Question 1

International Financial Reporting Standards preceded International Accounting Standards

Accepted Answer

A) True 
 B)False

Question 2

The International Accounting Standards Board has seven members.

Accepted Answer

A) True 
 B)False

Question 3

How does accounting help the capital allocation process attract investment capital?

Accepted Answer

A)  By providing timely, relevant information. 
B)  By encouraging innovation. 
C)  By promoting productivity. 
D)  By providing timely, relevant information and by encouraging innovation. 
A)  By providing timely, relevant information. 
B)  By encouraging innovation. 
C)  By promoting productivity. 
D)  By providing timely, relevant information and by encouraging innovation.

Question 4

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

Accepted Answer

A)  Accounting Research Bulletins 
B)  APB Opinions 
C)  APB Statements of Position 
D)  Statements of Financial Accounting Concepts 
A)  Accounting Research Bulletins 
B)  APB Opinions 
C)  APB Statements of Position 
D)  Statements of Financial Accounting Concepts

Question 5

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

Accepted Answer

A)  seven Board members. 
B)  three Board members. 
C)  four Board members. 
D)  five Board members. 
A)  seven Board members. 
B)  three Board members. 
C)  four Board members. 
D)  five Board members.

Question 6

The following are part of the "due process" system used by the FASB in the evolution of a typical FASB Accounting Standards Update:
1. Exposure Draft
2. FASB Accounting Standards Update"
3. Preliminary ViewsThe chronological order in which these items are released is as follows:"

Accepted Answer

A)  1, 2, 3. 
B)  1, 3, 2. 
C)  2, 3, 1. 
D)  3, 1, 2. 
A)  1, 2, 3. 
B)  1, 3, 2. 
C)  2, 3, 1. 
D)  3, 1, 2.

Question 7

What is the purpose of Emerging Issues Task Force?

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 8

Publications and organizations.Significant accounting publications are listed below (1-8). Sources or sponsors of accounting publications are identified next by alphabetical character (a-e). Match the publications with their sources.   Sources/Sponsors 
a. Financial Accounting Standards Board
b. Accounting Standards Executive Committee
c. The AICPA
d. Committee on Accounting Procedure
e. Accounting Principles Board

Accepted Answer

1. d 
2. a

Question 9

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

Accepted Answer

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

Question 10

Which organization is responsible for issuing Emerging Issues Task Force Statements?

Accepted Answer

A)  The FASB 
B)  The CAP 
C)  The APB 
D)  The SEC 
A)  The FASB 
B)  The CAP 
C)  The APB 
D)  The SEC

Question 11

Financial accounting standard-setting in the United States

Accepted Answer

A)  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. 
B)  is based solely on research and empirical findings. 
C)  is a legalistic process based on rules promulgated by governmental agencies. 
D)  is democratic in the sense that a majority of accountants must agree with a standard before it becomes enforceable. 
A)  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. 
B)  is based solely on research and empirical findings. 
C)  is a legalistic process based on rules promulgated by governmental agencies. 
D)  is democratic in the sense that a majority of accountants must agree with a standard before it becomes enforceable.

Question 12

A characteristic of generally accepted accounting principles include:

Accepted Answer

A)  a common set of standards and principles. 
B)  standards and principles are based a federal statutes. 
C)  acceptance requires an affirmative vote of Certified Public Accountants. 
D)  practices that become accepted for at least a year by all industry members. 
A)  a common set of standards and principles. 
B)  standards and principles are based a federal statutes. 
C)  acceptance requires an affirmative vote of Certified Public Accountants. 
D)  practices that become accepted for at least a year by all industry members.

Question 13

The purpose of the International Accounting Standards Board is to:

Accepted Answer

A)  regulate stock prices at the international level. 
B)  develop a uniform currency in which the financial transactions occur. 
C)  develop a single set of high-quality financial reporting standards. 
D)  arbitrate accounting disputes between auditors and international companies. 
A)  regulate stock prices at the international level. 
B)  develop a uniform currency in which the financial transactions occur. 
C)  develop a single set of high-quality financial reporting standards. 
D)  arbitrate accounting disputes between auditors and international companies.

