63 test bank for intermediate accounting 14th

Why was it believed that accounting standards that were issued by the Financial Accounting Standards Board would carry more weight.. 63 Free Test Bank for Intermediate Accounting 14th E

63 Test Bank for Intermediate Accounting 14th

Edition by Kieso

Multiple Choice Questions

When making decisions, investors are interested in assessing

1 a.the company’s ability to generate net cash inflows

2 b.management’s ability to protect and enhance the capital providers’

investments

3 c.Both a and b

4 d.the company’s ability to generate net income

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

What is the 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 about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors

4 d.Provide information that excludes claims to the resources

The passage of a new FASB Standards Statement requires the support of

1 a.all Board members

2 b.three Board members

3 c.four Board members

4 d.five Board members

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.a and b above

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 the above

A characteristic of generally accepted accounting principles

include the following:

1 a.common set of standards and principles

2 b.standards and principles are based federal statutes

3 c.acceptance requires an affirmative vote of Certified Public Accountants

4 d.practices that become accepted for at least a year by all industry

members

Which organization is responsible for issuing Emerging Issues Task Force Statements?

1 a.FASB

2 b.CAP

3 c.APB

4 d.SEC

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

Why did the AICPA create the Accounting Principles Board?

1 a.The SEC disbanded the previous standard setting organization

2 b.The previous standard setting organization did not provide a structured set of accounting principles

3 c.No such organization existed in the past

4 d.None of the above

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

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 organizations has been responsible for setting U.S accounting standards?

1 a.Accounting Principles Board

2 b.Committee on Accounting Procedure

3 c.Financial Accounting Standards Board

4 d.All of the above

Which organization was responsible for issuing Accounting

Research Bulletins?

1 a.Accounting Principles Board

2 b.Committee on Accounting Procedure

3 c.The SEC

4 d.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 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

Why was it believed that accounting standards that were issued

by the Financial Accounting Standards Board would carry more weight?

1 a.Smaller membership

2 b.FASB board members are well-paid

3 c.FASB board members must be CPAs

4 d.Due process

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

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 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

Which of the following is a general limitation of "general purpose financial statements"?

1 a.General purpose financial statements may not be the most informative for

a specific enterprise

2 b.General purpose financial statements are comparable

3 c.General purpose financial statements are assumed to present fairly the company's financial operations

4 d.None of the above

Primary users for general-purpose financial statements include

1 a.creditors

2 b.employees

3 c.investors

4 d.both creditors and investors

Which of the following represents a form of communication

through financial reporting but not through financial statements?

1 a.Balance sheet

2 b.President's letter

3 c.Income statement

4 d.Notes to financial statements

5 P27.The process of identifying, measuring, analyzing, and communicating financial information needed by management to plan, evaluate, and control

an organization’s operations is called

What is the relationship between the Securities and Exchange Commission and accounting standard setting in the United

States?

1 a.The SEC requires all companies listed on an exchange to submit their financial statements to the SEC

2 b.The SEC coordinates with the AICPA in establishing accounting

standards

3 c.The SEC has a mandate to establish accounting standards for

enterprises under its jurisdiction

4 d.The SEC reviews financial statements for compliance

Which perspective is adopted as part of the objective of general-purpose financial reporting?

1 a.Decision-usefulness perspective

2 b.Proprietary perspective

3 c.Entity perspective

4 d.Financial reporting perspective

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

Characteristics of generally accepted accounting principles

include all of the following except

1 a.authoritative accounting the rule-making body established a principle of reporting

2 b.standards are considered useful by the profession

3 c.each principle is approved by the SEC

4 d.practice has become universally accepted over time

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

What is the purpose of Emerging Issues Task Force?

1 a.Provide interpretation of existing standards

2 b.Provide a consensus on how to account for new and unusual financial transactions

3 c.Provide interpretive guidance

4 d.Provide timely guidance on select issues

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

1 a.FASB 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 the above

Financial statements in the early 2000s provide 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

63 Free Test Bank for Intermediate Accounting 14th Edition by Kieso Multiple Choice Questions - Page 2

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

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

What is not a reason that accounting standards may differ across countries?

1 a.Governments

2 b.Language

3 c.Culture

4 d.Past Practice

The following 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.Preliminary Views 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

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

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 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 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

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 is doing and what Congress says the accountant is doing

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

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

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

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

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)

Which of the following is not considered a component of generally accepted accounting principles?

1 a.FASB Implementation Guides

2 b.Widely recognized industry practices

3 c.Articles published in CPA journals

4 d.AICPA Accounting Interpretations

What is the purpose of a FASB Staff Position?

1 a.Provide interpretation of existing standards

2 b.Provide a consensus on how to account for new and unusual financial transactions

3 c.Provide interpretive guidance

4 d.Provide timely guidance on select issues

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.b and c

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

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

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

Rule 203 of the Code of Professional Conduct addresses:

1 a.ethical requirements

2 b.financial statements should be based on generally accepted accounting principles

3 c.advertising to obtained clients

4 d.auditing financial statements

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 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

What is not a source of pressure that may influence the

accounting standard setting process?

1 a.Congress

2 b.Lobbyist

3 c.CPA firms

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 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