59 test bank for intermediate accounting reporting and analysis 1st

Interpretations The Securities and Exchange Commission has the legal authority to prescribe accounting principles and reporting practices for 1.. FASB Financial Accounting Standards Boa

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59 Test Bank for Intermediate Accounting Reporting and Analysis 1st

Edition by Wahlen Multiple Choice Questions-Page 1

Which pronouncements are not issued by the FASB?

1. Statements of Financial Accounting Concepts

2. Technical Bulletins

3. Opinions

4. Interpretations

The Securities and Exchange Commission has the legal authority to prescribe accounting principles and reporting practices for

1. all companies issuing publicly traded securities

2. all companies issuing any type of securities

3. all companies

4. all corporations

The FASB Accounting Standards Codification is expected to provide all of the following benefits except

1. reduce the research time necessary to solve an accounting research issue

2. codify authoritative support such as results of academic research

3. provide real-time updates as new standards are issued

4. improve the usability of the authoritative accounting literature

The organization that has legal authority to prescribe accounting principles and reporting practices for all corporations issuing

publicly traded securities within the U.S capital markets is?

1. Accounting Principles Board

2. Securities and Exchange Commission

3. Financial Accounting Standards Board

4. Committee on Accounting Procedure

After formulating a strategic plan what three types of activities will a company engage in?

1. Planning, operating, and selling

2. Investing, operating, and selling

3. Financing, investing, and operating

4. Operating, planning, and financing

What type of FASB Pronouncement were to provide more timely and consistent application guidance and made to narrow and limit revisions of standards?

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2. Statements of Financial Accounting Standards

3. Interpretations

4. None of these choices

The primary reason that financial accounting and managerial

accounting have somewhat different objectives is because they

1. need information in different formats

2. provide information for different decisions

3. need information in different geographic locations

4. need information at different times

How many FASB members are there?

1. 5

2. 7

3. 21

4. 33

Which of the following pronouncements issued by the FASB

provides the lowest level of authoritative support?

1. technical bulletins

2. interpretations

3. statements of financial accounting standards

4. staff positions

Creditors' information needs revolve around all of the following decisions, except

1. extending credit

2. maintaining a credit relationship

3. not extending credit

4. investing in credit instruments

When making decisions, equity investors are interested in

assessing

1. the company's ability to generate cash flows

2. management's ability to increase the capital providers' investments

3. the company's ability to pay dividends

4. All of these choices

What is Financial Reporting?

1. The process of communicating internal accounting information to existing and potential investors, creditors, lenders, and other external decision makers

2. The process of communicating financial accounting information to existing and potential investors, creditors, lenders, and other external decision makers

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3. The process of preparing financial accounting information to existing and potential investors, managers, and employees

4. The process of communicating the strategic plan to existing and potential investors, creditors, lenders, and other external decision makers

The FASB Emerging Issues Task Force issues which of the

following?

1. Statements of Position to influence the development of principles

2. Consensus Positions on the implementation of standards

3. Financial Reporting Releases on guidelines for reporting issues

4. Technical Bulletins on accounting and reporting problems

Which organization has the most legal authority?

1. Financial Accounting Standards Board

2. Accounting Standards Executive Committee

3. Governmental Accounting Standards Board

4. Securities and Exchange Commission

As a potential equity investor, what would you least be interested in

a company prior to making and investment decision?

1. What differentiates them from their competition?

2. Whether they are generating a profit?

3. Whether they have positive cash flows?

4. What are the employee benefits and compensation packages?

Which of the following statements is true?

1. Accounting standard setting began in the United States when the AICPA formed the Committee on Accounting Procedure

2. Accounting standard setting began in the United States when the SEC formed the Committee on Accounting Procedure

3. Accounting standard setting began in the United States when the AICPA formed the Accounting Principles Board

4. Accounting standard setting began in the United States when the FASB

formed the Committee on Accounting Procedure

The Financial Accounting Foundation (FAF) is the parent

organization of the which?

1. AICPA (American Institute of Certified Public Accountants)

2. AAA (American Accounting Association)

3. SIFMA (Securities Industry and Financial Markets Association)

4. FASB (Financial Accounting Standards Board)

The Securities Exchange Act of 1934 established extensive

reporting requirements for listed companies Which is not a

commonly required report?

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1. Form 10-Q An extensive quarterly report, including financial statements.

2. Form S-2 A registration statement

3. Form 10-K An extensive annual report, including financial statements

4. Form 8-K A report used to describe significant events that may affect the company

Concerning FASB membership, which statement is not true?

