Question 1

The Securities and Exchange Commission has the legal authority to prescribe accounting principles and reporting practices for

Accepted Answer

A)  all companies issuing publicly traded securities 
B)  all companies issuing any type of securities 
C)  all companies 
D)  all corporations 
A)  all companies issuing publicly traded securities 
B)  all companies issuing any type of securities 
C)  all companies 
D)  all corporations

Question 2

Which of the following transactions would be reported in the cash flows from investing activities section in the statement of cash flows for the Harlem Company?

Accepted Answer

A)  Harlem sold a piece of land for $600,000. 
B)  Harlem borrowed $3,000,000 
C)  Harlem issued common stock for $700,000 to investors. 
D)  Harlem paid a cash dividend to its stockholders. 
A)  Harlem sold a piece of land for $600,000. 
B)  Harlem borrowed $3,000,000 
C)  Harlem issued common stock for $700,000 to investors. 
D)  Harlem paid a cash dividend to its stockholders.

Question 3

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 4

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

Accepted Answer

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

Question 5

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 6

Assume that authoritative support regarding GAAP for a particular transaction is needed. A correct hierarchy of authority to be followed (highest, second, third) would be

Accepted Answer

A)  FASB Statements, AICPA Accounting Interpretations, FASB Technical Bulletins 
B)  FASB Technical Bulletins, AICPA Accounting Interpretations, FASB Statements 
C)  AICPA Accounting Interpretations, FASB Technical Bulletins, FASB Statements 
D)  FASB Statements, FASB Technical Bulletins, AICPA Accounting Interpretations 
A)  FASB Statements, AICPA Accounting Interpretations, FASB Technical Bulletins 
B)  FASB Technical Bulletins, AICPA Accounting Interpretations, FASB Statements 
C)  AICPA Accounting Interpretations, FASB Technical Bulletins, FASB Statements 
D)  FASB Statements, FASB Technical Bulletins, AICPA Accounting Interpretations

Question 7

After formulating a strategic plan what three types of activities will a company engage in?

Accepted Answer

A)  Planning, operating, and selling 
B)  Investing, operating, and selling 
C)  Financing, investing, and operating 
D)  Operating, planning, and financing 
A)  Planning, operating, and selling 
B)  Investing, operating, and selling 
C)  Financing, investing, and operating 
D)  Operating, planning, and financing

Question 8

Which Principle of the AICPA Code of Professional Conduct is: Members should perform all of their professional responsibilities with the highest sense of integrity possible. This ensures trust and public confidence in the profession?

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 9

The FASB Emerging Issues Task Force issues which of the following?

Accepted Answer

A)  Statements of Position to influence the development of principles 
B)  Consensus Positions on the implementation of standards 
C)  Financial Reporting Releases on guidelines for reporting issues 
D)  Technical Bulletins on accounting and reporting problems 
A)  Statements of Position to influence the development of principles 
B)  Consensus Positions on the implementation of standards 
C)  Financial Reporting Releases on guidelines for reporting issues 
D)  Technical Bulletins on accounting and reporting problems

Question 10

Define:
1) What are assets?
2) What are liabilities?
3) What is shareholder's equity?
4) What financial statement would one find assets, liabilities and shareholder's equity?

Accepted Answer

1) Assets are resources the firm owns th

Question 11

What types of resources do companies compete for and why?

Accepted Answer

Companies compete for scarce resources t

Question 12

The correct order of presentation for the statement of cash flows is?

Accepted Answer

A)  Operating, Investing, Financing 
B)  Financing, Operating, Investing 
C)  Investing, Financing, Operating 
D)  Operating, Financing, Investing 
A)  Operating, Investing, Financing 
B)  Financing, Operating, Investing 
C)  Investing, Financing, Operating 
D)  Operating, Financing, Investing

Question 13

Which organization has the most legal authority?

Accepted Answer

A)  Financial Accounting Standards Board 
B)  Accounting Standards Executive Committee 
C)  Governmental Accounting Standards Board 
D)  Securities and Exchange Commission 
A)  Financial Accounting Standards Board 
B)  Accounting Standards Executive Committee 
C)  Governmental Accounting Standards Board 
D)  Securities and Exchange Commission

Question 14

As a potential equity investor, what would you least be interested in a company prior to making and investment decision?

