Ch 1 Financial Acc. Theory and Analysis

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Example Test Questions
Chapter 1
Multiple Choice:
1. Which of the following bodies has the ultimate authority to issue accounting pronouncements in the United States?
a. Securities and Exchange Commission
b. Financial Accounting Standards Board
c. International Accounting Standards Committee
d. Internal Revenue Service
Answer a
2. What historical evidence of the business operations of the private estate of Apollonius was discovered early inthe20th century?
a. The Iliad
b. Plato's Republic
c. The Zenon papyri
d. Pacioli‟s work, Summa de Arithmetica Geometria Proportioni et Proportionalita, Answer c
3. Who has been given credit or developing the double-entry system of bookkeeping? a. Francis Wheat
b. Fra Luca Pacioli
c. A. C. Littleton
d. William Paton
Answer b
4. Which of the following was not a criticism of the development of accounting standards by the Accounting Principles Board?
a. The independence of the members of the APB. The individuals serving on the board had fulltime responsibilities elsewhere that might influence their views of certain issues. b. The structure of the board. The largest eight public accounting firms (at that time) were automatically awarded one member, and there were usually five or six other public accountants on the APB.

c. Harmonization. The accounting standards developed were dissimilar to those developed by the International Accounting Standards Committee.
d. Response time. The emerging accounting problems were not being investigated and solved quickly enough by the part-time members.
Answer c

5. Which of the following is the professional organization of university accounting professors? a. American Accounting Association
b. American Institute of Certified Public Accountants

c. American Institute of Accountants
d. Financial Executives Institute
Answer a
6. What controversy originally highlighted the need for standard setting groups to have more authority?
a. Accounting for stock options
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