Forward-looking information. 
A)  Nonfinancial measurements. 
B)  Timeliness. 
C)  Accounting for hard assets. 
D)  Forward-looking information.

Question 13

The AICPA created the Accounting Principles Board in 1959.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A)  A decision-usefulness perspective. 
B)  A proprietary perspective. 
C)  An entity perspective. 
D)  A financial reporting perspective. 
A)  A decision-usefulness perspective. 
B)  A proprietary perspective. 
C)  An entity perspective. 
D)  A financial reporting perspective.

Question 17

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

Accepted Answer

A)  plan and control company's operations. 
B)  decide whether to invest in the company. 
C)  evaluate borrowing capacity to determine the extent of a loan to grant. 
D)  All the answer choices are correct. 
A)  plan and control company's operations. 
B)  decide whether to invest in the company. 
C)  evaluate borrowing capacity to determine the extent of a loan to grant. 
D)  All the answer choices are correct.

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

The Securities and Exchange Commission appointed the Committee on Accounting Procedure.

Accepted Answer

A) True 
 B)False

Question 20

The FASB's Codification creates a new set of GAAP.

Accepted Answer

A) True 
 B)False

Exam 1: Financial Accounting and Accounting Standards

The IASB consists of _________ part-time members.

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

Financial statements in the early 2000s provide information related to

FASB Technical Bulletins

Which of the following is an ethical concern of accountants?

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

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

Accrual accounting is used because

The Financial Accounting Foundation

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

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

The AICPA created the Accounting Principles Board in 1959.

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

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

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

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

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

The Securities and Exchange Commission appointed the Committee on Accounting Procedure.

The FASB's Codification creates a new set of GAAP.

Conceptual Framework for Financial Reporting

The Accounting Information System

Income Statement and Related Information

Balance Sheet and Statement of Cash Flows

Accounting and the Time Value of Money

Cash and Receivables

Valuation of Inventories: a Cost-Basis Approach

Inventories: Additional Valuation Issues

Acquisition and Disposition of Property, Plant, and Equipment

Depreciation, Impairments, and Depletion

Intangible Assets

Current Liabilities and Contingencies

Long-Term Liabilities

Stockholders Equity

Dilutive Securities and Earnings Per Share

Investments

Revenue Recognition

Accounting for Income Taxes

Accounting for Pensions and Postretirement Benefits

Accounting for Leases

Accounting Changes and Error Analysis

Statement of Cash Flows

Full Disclosure in Financial Reporting

Appendix

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