40 test bank for intermediate accounting principles and analysis 2nd

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40 Test Bank for Intermediate Accounting Principles and Analysis 2nd

Edition by Warfield

Multiple Choice Questions

One 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

Accounting principles are "generally accepted" only when

1 a.an authoritative accounting rule-making body has established it in an official pro-nouncement

2 b.it has been accepted as appropriate because of its universal application

3 c.both a and b

4 d.neither a nor b

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 the above

An organization that has not published accounting standards is the

1 a.American Institute of Certified Public Accountants

2 b.Securities and Exchange Commission

3 c.Financial Accounting Standards Board

4 d.All of these have published accounting standards

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

Financial accounting standard-setting in the United States

1 a.can be described as a social process which reflects political actions of various interested user groups as well as a product of research and logic

2 b.is based solely on research and empirical findings

3 c.is a legalistic process based on rules promulgated by governmental agencies

4 d.is democratic in the sense that a majority of accountants must agree with

a standard before it becomes enforceable

A common set of accounting standards and procedures are

called

1 a.financial accounting standards

2 b.generally accepted accounting principles

3 c.objectives of financial reporting.

4 d.statements of financial accounting concepts

FASB Technical Bulletins

1 a.are similar to FASB Interpretations in that they establish enforceable standards under the AICPA's Code of Professional Ethics

2 b.are issued monthly by the FASB to deal with current topics

3 c.are not expected to have a significant impact on financial reporting in general and provide guidance when it does not conflict with any broad fundamental accounting principle

4 d.were recently discontinued by the FASB because they dealt with

specialized topics having little impact on financial reporting in general

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

The most significant current source of generally accepted

accounting principles is the

1 a.AICPA

2 b.SEC

3 c.APB

4 d.FASB

Which of the following is not a part of generally accepted

accounting principles?

1 a.FASB Interpretations

2 b.CAP Accounting Research Bulletins

3 c.APB Opinions

4 d.All of these are part of generally accepted accounting principles

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

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

Statement of Financial Accounting Standards: 1.Exposure Draft; 2.Statement of Financial Accounting Standards; 3.Discussion Memorandum; 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 Financial Accounting Standards Board (FASB) was proposed

by the

1 a.American Institute of Certified Public Accountants

2 b.Accounting Principles Board.

3 c.Study Group on the Objectives of Financial Statements

4 d.Special Study Group on establishment of Accounting Principles (Wheat Committee)

The most authoritative category of generally accepted accounting principles includes all of the following except

1 a.Accounting Research Bulletins

2 b.APB Opinions

3 c.FASB Standards

4 d.FASB Technical Bulletins

The purpose of Statements of Financial Accounting Concepts is

to

1 a.establish GAAP

2 b.modify or extend the existing FASB Standards Statement

3 c.form a conceptual framework for solving existing and emerging problems

4 d.determine the need for FASB involvement in an emerging issue

Which of the following organizations has not been instrumental in the development of financial accounting standards in the United States?

1 a.AICPA

2 b.FASB

3 c.IASB

4 d.SEC

Financial statements in the early 2000s provide information

related to

1 a.non-financial measurements

2 b.forward-looking data

3 c.hard assets (inventory and plant assets)

4 d.none of these

The role of the Securities and Exchange Commission in the

formulation of accounting principles can be best described as

1 a.consistently primary

2 b.consistently secondary

3 c.sometimes primary and sometimes secondary

4 d.non-existent

Generally Accepted Accounting Principles include: 1) FASB

Technical Bulletins, 2) APB Opinions, and 3) Widely-accepted industry practices These three items rank from most authoritative

to least authoritative as follows:

1 a.1, 2, 3

2 b.1, 3, 2

3 c.2, 1, 3

4 d.2, 3, 1

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

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

Members of the Financial Accounting Standards Board are

1 a.employed by the American Institute of Certified Public Accountants (AICPA)