1. Not all members are CPAs from public practice

2. All members are full time and fully paid

3. All members are also members of the Financial Accounting Foundation

4. All members must sever organizational ties with their previous employer

Which of the following is not a decision that external stakeholder’s

of a company's financial information would make?

1. whether or not to extend credit to the company

2. whether or not to hold the company's stock

3. whether or not the company should add a new product line

4. whether or not to ask for an increase in employees' benefits during union contract negotiations

What type of FASB Pronouncement carried the highest authority within GAAP, establishing the methods and procedures required on specific accounting issues?

1. Staff Positions

3. Statements of Financial Accounting Concepts

Information asymmetry problems arise because management’s behavior

1. may be to enhance the owners' financial interests at the expense of their self-interests

2. will always follow classic agency law

3. may not always be in the best interests of the owners (stockholders)

4. as agents will always be in the best interests of the owners (stockholders)

What type of FASB pronouncements refined GAAP by clarifying conflicting or unclear issues relating to previously issued

standards?

1. Staff Positions

3. Interpretations

4. Other Pronouncements

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Which of the following is NOT a major standard-setting body

responsible for the establishment of U.S and international GAAP Generally Accepted Accounting Principles)?

1. SEC (Securities Exchange Commission)

2. PCAOB (Public Company Accounting Oversight Board)

4. IASB (International Accounting Standards Board)

What is the relationship between the Securities and Exchange

Commission and accounting standard setting in the United States?

1. The SEC requires all companies listed on an exchange to submit their

financial statements to the SEC

2. The SEC coordinates with the FASB in establishing accounting standards

3. The SEC has a mandate to establish accounting standards for corporations within the U.S capital markets

4. The SEC reviews financial statements for compliance with U.S GAAP or IFRS

Going from 1938 to the present, which is the correct sequence of accounting rule-making bodies?

2. CAP-FASB-APB

Which of the following is an internal stakeholder of a company's financial information?

1. company treasurer

2. stockholder in the company

3. bank lending to the company

4. union

While formally the SEC is charged with the responsibility for

establishing accounting principles to be followed in the preparation

of SEC filings, the impact of the SEC generally has been

1. in its assistance to Congress with the development of tax law

2. in guiding the development of stock exchanges

3. ineffective in controlling foreign corporations and investors

4. its informal review and approval of standards developed in the private sector prior to their release

Which of the following statements is true? In order to remain

impartial, the FASB discourages public input during development of standards

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1. FASB accounting standards are the result of clearly defined objectives, an integrated body of theory, and the known consequences of actions

2. The FASB deliberates and issues accounting standards only after receiving a formal letter of request from the SEC

3. Accounting standards, which reflect social decisions, are often the result of compromise

Three major organizations in the private and public sector develop U.S and international GAAP They include all of the following

except the

1. EU (European Union)

2. SEC (Securities and Exchange Commission)

59 Free Test Bank for Intermediate Accounting

Reporting and Analysis 1st Edition by Wahlen Multiple Choice Questions-Page 2

What is the name of the parent organization to the International Accounting Standards Board?

2. IFRS (International Financial Reporting Standards)

4. IFRIC (International Financial Reporting Standards Interpretations Committee)

Which statement measures and reports the financial results of a company’s performance for a period of time?

1. income statement

2. balance sheet

3. statement of cash flows

4. statement of financial position

Which of the following transactions would be reported in the cash flows from investing activities section in the statement of cash flows for the Harlem Company?

1. Harlem sold a piece of land for $600,000

2. Harlem borrowed $3,000,000

3. Harlem issued common stock for $700,000 to investors

4. Harlem paid a cash dividend to its stockholders

The AICPA Code of Professional Conduct includes which of the following principles?

1. Professionalism

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2. Conservatism

3. Objectivity

4. Quality

Auditors face ethical issues because

1. GAAP permits various standards to be used to produce profits

2. auditors may express an opinion that may cause difficulty to employees of a company

3. auditors may not discover insider trading

4. GAAP does not permit fraud

Notes to financial statements provide

1. discussions that further explain items shown in the financial statements

2. comparative financial information with the previous year

3. management's discussions about plans for the future

4. the report of the independent auditors

The Management Discussion and Analysis section of the financial statements discusses what important topics?

1. Business risk factors associated with the company

2. Management provides insight into key decisions implemented during that time period and future developments

3. Management utilizes this area as a forum to discuss strategic motives

Which of the following is NOT a major standard-setting body

responsible for the establishment of U.S and international GAAP (Generally Accepted Accounting Principles)?

1. SEC (Securities Exchange Commission)

2. PCAOB (Public Company Accounting Oversight Board)

The correct presentation of the income statement is?

