40 test bank for intermediate accounting IFRS edition 2nd edition

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40 Test Bank for Intermediate Accounting IFRS Edition 2nd Edition

by Kieso

Multiple Choice Questions

Users of financial reports include all of the following except:

1 a.creditors

2 b.government agencies

3 c.unions

4 d.All of these are users

Which of the following statements is true regarding the

International Accounting Standards Board (IASB)?

1 a.The IASB is a regulatory agency with enforcement powers for its

International Financial Reporting Standards (IFRS)

2 b.The IASB is a public organization, funded by taxpayer dollars from

member countries

3 c.Is compromised of 16 members

4 d.All of the choices are correct regarding the IASB

The financial statements most frequently provided include all of the following except the

1 a.statement of financial position

2 b.income statement

3 c.statement of cash flows

4 d.statement of retained earnings

Which of the following statements is not an objective of financial reporting?

1 a.Provide information that is useful in investment and credit decisions

2 b.Provide information about enterprise resources, claims to those

resources, and changes to them

3 c.Provide information on the liquidation value of an enterprise

4 d.Provide information that is useful in assessing cash flow prospects

What is a possible danger if politics plays too big a role in

developing IFRS?

1 a.Financial reporting standards that are issued that are not truly generally accepted

2 b.Individuals may influence the standards

3 c.User groups become active

4 d.The IASB delegates its authority to elected officials

What would be an advantage of having all countries adopt and follow the same accounting standards?

1 a.Consistency

2 b.Comparability

3 c.Lower preparation costs

4 d.Comparability and lower preparation costs

One element of the objective of financial reporting is to provide

1 a.information about the investors in the business entity

2 b.information about the liquidation values of the resources held by the enterprise

3 c.information that is useful in assessing cash flow prospects

4 d.information that will attract new investors.

All the following are differences between financial and managerial accounting in how accounting information is used except to

1 a.plan and control company's operations

2 b.decide whether to invest in the company

3 c.evaluate borrowing capacity to determine the extent of a loan to grant

4 d.All of these answers are differences

What is "expectation gap"?

1 a.The difference between what the public thinks the accountant is not doing and what the accountant knows they don't do

2 b.The difference between what the public thinks the accountant should do and what Congress says the accountant should do

3 c.The difference between what the public thinks the accountant should do and what the accountant thinks they can do

4 d.The difference between what the accountant should do and what the Courts say the accountant should be doing

International financial reporting interpretations (issued by the International Accounting Standards Board)

1 a.Are considered authoritative and must be followed

2 b.Cover newly identified financial reporting issues not specifically

addressed by the IASB

3 c.Cover issues where unsatisfactory or conflicting interpretations have developed

4 d.All of the choices are correct regarding International financial reporting interpretations

What is the major objective of financial reporting?

1 a.Provide information that is useful to management in making decisions

2 b.Provide information that clearly portray nonfinancial transactions

3 c.Provide information that is useful to present and potential equity investors, lenders, and other creditors in making decisions

4 d.Provide information that excludes claims to the resources

An effective capital allocation process

1 a.promotes productivity

2 b.encourages innovation

3 c.provides an efficient market for buying and selling securities

4 d.All of these answers are correct

In the past, many countries have relied on their own standard-setting organizations The standards issued by these various standard-setting organizations around the world include

1 a.Tax-oriented standards

2 b.Business-based standards

3 c.Principles-based standards

4 d.All of these answers are correct

Which of the following has the highest authoritative support?

1 a.International Financial Reporting Standards

2 b.International Accounting Standards

3 c.Interpretations of the IFRIC

4 d.Framework for Financial Reporting

When comparing U.S GAAP and International Financial

Reporting Standards (IFRS)

1 a.IFRS are considered more comprehensive than U.S GAAP

2 b.IFRS contain more implementation guidance than U.S GAAP

3 c.IFRS are considered more principles-based than U.S GAAP

4 d.All of the choices are correct regarding U.S GAAP and IFRS

Which of the following is an ethical concern of accountants?

1 a.Earnings manipulation

2 b.Conservative accounting

3 c.Industry practices

4 d.None of the above

General-purpose financial statements are the product of

1 a.financial accounting

2 b.managerial accounting

3 c.both financial and managerial accounting

4 d.neither financial nor managerial accounting

Which of the following is not one of the major types of

pronouncements issued by the International Accounting

Standards Board (IASB)?

1 a.International financial reporting standard

2 b.Memorandum of understanding

3 c.Framework for financial reporting

4 d.International financial reporting interpretations

The two major standard-setting organizations in the world are

1 a.Financial Accounting Standards Board (FASB) and the International Organization of Securities Commission (IOSCO)

2 b.Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB)

3 c.The International Accounting Standards Board (IASB) and International Organization of Securities Commission (IOSCO)

4 d.The International Accounting Standards Board (IASB) and the Standards Advisory Council (SAC)

The major financial statements include all of the following except:

1 a.Statement of financial position

2 b.Statement of changes in financial position

3 c.Statement of comprehensive income

4 d.Statement of changes in equity

Which of these statements regarding the IFRS and U.S GAAP is correct?

