Question 1

The FASB Accounting Standards Codification includes six levels or components. Which of the following is not one of those levels?

Accepted Answer

A)  Area 
B)  Topic 
C)  Sub-paragraphs 
D)  Paragraphs 
A)  Area 
B)  Topic 
C)  Sub-paragraphs 
D)  Paragraphs C

Question 2

What financial statement is considered the cornerstone of financial reporting?

Accepted Answer

A)  the income statement 
B)  the statement of cash flows 
C)  the statement of shareholders' equity 
D)  the balance sheet 
A)  the income statement 
B)  the statement of cash flows 
C)  the statement of shareholders' equity 
D)  the balance sheet D

Question 3

The Codification was established to assist in reducing the time necessary to research an accounting issue and improve the ability to utilize accounting information that conforms with GAAP.

Accepted Answer

A) True 
 B)False  True

Question 4

The FASB and IASB have some ambitious accounting standards projects to complete prior to their convergence. List three of the projects currently on the agenda.

Accepted Answer

1) insurance
2) leas

Question 5

The balance sheet is a snapshot of a company's financial position at a particular date.

Accepted Answer

A) True 
 B)False

Question 6

Information asymmetry may cause problems because management's 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 shareholders). 
D)  as agents will always be in the best interests of the owners shareholders). 
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 shareholders). 
D)  as agents will always be in the best interests of the owners shareholders).

Question 7

What is the mission of the Securities and Exchange Commission? How did the SEC come into being?

Accepted Answer

The mission of the SEC is to "protect in

Question 8

The Financial Accounting Foundation FAF) is the parent organization of which of the following organizations?

Accepted Answer

A)  AICPA American Institute of Certified Public Accountants) 
B)  AAA American Accounting Association) 
C)  SIFMA Securities Industry and Financial Markets Association) 
D)  FASB Financial Accounting Standards Board) 
A)  AICPA American Institute of Certified Public Accountants) 
B)  AAA American Accounting Association) 
C)  SIFMA Securities Industry and Financial Markets Association) 
D)  FASB Financial Accounting Standards Board)

Question 9

Which of the following is not one of the stages used by the FASB process before issuing an Accounting Standards Update?

Accepted Answer

A)  Conducting research 
B)  Issuing an Exposure Draft 
C)  Obtaining approval from the SEC for the new standard 
D)  Holding public hearings 
A)  Conducting research 
B)  Issuing an Exposure Draft 
C)  Obtaining approval from the SEC for the new standard 
D)  Holding public hearings

Question 10

What is the correct presentation of the income statement?

Accepted Answer

A)  Revenues - expenses + gains - losses = Net Income 
B)  Revenues - expenses = Net income - losses + gains 
C)  Revenues - losses - expenses + gains = Net Income 
D)  Revenues + gains - losses - expenses = Net Income 
A)  Revenues - expenses + gains - losses = Net Income 
B)  Revenues - expenses = Net income - losses + gains 
C)  Revenues - losses - expenses + gains = Net Income 
D)  Revenues + gains - losses - expenses = Net Income

Question 11

The FASB Codification consists of six components or levels, what are the components or levels?

Accepted Answer

1) Areas
2) Topics
3

Question 12

Which of the following statements regarding the requirement to follow U.S. GAAP in financial reporting is true?

Accepted Answer

A)  U.S. GAAP has been adopted as federal law, so failure to follow U.S. GAAP is prosecuted through the federal court system. 
B)  U.S. GAAP has been adopted as state law in all 50 states, so failure to follow U.S. GAAP is prosecuted through the state court system. 
C)  U.S. GAAP represents a set of professional standards, and the requirement to follow U.S. GAAP is enforced through the AICPA Code of Professional Conduct. 
D)  Compliance with U.S. GAAP is not enforced; it is a voluntary choice made by most companies and by most professional accountants 
A)  U.S. GAAP has been adopted as federal law, so failure to follow U.S. GAAP is prosecuted through the federal court system. 
B)  U.S. GAAP has been adopted as state law in all 50 states, so failure to follow U.S. GAAP is prosecuted through the state court system. 
C)  U.S. GAAP represents a set of professional standards, and the requirement to follow U.S. GAAP is enforced through the AICPA Code of Professional Conduct. 
D)  Compliance with U.S. GAAP is not enforced; it is a voluntary choice made by most companies and by most professional accountants

Question 13

Define:
1) What are revenues?
2) What are expenses?
3) What is net income?
4) In which financial statement would one find revenues, expenses, and net income?

Accepted Answer

1) Revenue is the inflow of assets resul

Question 14

U.S. companies that have subsidiaries in foreign countries can file their financial statements with the SEC by using?