1. Revenues - expenses + gains - losses = Net Income

2. Revenues-expenses = Net income - losses + gains

3. Revenues- losses - expenses + gains = Net Income

4. Revenues + gains - losses -expenses = Net Income

Which of the following documents includes all of the accounting standards?

1. Regulation S-X

2. The FASB Conceptual Framework

4. none of these

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Assume that authoritative support regarding GAAP for a particular transaction is needed A correct hierarchy of authority to be followed (highest, second, third) would be

1. FASB Statements, AICPA Accounting Interpretations, FASB Technical

Bulletins

2. FASB Technical Bulletins, AICPA Accounting Interpretations, FASB

Statements

3. AICPA Accounting Interpretations, FASB Technical Bulletins, FASB

Statements

4. FASB Statements, FASB Technical Bulletins, AICPA Accounting

Interpretations

Which Principle of the AICPA Code of Professional Conduct is: As a member one should continually strive to improve competence,

observe all ethical standards and provide services to the best of their ability?

1. The Public Interest

2. Responsibilities

3. Scope and Nature of Services

The four major financial statements of a corporation consist of the

1. income statement, balance sheet, statement of cash flows, and statement of changes in stockholders' equity

2. balance sheet, statement of cash flows, statement of retained earnings, and income statement

3. income statement, statement of cash flows, statement of financial flexibility, and balance sheet

4. statement of cash flows, balance sheet, income statement, and statement of capital equity

What is the responsibility of the International Accounting Standards Board?

1. IASB promotes uniform accounting standards among international countries

2. IASB settles accounting disputes between auditors and international

companies

3. IASB issues standards which regulate the financial accounting and reporting

of multinational

4. corporations and then enforces through legal channels

5. IASB is to develop a uniform currency in which the financial transactions would be measured

The accounting equations is

1. Assets + Liabilities = Stockholder's Equity

2. Assets -Liabilities = Stockholder’s Equity

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3. Assets = Liabilities - Stockholder’s Equity

4. Assets + Stockholders' Equity = Liabilities

Contributions that are paid to owners would affect both the

1. balance sheet and statement of cash flows

2. balance sheet and income statement

3. income statement and statement of changes in equity

4. income statement and statement of cash flows

The agreement in 2002 by the FASB and IASB to develop high

quality, compatible accounting standards that could be used by both domestic and cross-border financial reporting was called the

1. International Accounting Standards agreement

2. Financial Accounting Standards Board Global agreement

3. Norwalk agreement

4. United GAAP agreement

The stated principles of the AICPA Code of Professional Conduct do NOT include

1. Integrity

2. Honesty

3. Objectivity and Independence

4. Responsibilities

Which Principle of the AICPA Code of Professional Conduct is:

Members should perform all of their professional responsibilities with the highest sense of integrity possible This ensures trust and public confidence in the profession?

1. Scope and Nature of Services

2. Due Care

3. Integrity

For foreign companies that issue securities in the United States to raise capital, the SEC

1. requires these companies to file form 20-F which reconciles certain amounts reported in their financial statements with US GAAP

2. accepts all financial statements that use IFRS

3. accepts only financial statements that are fully stated under US GAAP

4. accepts financial statements from foreign companies that use

English-language IFRS without exception

What financial statement is considered the cornerstone of financial reporting?

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1. income statement

2. statement of cash flows

3. statement of retained earnings

4. balance sheet

Certain U.S accounting standards have been, and will be,

amended to aid in the international convergence process The

process of changing these standards usually involves

1. a short deliberation followed by a vote of the U.S Congress

2. acceptance of the change by the Internal Revenue Service

3. rejecting all existing standards and developing an entirely new concept

4. selecting the best standard between existing U.S and international standards

Which Principle of the AICPA Code of Professional Conduct is: A member should be free from conflicts of interest and be objective A member should be free of bias and provide auditing and attestation services in an independent manner?

2. Integrity

3. Responsibilities

Unethical actions include which of the following?

1. polluting lakes and streams

2. overcharging on government contracts

3. securities fraud

The FASB Accounting Standards Codification includes six levels or components which of these is not a level?

1. Area

2. Topic

3. Sub-paragraphs

4. Paragraphs

Conversion to IFRS reporting by all U.S companies would be best accomplished with a transition plan for all of the following reasons except

1. it would have to be a multi-year process

2. it needs to be an orderly process with a minimum of cost and disruption to the participants

3. certain IFRS need further improvement through continued convergence efforts

4. careful planning would enable maximum manipulation of the IFRS for the financial benefit of the United States

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