Accepted Answer

A)  What differentiates them from their competition? 
B)  Whether they are generating a profit? 
C)  Whether they have positive cash flows? 
D)  What are the employee benefits and compensation packages? 
A)  What differentiates them from their competition? 
B)  Whether they are generating a profit? 
C)  Whether they have positive cash flows? 
D)  What are the employee benefits and compensation packages?

Question 15

The codification is set up as a system of levels starting with sections, topics, and subtopics.

Accepted Answer

A) True 
 B)False

Question 16

Listed below are the ten steps the FASB goes through in issuing a new Statement. 
a.Conchuct re search_______
b.Deliberate on findings____
c.Hold public hearings_______
d.Identify topic_______
e.Issue Dis cussion Memorandum_______
f.Issue Exposure Draft_______
g.Issue Statement_______
h.Modify Exposure Draft_______
i.Vote_______

Required:
Indicate the proper sequence of these steps.

Accepted Answer

a.2
b.5
c.

Question 17

What is the responsibility of the International Accounting Standards Board?

Accepted Answer

A)  IASB promotes uniform accounting standards among international countries. 
B)  IASB settles accounting disputes between auditors and international companies. 
C)  IASB issues standards which regulate the financial accounting and reporting of multinational corporations and then enforces through legal channels. 
D)  IASB is to develop a uniform currency in which the financial transactions would be measured. 
A)  IASB promotes uniform accounting standards among international countries. 
B)  IASB settles accounting disputes between auditors and international companies. 
C)  IASB issues standards which regulate the financial accounting and reporting of multinational corporations and then enforces through legal channels. 
D)  IASB is to develop a uniform currency in which the financial transactions would be measured.

Question 18

The convergence project between the IASB and GAAP was initiated in 2002 when the two boards entered into the "Northward Agreement".

Accepted Answer

A) True 
 B)False

Question 19

The Securities Exchange Act of 1934 established extensive reporting requirements for listed companies. Which is not a commonly required report?

Accepted Answer

A)  Form 10-Q. An extensive quarterly report, including financial statements. 
B)  Form S-2. A registration statement 
C)  Form 10-K. An extensive annual report, including financial statements 
D)  Form 8-K. A report used to describe significant events that may affect the company. 
A)  Form 10-Q. An extensive quarterly report, including financial statements. 
B)  Form S-2. A registration statement 
C)  Form 10-K. An extensive annual report, including financial statements 
D)  Form 8-K. A report used to describe significant events that may affect the company.

Question 20

Creditors' information needs revolve around all of the following decisions, except

Accepted Answer

A)  extending credit 
B)  maintaining a credit relationship 
C)  not extending credit 
D)  investing in credit instruments 
A)  extending credit 
B)  maintaining a credit relationship 
C)  not extending credit 
D)  investing in credit instruments

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

The Securities and Exchange Commission has the legal authority to prescribe accounting principles and reporting practices for

Which of the following transactions would be reported in the cash flows from investing activities section in the statement of cash flows for the Harlem Company?

When making decisions, equity investors are interested in assessing

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

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

Assume that authoritative support regarding GAAP for a particular transaction is needed. A correct hierarchy of authority to be followed (highest, second, third) would be

After formulating a strategic plan what three types of activities will a company engage in?

Which Principle of the AICPA Code of Professional Conduct is: Members should perform all of their professional responsibilities with the highest sense of integrity possible. This ensures trust and public confidence in the profession?

The FASB Emerging Issues Task Force issues which of the following?

Define: 1) What are assets? 2) What are liabilities? 3) What is shareholder's equity? 4) What financial statement would one find assets, liabilities and shareholder's equity?

What types of resources do companies compete for and why?

The correct order of presentation for the statement of cash flows is?

Which organization has the most legal authority?

As a potential equity investor, what would you least be interested in a company prior to making and investment decision?

The codification is set up as a system of levels starting with sections, topics, and subtopics.

What is the responsibility of the International Accounting Standards Board?

The convergence project between the IASB and GAAP was initiated in 2002 when the two boards entered into the "Northward Agreement".

The Securities Exchange Act of 1934 established extensive reporting requirements for listed companies. Which is not a commonly required report?

Creditors' information needs revolve around all of the following decisions, except

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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