AC305 Chapter 1 Homework

Foreign companies listed on U.S. exchanges are required to issue statements that comply with U.S. GAAP. True False

False

IFRS is more "rules-based" in its approach to standards than U.S. GAAP. True False

False

International Financial Reporting Standards preceded International Accounting Standards. True False

False

The rules-based standards of IFRS are more detailed than the simpler, principles-based standards of GAAP. True False

False

Accounting principles are "generally accepted" only when I. an authoritative accounting rule-making body has established it in an official pronouncement. II. a given practice has been accepted as appropriate because of its universal application. I only. II only. I or II. Neither I nor II.

I or II

Financial Accounting Concepts are a major type of pronouncement issued by the FASB (Financial Accounting Standards Board). True False

True

IFRS includes both International Financial Reporting Standards and International Accounting Standards. True False

True

The Codification creates one level of GAAP which is considered authoritative. True False

True

The European Union requires publicly traded member country companies to use IFRS (International Financial Reporting Standards). True False

True

The Financial Accounting Standards Advisory Council (FASAC) consults with the FASB on major policy and technical issues and helps select task force members. True False

True

The standard-setting structure used by the International Accounting Standards Board is very similar to that used by the Financial Accounting Standards Board. True False

True

Which group selects members of the FASB? a) FAF (Financial Accounting Foundation). b) SEC (Securities and Exchange Commission). c) AICPA (American Institute of Certified Public Accountants). d) FASAC (Financial Accounting Standards Advisory Council).

a) FAF (Financial Accounting Foundation).

International Financial Reporting Standards (IFRS) are issued by the: a) IASB (International Accounting Standards Board). b) FASB (Financial Accounting Standards Board). c) EITF (Emerging Issues Task Force). d) SEC (Securities and Exchange Commission).

a) IASB (International Accounting Standards Board).

General-purpose financial statements are prepared primarily for: a) external users. B)internal users. c) auditors. d)government regulators.

a) external users.

The role of the Securities and Exchange Commission (SEC) in the formulation of accounting standards can be best described as a) varied - the SEC relies on FASB to develop standards but gives advice and recommendations to the private sector as needed. b) non-existent. c) it allows the FASB to develop all accounting standards by itself. d) it develops all accounting standards by itself.

a) varied - the SEC relies on FASB to develop standards but gives advice and recommendations to the private sector as needed.

All of the following are true regarding IFRS except: a) The adoption of IFRS by U.S. companies would make it easier to compare them with foreign companies. b) IFRS includes standards referred to as International Auditing Standards (IAS). c) IFRS is more "principles-based" than U.S. GAAP. d) IFRS are developed by the IASB.

b) IFRS includes standards referred to as International Auditing Standards (IAS).

IFRS stands for: a) International Federation of Reporting Services. b) International Financial Reporting Standards. c) Independent Financial Reporting Standards. d) Integrated Financial Reporting Services.

b) International Financial Reporting Standards.

Which of the following was established by the federal government to help develop and standardize financial information presented to stockholders? a) AICPA (American Institute of Certified Public Accountants). b) SEC (Securities and Exchange Commission). c) CAP (Committee on Accounting Procedure). d) FASB (Financial Accounting Standards Board).

b) SEC (Securities and Exchange Commission).

Which of the following is the objective of financial reporting? To provide information: a) about the management and shareholders of an enterprise. b) about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors. c) that defines the process of how and at what cost money is allocated among competing interests. d) used to identify, measure, analyze and communicate financial information needed by management to plan, control and evaluate a company's operations.

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

The mission of the International Accounting Standards Board (IASB) is to a) develop a uniform currency in which the financial transactions of companies throughout the world would be measured. b) develop a single set of high-quality and understandable IFRS for general-purpose financial statements. c) arbitrate accounting disputes between auditors and international companies. d) issue enforceable standards which regulate the financial accounting and reporting of multinational corporations.

b) develop a single set of high-quality and understandable IFRS for general-purpose financial statements.

A common set of accounting standards and procedures are called a) financial accounting standards. b) generally accepted accounting principles. c) objectives of financial reporting. d) statements of financial accounting concepts.

b) generally accepted accounting principles.

The authoritative status of the conceptual framework is as follows. a)It takes precedence over all other authoritative literature. b)It is used when there is no standard or interpretation related to the reporting issues under consideration. c)It has no authoritative status. d) It is not as authoritative as a standard but takes precedence over any interpretation related to the reporting issue.

b)It is used when there is no standard or interpretation related to the reporting issues under consideration.

