102 test bank for intermediate accounting 15th edition

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102 Test Bank for Intermediate Accounting 15th Edition

True False Questions - Free Text Questions - Multiple Choice

Questions

True False Questions

Financial reports in the early 21st century did not provide any

information about a company’s soft assets (intangibles)

1 True

2 False

GAAP is a product of careful logic or empirical findings and is

not influenced by political action

1 True

2 False

Financial accounting is the process of identifying, measuring,

analyzing, and communicating financial information needed by management to plan, evaluate, and control a company’s operations

The standard-setting structure used by the International

Accounting Standards Board is very similar to that used

by the Financial Accounting Standards Board

1 True

2 False

Ethical issues in financial accounting are governed by the

AICPA

1 True

2 False

International Financial Reporting Standards preceded

International Accounting Standards

1 True

2 False

The expectations gap is due to the difference between what the

public thinks accountants should do and what

accountants think they can do

1 True

2 False

Accounting standards are now less likely to require the

recording or disclosure of fair value information

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 rules-based standards of IFRS are more detailed than the

simpler, principles-based standards of U.S GAAP

1 True

2 False

IFRS includes both International Financial Reporting Standards

and International Accounting Standards

1 True

2 False

The Public Company Accounting Oversight Board has oversight

and enforcement authority and establishes auditing and independence standards and rules

U.S companies that list overseas are required to use

International Financial Reporting Standards, issued by the International Accounting Standards Board

1 True

2 False

The passage of a new FASB Accounting Standards Update

requires the support of five of the seven board members

1 True

2 False

Statements of Financial Accounting Concepts set forth

fundamental objectives and concepts that are used by the FASB in developing future standards of financial

accounting and reporting

1 True

2 False

The Securities and Exchange Commission appointed the

Committee on Accounting Procedure

1 True

2 False

Financial statements are the principal means through which a

company communicates its financial information to those outside it

1 True

2 False

Users of financial reports of a company use the information

provided by these reports to make their capital allocation decisions

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

1 True

2 False

Users of financial accounting statements have both coinciding

and conflicting needs for information of various types

1 True

2 False

The internal control standards applicable to Sarbanes–Oxley

(SOX) apply only to large public companies listed on U.S exchanges

1 True

2 False

The objective of financial reporting is to report the plans made

by a company to improve the productivity of its

employees

1 True

2 False

Investors are interested in financial reporting because it

provides information that is useful for making decisions

1 True

2 False

Multiple Choice Questions - Page 1

Characteristics of generally accepted accounting principles

include all of the following except

1 a.authoritative accounting that the rule-making body has established as 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

Accrual accounting is used because

1 a.cash flows are considered less important

2 b.it provides a better indication of a company’s 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 answer choices are correct

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

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

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

Which of the following helps in determining whether a business

thrives?

1 a.Markets

2 b.Free enterprise

3 c.Competition

4 d.All of these answer choices are correct

The passage of a new FASB Accounting Standards Update

requires the support of

1 a.seven Board members

2 b.three Board members

3 c.four Board members

4 d.five Board members

Which organization was responsible for issuing Accounting

Research Bulletins?

1 a.The Accounting Principles Board

2 b.The Committee on Accounting Procedure

3 c.The SEC

4 d.The FASB

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

FASB?

1 a.The 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 answer choices are correct

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

Which organization is responsible for issuing Emerging Issues

Task Force Statements?

1 a.a common set of standards and principles

2 b.standards and principles are based a 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

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

Primary users for general-purpose financial statements include

1 a.creditors

2 b.employees

3 c.investors

4 d.both creditors and investors

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

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 portrays 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

Which of the following is related to an effective capital

allocation?

1 a.Promoting productivity

2 b.Encouraging innovation

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

4 d.All of these answer choices are correct

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 answer choices are correct

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

Which perspective is adopted as a part of the objective of

general-purpose financial reporting?

1 a.A decision-usefulness perspective

2 b.A proprietary perspective

3 c.An entity perspective

4 d.A financial reporting perspective

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 organizations has been responsible for

setting U.S accounting standards?

1 a.The Accounting Principles Board

2 b.The Committee on Accounting Procedure

3 c.The Financial Accounting Standards Board

4 d.All of the answer choices are correct

Which of the following is not a user of financial reports?

1 a.Creditors

2 b.Government agencies.

3 c.Unions

4 d.All of these are users

Which of the following is true of the Financial Accounting

Standards Board

1 a.It has issued a series of pronouncements entitled Auditing Standards Updates

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

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

4 d.The members of the FASB are appointed by the Financial Accounting Foundation

Which of the following is a requirement for an accounting

principle to be called "generally accepted"?

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

pronouncement

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

3 c.An authoritative accounting rule-making body has established it and it has been accepted because of its universal application

4 d.None of the answer choices are correct

How does accounting help the capital allocation process attract

investment capital?

1 a.By providing timely, relevant information

2 b.By encouraging innovation

3 c.By promoting productivity

4 d.By providing timely, relevant information and by encouraging innovation

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 answer choices are correct.

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

The role of the Securities and Exchange Commission in the

formulation of accounting principles can be best

1 a.financial accounting standards

2 b.generally accepted accounting principles

3 c.objectives of financial reporting

4 d.statements of financial accounting concepts

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 answer choices are correct

Which of the following will be of interest to investors in

decision-making?

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

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

investments

3 c.Both assessing the company’s ability to generate net cash inflows and assessing management’s ability to protect and enhance the capital provider’s investments

4 d.Assessing the company’s ability to collect debts

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.The FASB board members were well-paid

3 c.The FASB board members were CPAs

4 d.Due process

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 not comparable

3 c.General purpose financial statements do not fairly present a company's financial operations

4 d.None of the answer choices are correct

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

4 d.Forward-looking information.

72 Free Test Bank for Intermediate Accounting 15th

Edition by Kieso Multiple Choice Questions - Page 2

Which of the following organizations have committed to

develop high-quality, compatible accounting standards that could be used for domestic and cross-border

financial reporting

1 a The Financial Accounting Standards Board (FASB) and the International

Organization of Securities Commission (IOSCO)

2 b The 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)

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

accounting standard setting?

1 a.Accounting standards that are not truly generally accepted

2 b.Individuals may influence the standards

3 c.User groups become active

4 d.The FASB delegates its authority to elected officials

The following are part of the "due process" system used by the

FASB in the evolution of a typical FASB Accounting

Standards Update: 1.Exposure Draft; 2.FASB Accounting Standards Update; 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

The purpose of Statements of Financial Accounting Concepts is

to

1 a.establish GAAP

2 b.modify or extend an existing FASB Accounting Standards Update

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

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

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

following except

1 a the Standing Interpretations Committee

2 b the Standards Advisory Council

3 c the Standards Comparison Committee

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

What would be an advantage of having all countries adopt and

follow the same accounting standards?

1 a.Agreement