Question 1

The primary reason that financial accounting and managerial accounting have somewhat different objectives is because they

Accepted Answer

A)  need information in different formats 
B)  provide information for different decisions 
C)  need information in different geographic locations 
D)  need information at different times 
A)  need information in different formats 
B)  provide information for different decisions 
C)  need information in different geographic locations 
D)  need information at different times B

Question 2

The codification was established to assist in reducing the time necessary to research an accounting issue and improve the ability to utilize accounting information to conform to GAAP.

Accepted Answer

A) True 
 B)False  True

Question 3

FASB's Emerging Issues Task Force was established to identify issues in which it felt FASB needed to address.

Accepted Answer

A) True 
 B)False  True

Question 4

A problem arising from equal information is called information asymmetry.

Accepted Answer

A) True 
 B)False

Question 5

"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

Question 6

Assume you are tutoring a beginning accounting student who tells you that the members of the FASB must have a great deal of power because they have the authority to issue standards that dictate accounting procedure.
Required:
Explain why accounting standards are the result of compromise and how such compromises are reached.

Accepted Answer

In order for a new standard to be issued

Question 7

Which of the following documents includes all of the accounting standards?

Accepted Answer

A)  Regulation S-X 
B)  The FASB Conceptual Framework 
C)  Statements of Financial Accounting Standards 
D)  none of these 
A)  Regulation S-X 
B)  The FASB Conceptual Framework 
C)  Statements of Financial Accounting Standards 
D)  none of these

Question 8

What type of FASB pronouncements refined GAAP by clarifying conflicting or unclear issues relating to previously issued standards?

Accepted Answer

A)  Staff Positions 
B)  Technical Bulletins 
C)  Interpretations 
D)  Other Pronouncements 
A)  Staff Positions 
B)  Technical Bulletins 
C)  Interpretations 
D)  Other Pronouncements

Question 9

The accounting equations is

Accepted Answer

A)  Assets + Liabilities = Stockholder's Equity 
B)  Assets -Liabilities = Stockholder's Equity 
C)  Assets = Liabilities - Stockholder's Equity 
D)  Assets + Stockholders' Equity = Liabilities 
A)  Assets + Liabilities = Stockholder's Equity 
B)  Assets -Liabilities = Stockholder's Equity 
C)  Assets = Liabilities - Stockholder's Equity 
D)  Assets + Stockholders' Equity = Liabilities

Question 10

The statement of shareholder's equity reports the effects of Accumulated Other Comprehensive income.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is an internal stakeholder of a company's financial information?

Accepted Answer

A)  company treasurer 
B)  stockholder in the company 
C)  bank lending to the company 
D)  union 
A)  company treasurer 
B)  stockholder in the company 
C)  bank lending to the company 
D)  union

Question 12

Which pronouncements are not issued by the FASB?

Accepted Answer

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

Question 13

Three major organizations in the private and public sector develop U.S. and international GAAP. They include all of the following except the

Accepted Answer

A)  EU (European Union) 
B)  SEC (Securities and Exchange Commission) 
C)  FASB (Financial Accounting Standards Board) 
D)  IASB (International Accounting Standards Board) 
A)  EU (European Union) 
B)  SEC (Securities and Exchange Commission) 
C)  FASB (Financial Accounting Standards Board) 
D)  IASB (International Accounting Standards Board)

Question 14

Concerning FASB membership, which statement is not true?

Accepted Answer

A)  Not all members are CPAs from public practice. 
B)  All members are full time and fully paid. 
C)  All members are also members of the Financial Accounting Foundation. 
D)  All members must sever organizational ties with their previous employer. 
A)  Not all members are CPAs from public practice. 
B)  All members are full time and fully paid. 
C)  All members are also members of the Financial Accounting Foundation. 
D)  All members must sever organizational ties with their previous employer.

Question 15

Which Principle of the AICPA Code of Professional Conduct is: As a member one should continually strive to improve competence, observe all ethical standards and provide services to the best of their ability?

Accepted Answer

A)  The Public Interest 
B)  Responsibilities 
C)  Scope and Nature of Services 
D)  Due Care 
A)  The Public Interest 
B)  Responsibilities 
C)  Scope and Nature of Services 
D)  Due Care

Question 16

What financial statement is considered the cornerstone of financial reporting?