Accepted Answer

A)  IFRS 
B)  GAAP 
C)  either IFRS or GAAP 
D)  IFRS for their subsidiaries and GAAP for their holdings in the United States. 
A)  IFRS 
B)  GAAP 
C)  either IFRS or GAAP 
D)  IFRS for their subsidiaries and GAAP for their holdings in the United States.

Question 15

The FASB Accounting Standards Codification is expected to provide all of the following benefits except

Accepted Answer

A)  to reduce the research time necessary to solve an accounting research issue. 
B)  to codify authoritative support such as results of academic research. 
C)  to provide real-time updates as new standards are issued. 
D)  to improve the usability of the authoritative accounting literature. 
A)  to reduce the research time necessary to solve an accounting research issue. 
B)  to codify authoritative support such as results of academic research. 
C)  to provide real-time updates as new standards are issued. 
D)  to improve the usability of the authoritative accounting literature.

Question 16

Which Principle of the AICPA Code of Professional Conduct is: Members should broaden and maintain public confidence by performing all of their professional responsibilities with the highest sense of honesty possible?

Accepted Answer

A)  Scope and Nature of Services 
B)  Due Care 
C)  Integrity 
D)  Objectivity and Independence 
A)  Scope and Nature of Services 
B)  Due Care 
C)  Integrity 
D)  Objectivity and Independence

Question 17

The mission of the Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and assist in the formation of capital.

Accepted Answer

A) True 
 B)False

Question 18

The statement of shareholders' equity reports the effects from the recognition or valuation of certain asset or liability transactions that change Accumulated Other Comprehensive Income.

Accepted Answer

A) True 
 B)False

Question 19

When making decisions, equity investors are interested in assessing

Accepted Answer

A)  the company's ability to generate cash flows. 
B)  management's ability to increase the capital providers' investments. 
C)  the company's ability to pay dividends. 
D)  All of these choices 
A)  the company's ability to generate cash flows. 
B)  management's ability to increase the capital providers' investments. 
C)  the company's ability to pay dividends. 
D)  All of these choices

Question 20

"Members should act in a way that will service the public interest, honor the public trust, and demonstrate commitment to professionalism." This is the Public Interest Principle of the AICPA's Code of Professional Conduct.

Accepted Answer

A) True 
 B)False

Exam 1: The Demand for and Supply of Financial Accounting Information

The FASB Accounting Standards Codification includes six levels or components. Which of the following is not one of those levels?

What financial statement is considered the cornerstone of financial reporting?

The Codification was established to assist in reducing the time necessary to research an accounting issue and improve the ability to utilize accounting information that conforms with GAAP.

The FASB and IASB have some ambitious accounting standards projects to complete prior to their convergence. List three of the projects currently on the agenda.

The balance sheet is a snapshot of a company's financial position at a particular date.

Information asymmetry may cause problems because management's behavior

What is the mission of the Securities and Exchange Commission? How did the SEC come into being?

The Financial Accounting Foundation FAF) is the parent organization of which of the following organizations?

Which of the following is not one of the stages used by the FASB process before issuing an Accounting Standards Update?

What is the correct presentation of the income statement?

The FASB Codification consists of six components or levels, what are the components or levels?

Which of the following statements regarding the requirement to follow U.S. GAAP in financial reporting is true?

Define: 1) What are revenues? 2) What are expenses? 3) What is net income? 4) In which financial statement would one find revenues, expenses, and net income?

U.S. companies that have subsidiaries in foreign countries can file their financial statements with the SEC by using?

The FASB Accounting Standards Codification is expected to provide all of the following benefits except

Which Principle of the AICPA Code of Professional Conduct is: Members should broaden and maintain public confidence by performing all of their professional responsibilities with the highest sense of honesty possible?

The mission of the Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and assist in the formation of capital.

The statement of shareholders' equity reports the effects from the recognition or valuation of certain asset or liability transactions that change Accumulated Other Comprehensive Income.

When making decisions, equity investors are interested in assessing

"Members should act in a way that will service the public interest, honor the public trust, and demonstrate commitment to professionalism." This is the Public Interest Principle of the AICPA's Code of Professional Conduct.

Financial Reporting: Its Conceptual Framework

Review of a Company S Accounting System

The Balance Sheet and the Statement of Shareholders Equity

The Income Statement and the Statement of Cash Flows Time Value of Money Module

Cash and Receivables

Inventories: Cost Measurement and Flow Assumptions

Inventories: Special Valuation Issues

Current Liabilities and Contingent Obligations

Property, Plant, and Equipment: Acquisition and Subsequent Investments

Depreciation, Depletion, Impairment, and Disposal

Intangibles

Investments and Long-Term Receivables

Financing Liabilities: Bonds and Long-Term Notes Payable

Contributed Capital

Retained Earnings and Earnings Per Share

Advanced Issues in Revenue Recognition

Accounting for Income Taxes

Accounting for Post-Retirement Benefits

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Understanding Time Value of Money Formulas and Concepts

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