Question 1

Which of the following is true of generally accepted accounting principles?

Accepted Answer

A)  GAAP includes detailed practices and procedures as well as broad guidelines of general application. 
B)  GAAP is influenced by pronouncements of the SEC and IRS. 
C)  GAAP changes over time as the nature of the business environment changes. 
D)  All of these answer choices are correct. 
A)  GAAP includes detailed practices and procedures as well as broad guidelines of general application. 
B)  GAAP is influenced by pronouncements of the SEC and IRS. 
C)  GAAP changes over time as the nature of the business environment changes. 
D)  All of these answer choices are correct.

Question 2

General-purpose financial statements are the product of

Accepted Answer

A)  financial accounting. 
B)  managerial accounting. 
C)  both financial and managerial accounting. 
D)  neither financial nor managerial accounting. 
A)  financial accounting. 
B)  managerial accounting. 
C)  both financial and managerial accounting. 
D)  neither financial nor managerial accounting.

Question 3

Why did the AICPA create the Accounting Principles Board?

Accepted Answer

A)  The SEC disbanded the previous standard setting organization. 
B)  The previous standard setting organization did not provide a structured set of accounting principles. 
C)  No such organization existed in the past. 
D)  None of the answer choices are correct. 
A)  The SEC disbanded the previous standard setting organization. 
B)  The previous standard setting organization did not provide a structured set of accounting principles. 
C)  No such organization existed in the past. 
D)  None of the answer choices are correct.

Question 4

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

Accepted Answer

A)  The Financial Accounting Standards Board (FAS
B)  and the International Organization of Securities Commission (IOSCO) 
B)  The Financial Accounting Standards Board (FAS
B)  and the International Accounting Standards Board (IAS
B)  
C)  The International Accounting Standards Board (IAS
B)  and International Organization of Securities Commission (IOSCO) 
D)  The International Accounting Standards Board (IAS
B)  and the Standards Advisory Council (SA
C)  
A)  The Financial Accounting Standards Board (FAS
B)  and the International Organization of Securities Commission (IOSCO) 
B)  The Financial Accounting Standards Board (FAS
B)  and the International Accounting Standards Board (IAS
B)  
C)  The International Accounting Standards Board (IAS
B)  and International Organization of Securities Commission (IOSCO) 
D)  The International Accounting Standards Board (IAS
B)  and the Standards Advisory Council (SA
C)

Question 5

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

Accepted Answer

A)  An authoritative accounting rule-making body has established it in an official pronouncement. 
B)  The principle has been accepted as appropriate because of its universal application. 
C)  An authoritative accounting rule-making body has established it and it has been accepted because of its universal application. 
D)  None of the answer choices are correct. 
A)  An authoritative accounting rule-making body has established it in an official pronouncement. 
B)  The principle has been accepted as appropriate because of its universal application. 
C)  An authoritative accounting rule-making body has established it and it has been accepted because of its universal application. 
D)  None of the answer choices are correct.

Question 6

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

Accepted Answer

A)  Congress. 
B)  Lobbyist. 
C)  CPA firms. 
D)  All of these answers are correct. 
A)  Congress. 
B)  Lobbyist. 
C)  CPA firms. 
D)  All of these answers are correct.

Question 7

Which organization was responsible for issuing Accounting Research Bulletins?

Accepted Answer

A)  The Accounting Principles Board. 
B)  The Committee on Accounting Procedure. 
C)  The SEC. 
D)  The FASB. 
A)  The Accounting Principles Board. 
B)  The Committee on Accounting Procedure. 
C)  The SEC. 
D)  The FASB.

Question 8

Which of the following organizations has not published accounting standards?

Accepted Answer

A)  American Institute of Certified Public Accountants. 
B)  Securities and Exchange Commission. 
C)  Financial Accounting Standards Board. 
D)  All of these have published accounting standards. 
A)  American Institute of Certified Public Accountants. 
B)  Securities and Exchange Commission. 
C)  Financial Accounting Standards Board. 
D)  All of these have published accounting standards.

Question 9

What is the purpose of a FASB Staff Position?

Accepted Answer

A)  Provide interpretation of existing standards. 
B)  Provide a consensus on how to account for new and unusual financial transactions. 
C)  Provide interpretive guidance. 
D)  Provide timely guidance on select issues. 
A)  Provide interpretation of existing standards. 
B)  Provide a consensus on how to account for new and unusual financial transactions. 
C)  Provide interpretive guidance. 
D)  Provide timely guidance on select issues.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

The purpose of Statements of Financial Accounting Concepts is to

Accepted Answer

A)  establish GAAP. 
B)  modify or extend an existing FASB Accounting Standards Update. 
C)  form a conceptual framework for solving existing and emerging . 
D)  determine the need for FASB involvement in an emerging issue. 
A)  establish GAAP. 
B)  modify or extend an existing FASB Accounting Standards Update. 
C)  form a conceptual framework for solving existing and emerging . 
D)  determine the need for FASB involvement in an emerging issue.