Question 14

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

Accepted Answer

A)  Accounting standards that are not truly generally accepted. 
B)  Individuals may influence the standards. 
C)  User groups become active. 
D)  The FASB delegates its authority to elected officials. 
A)  Accounting standards that are not truly generally accepted. 
B)  Individuals may influence the standards. 
C)  User groups become active. 
D)  The FASB delegates its authority to elected officials.

Question 15

Development of accounting principles.Presented below are three independent, unrelated statements regarding the formulation of generally accepted accounting principles. Each statement contains some incorrect or debatable statement(s).
Statement I
The users of financial accounting statements have coinciding and conflicting needs for statements of various types. To meet these needs, and to satisfy the financial reporting responsibility of management, accountants prepare different sets of financial statements for different users.
Statement II
The FASB should be responsive to the needs and viewpoints of the entire economic community, not just the public accounting profession. The FASB therefore will succeed because it will deal effectively with all interested groups.
Statement III
The Securities and Exchange Commission is very concerned about financial reporting and has formulated a committee called the Accounting Standards Executive Committee (AcSEC). This will provide input to the FASB. In addition, after each FASB Statement is issued, the AcSEC issues Statements of Position stating its position on the FASB statement.

Instructions

Evaluate each of the independent statements and identify the areas of fallacious reasoning in each. Explain why the reasoning is incorrect. Complete your discussion of each statement before proceeding to the next statement.

Accepted Answer

Statement I
It is true that users of fin

Question 16

Rule 203 of the Code of Professional Conduct addresses:

Accepted Answer

A)  ethical requirements. 
B)  financial statements being based on generally accepted accounting principles. 
C)  advertising to obtain clients. 
D)  auditing financial statements. 
A)  ethical requirements. 
B)  financial statements being based on generally accepted accounting principles. 
C)  advertising to obtain clients. 
D)  auditing financial statements.

Question 17

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

Accepted Answer

A)  The Accounting Principles Board. 
B)  The Committee on Accounting Procedure. 
C)  The Financial Accounting Standards Board. 
D)  All of the answer choices are correct. 
A)  The Accounting Principles Board. 
B)  The Committee on Accounting Procedure. 
C)  The Financial Accounting Standards Board. 
D)  All of the answer choices are correct.

Question 18

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

Accepted Answer

A)  Agreement. 
B)  Comparability. 
C)  Lower preparation costs. 
D)  Comparability and lower preparation costs. 
A)  Agreement. 
B)  Comparability. 
C)  Lower preparation costs. 
D)  Comparability and lower preparation costs.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

What is the objective of financial reporting?

Accepted Answer

A)  Provide information that is useful to management in making decisions. 
B)  Provide information that clearly portrays nonfinancial transactions. 
C)  Provide information about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors. 
D)  Provide information that excludes claims to the resources. 
A)  Provide information that is useful to management in making decisions. 
B)  Provide information that clearly portrays nonfinancial transactions. 
C)  Provide information about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors. 
D)  Provide information that excludes claims to the resources.

Exam 1: Financial Accounting and Accounting Standards

International Financial Reporting Standards preceded International Accounting Standards

The International Accounting Standards Board has seven members.

How does accounting help the capital allocation process attract investment capital?

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

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

The following are part of the "due process" system used by the FASB in the evolution of a typical FASB Accounting Standards Update: 1. Exposure Draft 2. FASB Accounting Standards Update" 3. Preliminary ViewsThe chronological order in which these items are released is as follows:"

What is the purpose of Emerging Issues Task Force?

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

Which organization is responsible for issuing Emerging Issues Task Force Statements?

Financial accounting standard-setting in the United States

A characteristic of generally accepted accounting principles include:

The purpose of the International Accounting Standards Board is to:

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

Rule 203 of the Code of Professional Conduct addresses:

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

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

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

What is the objective of financial reporting?

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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