Question 1

For which of the following reporting issues has the FASB adopted substantially the same approach as the IASB?

Accepted Answer

A)  Segment reporting 
B)  Earnings per share 
C)  Statement of cash flows 
D)  Pension plans 
A)  Segment reporting 
B)  Earnings per share 
C)  Statement of cash flows 
D)  Pension plans

Question 2

Accounting standards help accountants meet the information demands of interested parties by providing:

Accepted Answer

A)  legislation introduction pertaining to financial reporting 
B)  limits and guidance for financial reporting 
C)  improved operating plans to the Board 
D)  reports to the Media 
A)  legislation introduction pertaining to financial reporting 
B)  limits and guidance for financial reporting 
C)  improved operating plans to the Board 
D)  reports to the Media

Question 3

The branch of accounting that is concerned with providing information to present and potential creditors of an enterprise is

Accepted Answer

A)  auditing. 
B)  managerial accounting. 
C)  financial accounting. 
D)  income tax accounting. 
A)  auditing. 
B)  managerial accounting. 
C)  financial accounting. 
D)  income tax accounting.

Question 4

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

Accepted Answer

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

Question 5

Primary responsibility for GAAP and public reporting currently rests with the

Accepted Answer

A)  SEC. 
B)  FASB. 
C)  Congress. 
D)  AICPA. 
A)  SEC. 
B)  FASB. 
C)  Congress. 
D)  AICPA.

Question 6

Financial statements issued for the use of parties external to the enterprise are the primary responsibility of the

Accepted Answer

A)  management of the enterprise. 
B)  stockholders of the enterprise. 
C)  independent auditors of the enterprise. 
D)  creditors of the enterprise. 
A)  management of the enterprise. 
B)  stockholders of the enterprise. 
C)  independent auditors of the enterprise. 
D)  creditors of the enterprise.

Question 7

Generally accepted accounting principles

Accepted Answer

A)  are accounting adaptations based on the laws of economic science. 
B)  derive their credibility and authority from legal rulings and court precedents. 
C)  derive their credibility and authority from the federal government through the financial reporting section of the SEC. 
D)  derive their credibility and authority from general recognition and acceptance by the accounting profession. 
A)  are accounting adaptations based on the laws of economic science. 
B)  derive their credibility and authority from legal rulings and court precedents. 
C)  derive their credibility and authority from the federal government through the financial reporting section of the SEC. 
D)  derive their credibility and authority from general recognition and acceptance by the accounting profession.

Question 8

The following is NOT one of the fundamental criteria for recognition?

Accepted Answer

A)  Timeliness 
B)  Measurability 
C)  Relevance 
D)  Reliability 
A)  Timeliness 
B)  Measurability 
C)  Relevance 
D)  Reliability

Question 9

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 10

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.

Question 11

The accrual basis of accounting is based primarily on

Accepted Answer

A)  conservatism and revenue realization. 
B)  conservatism and matching. 
C)  consistency and matching. 
D)  revenue realization and matching. 
A)  conservatism and revenue realization. 
B)  conservatism and matching. 
C)  consistency and matching. 
D)  revenue realization and matching.

Question 12

Recording the purchase price of a paper shredder (with an estimated useful life of 10 years)as an expense of the current period is justified by the

Accepted Answer

A)  going-concern assumption. 
B)  materiality constraint. 
C)  matching principle. 
D)  comparability principle. 
A)  going-concern assumption. 
B)  materiality constraint. 
C)  matching principle. 
D)  comparability principle.

Question 13

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 14

The United States Securities and Exchange Commission

Accepted Answer

A)  has recognized IASB standards as an acceptable alternative to U.S.GAAP. 
B)  requires foreign companies listing their shares on U.S.stock exchanges to restate their financial statements to U.S.GAAP. 
C)  has barred foreign companies from listing their shares on U.S.stock exchanges. 
D)  has no jurisdiction in the United States over foreign companies listing their shares on U.S.stock exchanges. 
A)  has recognized IASB standards as an acceptable alternative to U.S.GAAP. 
B)  requires foreign companies listing their shares on U.S.stock exchanges to restate their financial statements to U.S.GAAP. 
C)  has barred foreign companies from listing their shares on U.S.stock exchanges. 
D)  has no jurisdiction in the United States over foreign companies listing their shares on U.S.stock exchanges.

Question 15

A major difference between the Financial Accounting Standards Board (FASB)and its predecessor,the Accounting Principles Board (APB),is

Accepted Answer

A)  all members of the FASB serve full time,are paid a salary,and are independent of any public or private enterprises. 
B)  over 50 percent of the members of the FASB are required to be Certified Public Accountants. 
C)  the FASB issues exposure drafts of proposed standards. 
D)  all members of the FASB possess experience in both public and corporate accounting. 
A)  all members of the FASB serve full time,are paid a salary,and are independent of any public or private enterprises. 
B)  over 50 percent of the members of the FASB are required to be Certified Public Accountants. 
C)  the FASB issues exposure drafts of proposed standards. 
D)  all members of the FASB possess experience in both public and corporate accounting.

Question 16

The following is NOT a major component of the financial statements:

Accepted Answer

A)  auditor's opinion 
B)  annual report 
C)  explanatory notes 
D)  balance sheet 
A)  auditor's opinion 
B)  annual report 
C)  explanatory notes 
D)  balance sheet

Question 17

The following private-sector organization was created by the Sarbanes-Oxley Act of 2002 to perform required audits on U.S.publicly traded companies:

Accepted Answer

A)  AICPA 
B)  Public Company Accounting Oversight Board 
C)  Financial Executives Institute. 
D)  Financial Accounting Standards Board. 
A)  AICPA 
B)  Public Company Accounting Oversight Board 
C)  Financial Executives Institute. 
D)  Financial Accounting Standards Board.

Question 18

The overall objective of financial reporting is to provide information

Accepted Answer

A)  that is useful for decision making. 
B)  about an enterprise's assets,liabilities,and owners' equity. 
C)  about an enterprise's financial performance during a period. 
D)  that allows owners to assess management's performance. 
A)  that is useful for decision making. 
B)  about an enterprise's assets,liabilities,and owners' equity. 
C)  about an enterprise's financial performance during a period. 
D)  that allows owners to assess management's performance.

Question 19

How many board members serve on the FASB?

Accepted Answer

A)  5 
B)  7 
C)  14 
D)  20 
A)  5 
B)  7 
C)  14 
D)  20

Question 20

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.

Exam 1: Financial Reporting

For which of the following reporting issues has the FASB adopted substantially the same approach as the IASB?

Accounting standards help accountants meet the information demands of interested parties by providing:

The branch of accounting that is concerned with providing information to present and potential creditors of an enterprise is

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

Primary responsibility for GAAP and public reporting currently rests with the

Financial statements issued for the use of parties external to the enterprise are the primary responsibility of the

Generally accepted accounting principles

The following is NOT one of the fundamental criteria for recognition?

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

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

The accrual basis of accounting is based primarily on

Recording the purchase price of a paper shredder (with an estimated useful life of 10 years)as an expense of the current period is justified by the

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

The United States Securities and Exchange Commission

A major difference between the Financial Accounting Standards Board (FASB)and its predecessor,the Accounting Principles Board (APB),is

The following is NOT a major component of the financial statements:

The following private-sector organization was created by the Sarbanes-Oxley Act of 2002 to perform required audits on U.S.publicly traded companies:

The overall objective of financial reporting is to provide information

How many board members serve on the FASB?

The process of establishing financial accounting standards is

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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