Question 12

The purpose of the International Accounting Standards Board is to

Accepted Answer

A)  issue enforceable standards which regulate the financial accounting and reporting of multinational corporations. 
B)  develop a uniform currency in which the financial transactions of companies through-out the world would be measured. 
C)  promote uniform accounting standards among countries of the world. 
D)  arbitrate accounting disputes between auditors and international companies. 
A)  issue enforceable standards which regulate the financial accounting and reporting of multinational corporations. 
B)  develop a uniform currency in which the financial transactions of companies through-out the world would be measured. 
C)  promote uniform accounting standards among countries of the world. 
D)  arbitrate accounting disputes between auditors and international companies.

Question 13

Which of the following helps in determining whether a business thrives?

Accepted Answer

A)  Markets. 
B)  Free enterprise. 
C)  Competition. 
D)  All of these answer choices are correct. 
A)  Markets. 
B)  Free enterprise. 
C)  Competition. 
D)  All of these answer choices are correct.

Question 14

The Financial Accounting Standards Board was established because many groups interested in financial reporting believed that the Accounting Principles Board was not effective. Discuss the apparent advantages that the FASB should have over its earlier counterpart, the APB.

Accepted Answer

1. Smaller membership. The FASB is compo

Question 15

Which of the following is not a publication of the FASB?

Accepted Answer

A)  Statements of Financial Accounting Concepts 
B)  Accounting Research Bulletins 
C)  Interpretations 
D)  Technical Bulletins 
A)  Statements of Financial Accounting Concepts 
B)  Accounting Research Bulletins 
C)  Interpretations 
D)  Technical Bulletins

Question 16

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

Accepted Answer

A)  It has issued a series of pronouncements entitled Auditing Standards Updates. 
B)  It was the forerunner of the current Accounting Principles Board. 
C)  It is the arm of the Securities and Exchange Commission responsible for setting financial accounting standards. 
D)  The members of the FASB are appointed by the Financial Accounting Foundation. 
A)  It has issued a series of pronouncements entitled Auditing Standards Updates. 
B)  It was the forerunner of the current Accounting Principles Board. 
C)  It is the arm of the Securities and Exchange Commission responsible for setting financial accounting standards. 
D)  The members of the FASB are appointed by the Financial Accounting Foundation.

Question 17

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

Accepted Answer

A)  consistently primary. 
B)  consistently secondary. 
C)  sometimes primary and sometimes secondary. 
D)  non-existent. 
A)  consistently primary. 
B)  consistently secondary. 
C)  sometimes primary and sometimes secondary. 
D)  non-existent.

Question 18

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

Accepted Answer

A)  U.S. GAAP is considered to be "principles-based". 
B)  U.S. GAAP is considered to be less detailed than IFRS. 
C)  IFRS is considered to be "principles-based" and less detailed than U.S. GAAP 
D)  Both U.S. GAAP and IFRS are considered to be "rules-based", but U.S. GAAP tends to be more complex. 
A)  U.S. GAAP is considered to be "principles-based". 
B)  U.S. GAAP is considered to be less detailed than IFRS. 
C)  IFRS is considered to be "principles-based" and less detailed than U.S. GAAP 
D)  Both U.S. GAAP and IFRS are considered to be "rules-based", but U.S. GAAP tends to be more complex.

Question 19

Which of the following is not a user of financial reports?

Accepted Answer

A)  Creditors. 
B)  Government agencies. 
C)  Unions. 
D)  All of these are users. 
A)  Creditors. 
B)  Government agencies. 
C)  Unions. 
D)  All of these are users.

Question 20

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

Accepted Answer

A)  AICPA 
B)  FASB 
C)  IASB 
D)  SEC 
A)  AICPA 
B)  FASB 
C)  IASB 
D)  SEC

Exam 1: Financial Accounting and Accounting Standards

Which of the following is true of generally accepted accounting principles?

General-purpose financial statements are the product of

Why did the AICPA create the Accounting Principles Board?

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

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

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

Which organization was responsible for issuing Accounting Research Bulletins?

Which of the following organizations has not published accounting standards?

What is the purpose of a FASB Staff Position?

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

The purpose of Statements of Financial Accounting Concepts is to

The purpose of the International Accounting Standards Board is to

Which of the following helps in determining whether a business thrives?

The Financial Accounting Standards Board was established because many groups interested in financial reporting believed that the Accounting Principles Board was not effective. Discuss the apparent advantages that the FASB should have over its earlier counterpart, the APB.

Which of the following is not a publication of the FASB?

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

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

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

Which of the following is not a user of financial reports?

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

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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