Question 1

Financial disclosure statements are strictest in

Accepted Answer

A)  the United Kingdom. 
B)  Germany. 
C)  the United States. 
D)  France. 
A)  the United Kingdom. 
B)  Germany. 
C)  the United States. 
D)  France.

Question 2

Which of the following is NOT an implication of the going-concern assumption?

Accepted Answer

A)  The historical cost principle is credible. 
B)  Depreciation and amortization policies are justifiable and appropriate. 
C)  The current/noncurrent classification of assets and liabilities is justifiable and significant. 
D)  Amortizing research and development costs over multiple periods is justifiable and appropriate. 
A)  The historical cost principle is credible. 
B)  Depreciation and amortization policies are justifiable and appropriate. 
C)  The current/noncurrent classification of assets and liabilities is justifiable and significant. 
D)  Amortizing research and development costs over multiple periods is justifiable and appropriate.

Question 3

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 4

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 5

The following is a qualitative characteristic of accounting information:

Accepted Answer

A)  timeliness 
B)  feedback value 
C)  neutrality 
D)  decision usefulness. 
A)  timeliness 
B)  feedback value 
C)  neutrality 
D)  decision usefulness.

Question 6

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

Accepted Answer

A)  Board of directors 
B)  Stockholders in the company 
C)  Holders of the company's bonds 
D)  Creditors with long-term contracts with the company 
A)  Board of directors 
B)  Stockholders in the company 
C)  Holders of the company's bonds 
D)  Creditors with long-term contracts with the company

Question 7

Conservatism is best described as selecting an accounting alternative that

Accepted Answer

A)  understates assets and/or net income. 
B)  has the least favorable impact on owners' equity. 
C)  overstates,as opposed to understates,liabilities. 
D)  is least likely to mislead users of financial information. 
A)  understates assets and/or net income. 
B)  has the least favorable impact on owners' equity. 
C)  overstates,as opposed to understates,liabilities. 
D)  is least likely to mislead users of financial information.

Question 8

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 9

Which of the following is a characteristic of the Financial Accounting Standards Board?

Accepted Answer

A)  The FASB is composed of five members. 
B)  FASB members must come from CPA firms. 
C)  FASB members are part-time. 
D)  FASB members may retain their positions with previous employers. 
A)  The FASB is composed of five members. 
B)  FASB members must come from CPA firms. 
C)  FASB members are part-time. 
D)  FASB members may retain their positions with previous employers.

Question 10

Interested parties receive information about a company's past performance from:

Accepted Answer

A)  CEO's 
B)  the SEC 
C)  financial reporting 
D)  financial news 
A)  CEO's 
B)  the SEC 
C)  financial reporting 
D)  financial news

Question 11

In an effort to improve the conceptual framework,the FASB,in conjunction with the IASB has been moving towards more __________ standards.

Accepted Answer

A)  rules approach 
B)  principles approach 
C)  broad approach 
D)  international approach 
A)  rules approach 
B)  principles approach 
C)  broad approach 
D)  international approach

Question 12

The secondary qualitative characteristics of accounting information are

Accepted Answer

A)  relevance and reliability. 
B)  comparability and consistency. 
C)  understandability and decision usefulness. 
D)  materiality and conservatism. 
A)  relevance and reliability. 
B)  comparability and consistency. 
C)  understandability and decision usefulness. 
D)  materiality and conservatism.

Question 13

Financial information exhibits the characteristic of consistency when

Accepted Answer

A)  accounting procedures are adopted which smooth net income and make results consistent between years. 
B)  extraordinary gains and losses are shown separately on the income statement. 
C)  accounting entities give similar events the same accounting treatment each period. 
D)  expenditures are reported as expenses and netted against revenue in the period in which they are paid. 
A)  accounting procedures are adopted which smooth net income and make results consistent between years. 
B)  extraordinary gains and losses are shown separately on the income statement. 
C)  accounting entities give similar events the same accounting treatment each period. 
D)  expenditures are reported as expenses and netted against revenue in the period in which they are paid.