1 a.U.S GAAP is considered to be "principles-based" and more detailed than IFRS

2 b.U.S GAAP is considered to be "rules-based" and less detailed than IFRS

3 c.IFRS is considered to be "principles-based" and less detailed than U.S GAAP

4 d.Both U.S GAAP and IFRS are considered to be "rules-based", but U.S GAAP tends to be more complex

As part of the objective of general-purpose financial reporting, there is an emphasis on “assessing cash flow prospects.” Under

International Financial Reporting Standards (IFRS) this is

interpreted to mean:

1 a.Cash basis accounting is preferred over accrual based accounting

2 b.Information about the financial effects of cash receipts and cash

payments is generally considered the best indicator of a company’s present and continuing ability to generate favorable cash flows

3 c.Over the long run, trends in revenues and expenses are generally more meaningful than trends in cash receipts and disbursements

4 d.All of the choices are correct regarding “assessing cash flow prospects” under IFRS

Which of the following organizations is not among the four

international standard-setting organizations?

1 a.IFRS Foundation

2 b.IFRS

3 c.IFRS

4 d.International Organization of Securities Commissions (IOSCO)

Financial statements in the early 2000s provided information related to

1 a.nonfinancial measurements

2 b.forward-looking data

3 c.hard assets (inventory and plant assets)

4 d.None of these answers are correct

Which of the following represents a form of communication

through financial reporting but not through financial statements?

1 a.Statement of financial position

2 b.President's letter.

3 c.Income statement

4 d.Notes to financial statements

The information provided by financial reporting pertains to

1 a.individual business enterprises, rather than to industries or an economy

as a whole or to members of society as consumers

2 b.business industries, rather than to individual enterprises or an economy

as a whole or to members of society as consumers

3 c.individual business enterprises, industries, and an economy as a whole, rather than to members of society as consumers

4 d.an economy as a whole and to members of society as consumers, rather than to individual enterprises or industries

Accrual accounting is used because

1 a.cash flows are considered less important

2 b.it provides a better indication of ability to generate cash flows than the cash basis

3 c.it recognizes revenues when cash is received and expenses when cash is paid

4 d None of these answers are correct

Which of the following is true with regard to the characteristics of the International Accounting Standards Board (IASB)?

1 a.A unanimous vote by all Board members is needed to issue a new

International Financial Reporting Standard (IFRS)

2 b.The IASB consists of 16 part-time members

3 c.Each member of the IASB must come from a different country

4 d.IASB members are appointed for 5-year renewable terms

The process of identifying, measuring, analyzing, and

communicating financial information needed by management to plan, evaluate, and control an organization’s operations is called

1 a.financial accounting

2 b.managerial accounting

3 c.tax accounting

4 d.auditing

What is due process in the context of standard setting at the IASB?

1 a.IASB operates in full view of the public

2 b.Public hearings are held on proposed accounting standards

3 c.Interested parties can make their views known

4 d.All of these answers are correct

The International Accounting Standards Board (IASB) follows specific steps in developing International Financial Reporting Standards (IFRS) Place the following steps in the correct order: 1)Research and analysis conducted; preliminary views of pros and cons issued; 2)Topics identified and placed on the agenda; 3)Board evaluates responses, final standard issued;4)Public hearing on proposed standard; 5)Board evaluates research, issues exposure draft

1 a.1, 2, 3, 4, 5

2 b.2, 1, 4, 5, 3

3 c.1, 2, 5, 4, 3

4 d.1, 2, 5, 3, 4

Which of the following statements is true?

1 a.Over 115 countries require or permit use of International Financial

Reporting Standards (IFRS)

2 b.Canada is the most significant holdout from use of International Financial Reporting Standards (IFRS)

3 c.Nearly 50% of investors in the United States own foreign securities, either directly or through funds

4 d.To facilitate efficient capital allocation, investors need relevant information stated in a common currency

Which of the following is not a major challenge facing the

accounting profession?

1 a.Nonfinancial measurements

2 b.Timeliness

3 c.Accounting for hard assets

4 d.Forward-looking information

The purpose of the International Accounting Standards Board is

to

1 a.issue enforceable standards which regulate the financial accounting and reporting of multinational corporations

2 b.develop a uniform currency in which the financial transactions of

companies through-out the world would be measured

3 c.develop a single set of high-quality IFRS

4 d.arbitrate accounting disputes between auditors and international

companies

The international financial reporting environment includes

challenges in financial reporting including all of the following except:

1 a.Political environment

2 b.Expectations gap

3 c.Decision-usefulness

4 d.Ethics

How does accounting help the capital allocation process attract investment capital?

1 a.Provides timely, relevant information

2 b.Encourages innovation

3 c.Promotes productivity

4 d.Provides timely, relevant information and encourages innovation

Significant financial reporting issues facing global financial

reporting and efficient capital allocation include all of the following except:

1 a.How to provide backward-looking information

2 b.How to report nonfinancial measures such as customer satisfaction

3 c.How to provide forward-looking information

4 d.How to provide real-time financial statement information

The following published documents are part of the "due process" system used by the IASB in the evolution of a typical IASB

Standard: 1)Exposure Draft; 2)IASB Standard; 3)Discussion

Paper The chronological order in which these items are released

is as follows:

1 a.1, 2, 3

2 b.1, 3, 2

3 c.2, 3, 1

4 d.3, 1, 2

The IASB's standard-setting structure includes all of the following except:

1 a.IFRS Interpretations Committee

2 b.IFRS Advisory Council

3 c.IFRS Comparison Committee

4 d.Trustees

Non-financial measurements include all of the following except:

1 a.backlog information

2 b.customer satisfaction indexes

3 c.reject rates on goods purchased

4 d.All of the choices are non-financial measurements