Question 1

The area of accounting that emphasizes developing accounting information for use within a company is known as __________ accounting.

Accepted Answer

A) management 
B) forensic 
C) audit 
D) financial 
A) management 
B) forensic 
C) audit 
D) financial A

Question 2

What accounting concept justifies the use of accruals and deferrals?

Accepted Answer

A) Going-concern assumption 
B) Corporate form of organization 
C) Consistency characteristic 
D) Arm's-length transactions 
A) Going-concern assumption 
B) Corporate form of organization 
C) Consistency characteristic 
D) Arm's-length transactions A

Question 3

The members of the __________ are appointed by the Financial Accounting Foundation.

Accepted Answer

A) American Accounting Association. 
B) Financial Accounting Standards Board 
C) Securities and Exchange Commission. 
D) American Institute of Certified Public Accountants. 
A) American Accounting Association. 
B) Financial Accounting Standards Board 
C) Securities and Exchange Commission. 
D) American Institute of Certified Public Accountants. B

Question 4

The process of establishing financial accounting standards is

Accepted Answer

A) a democratic process in that a majority of practicing accountants must agree with a standard before it becomes implemented. 
B) a legislative process based on rules promulgated by government agencies. 
C) based solely on economic analysis of the effects each standard will have if it is implemented. 
D) a social process which incorporates political actions of various interested user groups as well as professional research and logic. 
A) a democratic process in that a majority of practicing accountants must agree with a standard before it becomes implemented. 
B) a legislative process based on rules promulgated by government agencies. 
C) based solely on economic analysis of the effects each standard will have if it is implemented. 
D) a social process which incorporates political actions of various interested user groups as well as professional research and logic.

Question 5

The responsibility to review the work of the accountants and issue opinions as to the fairness of the financial statements rests with

Accepted Answer

A) the external auditor. 
B) the board of directors. 
C) the internal auditors. 
D) management. 
A) the external auditor. 
B) the board of directors. 
C) the internal auditors. 
D) management.

Question 6

The SEC was given the power to establish accounting principles including setting requirements for details shown on financial statements by the:

Accepted Answer

A) FASB 
B) AICPA 
C) Congress 
D) AAA 
A) FASB 
B) AICPA 
C) Congress 
D) AAA

Question 7

The going-concern assumption holds that the business entity will continue its operations long enough to realize its projects,commitments,and ongoing activities.The assumption is that the entity is not expected to be liquidated in the foreseeable future or that the entity will continue for an indefinite period of time.
Explain the relationship between the going-concern assumption and the historical cost principle and the amortization of assets.

Accepted Answer

The going-concern assumption justifies t

Question 8

The assumed continuation of a business entity in the absence of evidence to the contrary is an example of the accounting concept of

Accepted Answer

A) accrual. 
B) consistency. 
C) comparability. 
D) going concern. 
A) accrual. 
B) consistency. 
C) comparability. 
D) going concern.

Question 9

The primary purpose of the Securities and Exchange Commission is to

Accepted Answer

A) regulate the issuance and trading of securities. 
B) issue accounting and auditing regulations for publicly held companies. 
C) prevent the trading of speculative securities. 
D) enforce generally accepted accounting principles. 
A) regulate the issuance and trading of securities. 
B) issue accounting and auditing regulations for publicly held companies. 
C) prevent the trading of speculative securities. 
D) enforce generally accepted accounting principles.

Question 10

The primary current source of generally accepted accounting principles for governmental operations is the

Accepted Answer

A) Financial Accounting Standards Board. 
B) Securities and Exchange Commission. 
C) Governmental Accounting Standards Board. 
D) Government Accounting Office. 
A) Financial Accounting Standards Board. 
B) Securities and Exchange Commission. 
C) Governmental Accounting Standards Board. 
D) Government Accounting Office.

Question 11

The International Accounting Standards Board was formed to

Accepted Answer

A) enforce FASB standards in foreign countries. 
B) develop worldwide accepted accounting standards. 
C) establish accounting standards for U.S. multinational companies. 
D) develop accounting standards for countries that do not have their own standard-setting bodies. 
A) enforce FASB standards in foreign countries. 
B) develop worldwide accepted accounting standards. 
C) establish accounting standards for U.S. multinational companies. 
D) develop accounting standards for countries that do not have their own standard-setting bodies.

Question 12

Important constraints underlying the qualitative characteristics of accounting information are

Accepted Answer

A) historical cost and going concern. 
B) materiality, conservatism, and cost-effectiveness. 
C) consistency, comparability, and conservatism. 
D) verifiability, neutrality, and representational faithfulness. 
A) historical cost and going concern. 
B) materiality, conservatism, and cost-effectiveness. 
C) consistency, comparability, and conservatism. 
D) verifiability, neutrality, and representational faithfulness.

