91 test bank for intermediate accounting 13th edition kieso

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91 Test Bank for Intermediate Accounting 13th Edition Kieso

True-False Questions

Financial Accounting Concepts set forth fundamental

objectives and concepts that are used in developing future standards of financial accounting and reporting

The standard-setting structure used by the International

Accounting Standards Board is very similar to that used by the Financial Accounting Standards Board

Accounting standards are now less likely to require the

recording or disclosure of fair value information due to its

The International Accounting Standards Board issues

International Financial Reporting Standards

1. True

2 False

The AICPA’s Code of Professional Conduct requires that

members prepare financial statements in accordance with

generally accepted accounting principles

1. True

2 False

The Securities and Exchange Commission appointed the

Committee on Accounting Procedure

1. True

2 False

Currently, both U.S GAAP and the International Financial

Reporting Standards are acceptable for international use

1. True

2 False

The expectations gap is caused by what the public thinks

accountants should be doing and what accountants think they can do

1. True

2 False

International Accounting Standards are no longer considered part of iGAAP because they have been replaced by International Financial Reporting Standards

International Financial Reporting Standards preceded

International Accounting Standards

1. True

2 False

An effective process of capital allocation promotes productivity and provides an efficient market for buying and selling

securities and obtaining and granting credit.

Financial reports in the early 21st century did not provide any information about a company’s soft assets

One weakness of accrual accounting is that it does not provide

a good indication of the enterprise's present and continuing ability to generate favorable cash flows

Financial accounting is the process of identifying, measuring, analyzing, and communicating financial information needed by management to plan, evaluate, and control an organiza-tion's operations

1. True

2 False

iGAAP includes both International Financial Reporting

Standards and International Accounting Standards

1. True

2 False

Multiple Choice Questions-Page 1

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

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

What is a major objective of financial reporting?

1. a.Provide information that is useful to the Internal Revenue Service in determining the amount of federal income taxes payable

2 b.Provide information that is useful in assessing the amounts and timing of revenue

3 c.Provide information that is comprehensible only by sophisticated investors

4 d.Provide information that clearly portrays the economic resources of an enterprise

Financial statements in the early 2000s provide information related to

1. a.Accounting Principles Board

2 b.Committee on Accounting Procedure

3 c.The SEC

4 d.AICPA

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

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

Which of the following is not a major challenge facing the

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 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

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

Accounting principles are "generally accepted" only when

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

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

2 b.income statement.

3 c.statement of cash flows

4 d.statement of retained earnings

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

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

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.

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

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

The role of the Securities and Exchange Commission in the formulation of accounting principles can be best described as

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.

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

What is a 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 assess the amounts, timing, and uncertainty of perspective cash receipts

4 d.Provide information that excludes claims to the resources

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

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

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

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

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

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

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.

65 Free Test Bank for Intermediate Accounting 13th

Edition 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

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

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

Exposure Draft Q#SStatement of Financial Accounting

Standards Q#SPreliminary Views The chronological order in which these items are released is as follows:

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

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

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

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

FASB Technical Bulletins

1. a.are similar to FASB Interpretations in that they establish enforceable standards underthe 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

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

Rule 203 of the Code of Professional Conduct address:

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 IASB's standard-setting structure includes all of the

following except

1. a.Standing Interpretations Committee

2 b.Standards Advisory Council

3 c.Standards Comparison Committee

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

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

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

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

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

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

The purpose of the International Accounting Standards Board is

through-3 c.promote uniform accounting standards among countries of the world

4 d.arbitrate accounting disputes between auditors and international companies

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 American Institute of Certified Public Accountants (AICPA) continues to be involved in all of the following except

1. a.developing and enforcing professional ethics

2 b.developing auditing standards

3 c.providing professional education programs

4 d.all of the above

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