2 b.part-time employees

3 c.required to hold a CPA certificate

4 d.independent of any other organization

Generally accepted accounting principles

1 a.include detailed practices and procedures as well as broad guidelines of general application

2 b.are influenced by pronouncements of the SEC and IRS

3 c.change over time as the nature of the business environment changes

4 d.all of these

The Financial Accounting Standards Board

1 a.has issued a series of pronouncements entitled Statements on Auditing Standards

2 b.was the forerunner of the current Accounting Principles Board

3 c.is the arm of the Securities and Exchange Commission responsible for setting financial accounting standards

4 d.is appointed by the Financial Accounting Foundation

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

1 a.balance sheet

2 b.income statement

3 c.statement of cash flows

4 d.statement of retained earnings

The body that has the power to prescribe the accounting

practices and standards to be employed by companies that fall under its jurisdiction is the

1 a.FASB

2 b.AICPA

3 c.SEC

4 d.APB

Companies that are listed on a stock exchange are required to submit their financial statements to the

1 a.AICPA

2 b.APB

3 c.FASB

4 d.SEC

Which of the following is not a publication of the FASB?

1 a.Statements of Financial Accounting Concepts

2 b.Accounting Research Bulletins

3 c.Interpretations

4 d.Technical Bulletins

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.promote uniform accounting standards among countries of the world

4 d.arbitrate accounting disputes between auditors and international

companies

The Governmental Accounting Standards Board

1 a.oversees the activities of the SEC

2 b.is a private-sector body, which addresses state and local governmental reporting issues

3 c.is a division of the Securities and Exchange Commission, which oversees the corpo-rate accounting in annual reports

4 d.was terminated when the Financial Accounting Standards Board was created

The major distinction between the Financial Accounting

Standards Board (FASB) and its predecessor, the Accounting Principles Board (APB), is

1 a.the FASB issues exposure drafts of proposed standards

2 b.all members of the FASB are fully remunerated, serve full time, and are independent of any companies or institutions

3 c.all members of the FASB possess extensive experience in financial reporting

4 d.a majority of the members of the FASB are CPAs drawn from public practice

The purpose of the Emerging Issues Task Force is to

1 a.develop a conceptual framework as a frame of reference for the solution

of future problems

2 b.lobby the FASB on issues that affect a particular industry

3 c.do research on issues that relate to long-term accounting problems

4 d.issue statements which reflect a consensus on how to account for new and unusual financial transactions that need to be resolved quickly

In the House of GAAP, is the following on the highest level of authoritative status (meaning among the most authoritative)? FASB StatementFASB Statement; FASBof Financialof Financial; TechnicalAccountingFASBAccounting;

BulletinStandardsInterpretationConcepts

1 a.YesYesYesYes

2 b.YesYesYesNo

3 c.NoYesNoNo

4 d.NoYesYesNo

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

The Financial Accounting Foundation

1 a.oversees the operations of the FASB

2 b.oversees the operations of the AICPA

3 c.provides information to interested parties on financial reporting issues

4 d.works with the Financial Accounting Standards Advisory Council to provide informa-tion to interested parties on financial reporting issues

The Governmental Accounting Standards Board's main purpose

is to develop standards for

1 a.the General Accounting Office

2 b.the Federal government

3 c.state and local government

4 d.the Internal Revenue Service

Which of the following publications does not qualify as a

statement of generally accepted accounting principles?

1 a.Statements of financial standards issued by the FASB

2 b.Accounting interpretations issued by the FASB

3 c.APB Opinions

4 d.Accounting research studies issued by the AICPA

Whether a business is successful and thrives is determined by

1 a.markets

2 b.free enterprise

3 c.competition

4 d.all of these

The Financial Accounting Standards Board employs a "due process" system which

1 a.is an efficient system for collecting dues from members

2 b.enables interested parties to express their views on issues under consideration

3 c.identifies the accounting issues that are the most important

4 d.requires that all accountants must receive a copy of financial standards