Question 14

Which of the following statements concerning the objectives of financial reporting is correct?

Accepted Answer

A)  The objectives are intended to be specific in nature. 
B)  The objectives are directed primarily toward the needs of internal users of accounting information. 
C)  The objectives were the end result of the FASB's conceptual framework project. 
D)  The objectives encompass not only financial statement disclosures,but other information as well. 
A)  The objectives are intended to be specific in nature. 
B)  The objectives are directed primarily toward the needs of internal users of accounting information. 
C)  The objectives were the end result of the FASB's conceptual framework project. 
D)  The objectives encompass not only financial statement disclosures,but other information as well.

Question 15

Which of the following is not included in the highest authoritative level of GAAP?

Accepted Answer

A)  FASB Statements 
B)  AICPA Statements of Position 
C)  FASB Staff Positions 
D)  Accounting Principles Board (AP
B) Opinions 
A)  FASB Statements 
B)  AICPA Statements of Position 
C)  FASB Staff Positions 
D)  Accounting Principles Board (AP
B) Opinions

Question 16

An item would be considered material and therefore would be disclosed in the financial statements if the

Accepted Answer

A)  expected benefits of disclosure exceed the additional costs. 
B)  impact on earnings is greater than 3 percent. 
C)  FASB definition of materiality is met. 
D)  omission of misstatement of the amount would make a difference to the users. 
A)  expected benefits of disclosure exceed the additional costs. 
B)  impact on earnings is greater than 3 percent. 
C)  FASB definition of materiality is met. 
D)  omission of misstatement of the amount would make a difference to the users.

Question 17

Proper application of accounting principles is most dependent upon the

Accepted Answer

A)  existence of specific guidelines. 
B)  oversight of regulatory bodies. 
C)  external audit function. 
D)  professional judgment of the accountant. 
A)  existence of specific guidelines. 
B)  oversight of regulatory bodies. 
C)  external audit function. 
D)  professional judgment of the accountant.

Question 18

Historical cost has been the valuation basis most commonly used in accounting because of its

Accepted Answer

A)  timelessness. 
B)  conservatism. 
C)  reliability. 
D)  accuracy. 
A)  timelessness. 
B)  conservatism. 
C)  reliability. 
D)  accuracy.

Question 19

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 20

Which of the following is true?

Accepted Answer

A)  Form 10-K is required under the FASB Conceptual Framework. 
B)  Form 10-Q is a quarterly report of significant events required by the SEC. 
C)  Form 8-K is a quarterly report of significant events required by the SEC. 
D)  Form 8-K is the annual report submitted by small businesses to the SEC. 
A)  Form 10-K is required under the FASB Conceptual Framework. 
B)  Form 10-Q is a quarterly report of significant events required by the SEC. 
C)  Form 8-K is a quarterly report of significant events required by the SEC. 
D)  Form 8-K is the annual report submitted by small businesses to the SEC.

Exam 1: Financial Reporting

Financial disclosure statements are strictest in

Which of the following is NOT an implication of the going-concern assumption?

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

Which of the following is true about international accounting standards?

The following is a qualitative characteristic of accounting information:

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

Conservatism is best described as selecting an accounting alternative that

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

Which of the following is a characteristic of the Financial Accounting Standards Board?

Interested parties receive information about a company's past performance from:

In an effort to improve the conceptual framework,the FASB,in conjunction with the IASB has been moving towards more __________ standards.

The secondary qualitative characteristics of accounting information are

Financial information exhibits the characteristic of consistency when

Which of the following statements concerning the objectives of financial reporting is correct?

Which of the following is not included in the highest authoritative level of GAAP?

An item would be considered material and therefore would be disclosed in the financial statements if the

Proper application of accounting principles is most dependent upon the

Historical cost has been the valuation basis most commonly used in accounting because of its

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

Which of the following is true?

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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