Intermediate Accounting Test Bank

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CHAPTER 1
FINANCIAL ACCOUNTING AND
ACCOUNTING STANDARDS
IFRS questions are available at the end of this chapter.

TRUE-FALSE—Conceptual
Answer
F
T
T
T
F
T
T
F
F
T
T
F
T
F
T
T
F
F
F
F

No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.

Description
Definition of financial accounting.
Purpose of financial statements.
Definition of financial accounting.
Capital allocation process.
Objective of financial reporting.
Decision-Usefulness approach.
Users of financial statements.
Committee on Accounting Procedure.
Passage of FASB standards.
Financial Accounting Concepts.
Creation of Accounting Principles Board.
FASB Codification.
Code of Professional Conduct.
GAAP and political action.
Public Company Accounting Oversight Board.
Expectations gap.
Financial reports.
Fair value information.
International Financial Reporting Standards.
Ethical issues.

MULTIPLE CHOICE—Conceptual
Answer
a
d
d
a
d
b
b
a
d
d
c
c
c
d
c

No.

Description

21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.

Financial accounting.
Users of financial reports.
Identify the major financial statements.
Financial reporting entity.
Differences between financial and managerial accounting.
Financial reporting communication.
Managerial accounting.
Capital allocation process.
Efficient use of resources.
Capital allocation process.
Financial statement information.
Accounting profession challenge.
Financial reporting objective.
Financial statements primary users.
Investor’s decision making.

Test Bank for Intermediate Accounting, Fourteenth Edition

1-2

MULTIPLE CHOICE—Conceptual
Answer
b
c
c
b
a
c
d
d
b
b
a
c
d
c
b
a
c
c
d
d
d
a
b
b
b
c
d
b
b
c
d
c
d
d
d
d
d
d
b
c
c
a
c

(cont.)

No.

Description

36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.
56.
57.
58.
59.
60.
61.
62.
63.
64.
65.
66.
67.
P
68.
P
69.
70.
71.
72.
73.
74.
75.
76.
77.
78.

Accrual accounting.
Objective of financial reporting perspective.
Meaning of “generally accepted.”
Common set of standards and procedures.
Limitation of general purpose financial statements.
Securities and Exchange Commission and accounting standard setting. Due process in FASB standard setting.
Organizations responsible for setting accounting standards.
Reason for Accounting Principles Board creation
Organization issuing Accounting Research Bulletins.
Characteristic of GAAP.
Characteristics of GAAP.
FASB accounting standards.
FASB standard passage.
Purpose of Emerging Issues Task Force.
AICPA role in standard setting.
Role of SEC.
Powers of the SEC.
SEC enforcement.
Creation of FASB.
Appointment of FASB members.
Purpose of the Financial Accounting Foundation.
Characteristics of FASB.
FASB and "due process" system.
Publications of FASB.
Purpose of FASB Technical Bulletins.
Purpose of Emerging Issues Task Force.
Role of the AICPA.
Pronouncement issued by the APB.
Standard setting organizations.
Identification of standard setting organizations.
Statements of financial accounting concepts.
FASB members.
FASB statement process.
Nature of GAAP.
Body which promulgates GAAP.
Publications which are not GAAP.
Publications which are not GAAP.
Code for Professional Conduct Rule 203.
Purpose of FASB staff position.
Components of GAAP.
Political environment of standard setting.
International Accounting Standards Board.

Financial Accounting and Accounting Standards

MULTIPLE CHOICE—Conceptual
Answer
d
a
c
b
d
a
P

1-3

(cont.)

No.

Description

79.
80.
81.
82.
83.
84.

Standard setting process pressure.
Danger of politics in standard setting
Definition of "expectation gap".
Reason accounting standards differ across countries.
Advantage of countries adopting same accounting standards....
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