Accepted Answer

A)  income statement 
B)  statement of cash flows 
C)  statement of retained earnings 
D)  balance sheet 
A)  income statement 
B)  statement of cash flows 
C)  statement of retained earnings 
D)  balance sheet

Question 17

The Management Discussion and Analysis section of the financial statements discusses what important topics?

Accepted Answer

A)  Business risk factors associated with the company. 
B)  Management provides insight into key decisions implemented during that time period and future developments. 
C)  Management utilizes this area as a forum to discuss strategic motives. 
D)  All of these choices 
A)  Business risk factors associated with the company. 
B)  Management provides insight into key decisions implemented during that time period and future developments. 
C)  Management utilizes this area as a forum to discuss strategic motives. 
D)  All of these choices

Question 18

Which of the following is not considered an ethical issue in accounting?

Accepted Answer

A)  Biased financial statement presentation 
B)  Accelerated revenue recognition 
C)  Earnings manipulation 
D)  Industry practices 
A)  Biased financial statement presentation 
B)  Accelerated revenue recognition 
C)  Earnings manipulation 
D)  Industry practices

Question 19

Prior to 2009, the FASB issued several types of pronouncements which had differing levels of authority. Explain the differing types of pronouncements, provide a brief explanation as to what changed after 2009 and why is it still important today?

Accepted Answer

FASB Pronouncements were issued with dif

Question 20

Certain U.S. accounting standards have been, and will be, amended to aid in the international convergence process. The process of changing these standards usually involves

Accepted Answer

A)  a short deliberation followed by a vote of the U.S. Congress 
B)  acceptance of the change by the Internal Revenue Service 
C)  rejecting all existing standards and developing an entirely new concept 
D)  selecting the best standard between existing U.S. and international standards 
A)  a short deliberation followed by a vote of the U.S. Congress 
B)  acceptance of the change by the Internal Revenue Service 
C)  rejecting all existing standards and developing an entirely new concept 
D)  selecting the best standard between existing U.S. and international standards

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

The primary reason that financial accounting and managerial accounting have somewhat different objectives is because they

The codification was established to assist in reducing the time necessary to research an accounting issue and improve the ability to utilize accounting information to conform to GAAP.

FASB's Emerging Issues Task Force was established to identify issues in which it felt FASB needed to address.

A problem arising from equal information is called information asymmetry.

"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.

Which of the following documents includes all of the accounting standards?

What type of FASB pronouncements refined GAAP by clarifying conflicting or unclear issues relating to previously issued standards?

The accounting equations is

The statement of shareholder's equity reports the effects of Accumulated Other Comprehensive income.

Which of the following is an internal stakeholder of a company's financial information?

Which pronouncements are not issued by the FASB?

Three major organizations in the private and public sector develop U.S. and international GAAP. They include all of the following except the

Concerning FASB membership, which statement is not true?

Which Principle of the AICPA Code of Professional Conduct is: As a member one should continually strive to improve competence, observe all ethical standards and provide services to the best of their ability?

What financial statement is considered the cornerstone of financial reporting?

The Management Discussion and Analysis section of the financial statements discusses what important topics?

Which of the following is not considered an ethical issue in accounting?

Prior to 2009, the FASB issued several types of pronouncements which had differing levels of authority. Explain the differing types of pronouncements, provide a brief explanation as to what changed after 2009 and why is it still important today?

Certain U.S. accounting standards have been, and will be, amended to aid in the international convergence process. The process of changing these standards usually involves

Financial Reporting: Its Conceptual Framework

Review of a Companys Accounting System

The Balance Sheet and the Statement of Shareholders Equity

The Income Statement and the Statement of Cash Flows

Cash and Receivables

Inventories: Cost Measurement and Flow Assumptions

Inventories: Special Valuation Issues

Current Liabilities and Contingencies

Property, Plant, and Equipment: Acquisition and Subsequent Investments

Depreciation, Depletion, Impairment, and Disposal

Intangibles

Investments and Long-Term Receivables

Financing Liabilities: Bonds and Notes Payable

Contributed Capital

Retained Earnings and Earnings Per Share

Advanced Issues in Revenue Recognition

Accounting for Income Taxes

Accounting for Postretirement Benefits

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Time Value of Money Module

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