The major key players on the international side are the: a) IOSCO and the SEC. b) SEC and FASB. c) IASB and IOSCO. d) IASB and FASB.

c) IASB and IOSCO.

The objective of financial reporting identifies ______________ as the primary users for general-purpose financial statements. a) Managers. b) Employees. c) Investors and creditors. d) Regulators (IRS and SEC).

c) Investors and creditors.

Choose the correct statement about GAAP. a) Firms may not restate financial statements previously issued. b) GAAP are laws. c) It is a violation of SEC regulations for publicly traded companies to depart from GAAP. d) Only publicly traded companies must comply with GAAP.

c) It is a violation of SEC regulations for publicly traded companies to depart from GAAP.

Accounting standard-setters use the following process in establishing accounting standards: a) Research, preliminary views, discussion paper, standard. b) Discussion paper, research, exposure draft, standard. c) Research, discussion paper, exposure draft, standard. d) Research, exposure draft, discussion paper, standard.

c) Research, discussion paper, exposure draft, standard.

Which of the following publications is not considered a GAAP document? a) APB Opinions b) FASB Standards c) Statements of Financial Accounting Concepts d) AICPA Research Bulletins

c) Statements of Financial Accounting Concepts

GAAP is comprised of: a) FASB standards, interpretations, and concepts statements. b) FASB financial standards. c) any accounting guidance included in the FASB Codification. d)FASB standards, interpretations, EITF consensuses, and accounting rules issued by FASB predecessor organizations.

c) any accounting guidance included in the FASB Codification.

The objective of general purpose financial reporting adopts an entity perspective, which means that a) financial reporting should be focused on assessing the company's stewardship. b) financial reporting should be focused solely on the needs of the owners. c) companies are viewed as separate and distinct from their owners. d) none of these answer choices are correct.

c) companies are viewed as separate and distinct from their owners.

Which of the following documents is typically issued as part of the due-process activities of the Financial Accounting Standards Board (FASB) for amending the FASB Accounting Standards Codification? a) A proposed staff accounting bulletin. b) A proposed statement of position. c) A proposed accounting research bulletin. d) A proposed accounting standards update.

d) A proposed accounting standards update.

Which of the following would result if there was not set of generally accepted and universally practiced accounting standards? a) It would be almost impossible to prepare statements that could be compared. b) Each company would have to develop its own standards. c) Readers of financial statements would have to familiarize themselves with every company's peculiar accounting and reporting practices. d) All of these answer choices are correct.

d) All of these answer choices are correct.

Which of the following user groups influence the formulation of accounting standards? a) Government. b) Academicians. c) CPAs and accounting firms. d) All of these choices are correct.

d) All of these choices are correct.

The organization that provides implementation guidance within the framework of the Codification to reduce diversity in practice on a timely basis is the a) FASB (Financial Accounting Standards Board). b) AICPA (American Institute of Certified Public Accountants). c) FASAC (Financial Accounting Standards Advisory Council). d) EITF (Emerging Issues Task Force).

d) EITF (Emerging Issues Task Force).

IFRS is comprised of: a) FASB Financial Reporting Standards and International Accounting Standards. b) International Financial Reporting Standards and FASB Financial Reporting Standards. c) International Accounting Standards and International Accounting Interpretations. d) International Financial Reporting Standards, International Accounting Standards, and International Accounting Interpretations.

d) International Financial Reporting Standards, International Accounting Standards, and International Accounting Interpretations.

The FASB is a(n): a) Governmental unit. b) Group of accounting firms. c) International organization. d) Private sector body.

d) Private sector body.

The Financial Accounting Standards Board Accounting Standards Codification a) does not create new GAAP. b) eliminates nonessential information. c) simplifies user access to all authoritative U.S. generally accepted accounting principles. d) all of these answer choices are correct.

d) all of these answer choices are correct.

GAAP stands for: a) governmental auditing and accounting practices. b) generally accepted attest principles. c) government audit and attest policies. d) generally accepted accounting principles.

d) generally accepted accounting principles.

The objective of financial reporting places most emphasis on: a)providing specific guidance related to specific needs. b)reporting on stewardship. c)providing information to individuals who are experts in the field. d)reporting to capital providers.

d)reporting to capital providers.

The first step taken in the establishment of a typical FASB statement is: a) the board Evaluates responses and changes exposure draft if necessary. Final standard is issued. b) the board evaluates the research and public response and issues an exposure draft. c) a public hearing on the proposed standard is held. d) topics are identified and placed on the board's agenda.

d)topics are identified and placed on the board's agenda.