Question 13

The harmonization of world accounting standards is viewed by many accountants,analysts,standard setters,and others as being among the most important issues facing business throughout the world.Advocates of harmonization seek to establish a common set of international accounting and reporting standards.Such a task has proven formidable,however.
Identify factors that would hinder the process of harmonization of accounting standards.

Accepted Answer

Accounting standards throughout the worl

Question 14

When the FASB deliberates about an accounting standard,firms whose financial statements would be affected by that standard

Accepted Answer

A) are legally barred from lobbying the FASB. 
B) are not allowed to lobby the FASB if the standard would have a negative impact on their financial statements. 
C) are not allowed to lobby the FASB if the standard would have a positive impact on their financial statements. 
D) are free to lobby for or against the standard. 
A) are legally barred from lobbying the FASB. 
B) are not allowed to lobby the FASB if the standard would have a negative impact on their financial statements. 
C) are not allowed to lobby the FASB if the standard would have a positive impact on their financial statements. 
D) are free to lobby for or against the standard.

Question 15

The financial statements that are prepared for the business are separate and distinct from the owners according to the

Accepted Answer

A) going-concern assumption. 
B) matching principle. 
C) economic entity assumption. 
D) full disclosure principle. 
A) going-concern assumption. 
B) matching principle. 
C) economic entity assumption. 
D) full disclosure principle.

Question 16

Which of the following items is not a modifying convention?

Accepted Answer

A) Matching 
B) Materiality 
C) Industry practices 
D) Conservatism 
A) Matching 
B) Materiality 
C) Industry practices 
D) Conservatism

Question 17

Which of the following is true about international accounting standards?

Accepted Answer

A) Significant differences exist between U.S. GAAP and GAAP of other countries. 
B) Few differences exist between U.S. GAAP and GAAP of other countries. 
C) The IASB is the standards-setting body of France. 
D) It is unlikely that the differences between U.S. GAAP and GAAP of other countries will diminish over time. 
A) Significant differences exist between U.S. GAAP and GAAP of other countries. 
B) Few differences exist between U.S. GAAP and GAAP of other countries. 
C) The IASB is the standards-setting body of France. 
D) It is unlikely that the differences between U.S. GAAP and GAAP of other countries will diminish over time.

Question 18

Which of the following elements of financial statements is not a component of comprehensive income?

Accepted Answer

A) Revenues 
B) Expenses 
C) Losses 
D) Distributions to owners 
A) Revenues 
B) Expenses 
C) Losses 
D) Distributions to owners

Question 19

The primary measurement basis currently used to value assets in external financial statements of an enterprise is the

Accepted Answer

A) current market price if the assets currently held by an enterprise were sold on the open market. 
B) current market price if the assets held by an enterprise were purchased on the open market. 
C) present value of the cash flows the assets are expected to generate over their remaining useful lives. 
D) market price of the assets held by an enterprise at the date the assets were acquired (although some assets may be valued at their current selling price or net realizable value). 
A) current market price if the assets currently held by an enterprise were sold on the open market. 
B) current market price if the assets held by an enterprise were purchased on the open market. 
C) present value of the cash flows the assets are expected to generate over their remaining useful lives. 
D) market price of the assets held by an enterprise at the date the assets were acquired (although some assets may be valued at their current selling price or net realizable value).

Question 20

The __________ of a firm is primarily responsible for the preparation of financial statements in accordance with GAAP.

Accepted Answer

A) the internal auditors. 
B) management. 
C) the external auditors. 
D) the board of directors. 
A) the internal auditors. 
B) management. 
C) the external auditors. 
D) the board of directors.

Exam 1: Financial Reporting

The area of accounting that emphasizes developing accounting information for use within a company is known as __________ accounting.

What accounting concept justifies the use of accruals and deferrals?

The members of the __________ are appointed by the Financial Accounting Foundation.

The process of establishing financial accounting standards is

The responsibility to review the work of the accountants and issue opinions as to the fairness of the financial statements rests with

The SEC was given the power to establish accounting principles including setting requirements for details shown on financial statements by the:

The assumed continuation of a business entity in the absence of evidence to the contrary is an example of the accounting concept of

The primary purpose of the Securities and Exchange Commission is to

The primary current source of generally accepted accounting principles for governmental operations is the

The International Accounting Standards Board was formed to

Important constraints underlying the qualitative characteristics of accounting information are

When the FASB deliberates about an accounting standard,firms whose financial statements would be affected by that standard

The financial statements that are prepared for the business are separate and distinct from the owners according to the

Which of the following items is not a modifying convention?

Which of the following is true about international accounting standards?

Which of the following elements of financial statements is not a component of comprehensive income?

The primary measurement basis currently used to value assets in external financial statements of an enterprise is the

The __________ of a firm is primarily responsible for the preparation of financial statements in accordance with GAAP.

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll,pensions, Other Compissues

Earnings Per Share

Derivatives, contingencies, business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

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