ACCT 5305 QUIZ QUESTIONS

In the following Code of Professional Conduct reference, which number refers to the "section" being applied? ET 1.200.001 a. .200 b. 1 c. The section number is not shown d. .001

.001

Which of the following references would you expect would govern "acts discreditable" for "members in business"? a. ET 1.400.001 b. ET 2.400.001 c. ET 3.400.001 d. None of the above

ET 2.400.001

AICPA auditing standards use which of the following terms to indicate an "unconditional" responsibility of an auditor? a. Must b. Should c. Presumptively mandatory d. Required reading

Must

The AICPA's Auditing Standards Board issues ___, which are then organized into sections of the professional standards referred to as AU-Cs. a. Statements on Auditing Standards (SAS) b. Auditing Standards Board Issues (ASBs) c. Auditing Standards d. Communications (ASC) e. Auditing Standards (AS)

Statements on Auditing Standards (SAS)

Which bound edition should a researcher consult if the researcher is preparing current-period financial statements and only wants to perform research involving guidance that is currently applicable? (Assume the researcher is not interested in educational annotations and cross-referencing)

The Blue Book

SFFAS No. 1 refers to a standard issued by which of the following standard setters?

The FASAB

Board members of the IASB are appointed by which of the following? a. The IFRS Foundation's Trustees b. The IFRS Foundation's Trustees c. The IFRS Advisory Council d. The IFRS Foundation's Monitoring Board

The IFRS Foundation's Trustees

Which bound edition should a researcher consult if the researcher is looking for guidance that has been issued but has a future-period effective date? (Assume the researcher is not interested in educational annotations and cross-referencing) a. The Yellow Book b. The Green Book c. The Preface d. The Red Book e. The Blue Book

The Red Book

Which of the following reflects the correct chronological order of historical and current standard setters? a. The SEC was first granted authority, then the Committee on Accounting Procedure (CAP), then the Accounting Principles Board (APB), and now the Financial Accounting Standards Board (FASB) b. APB then the SEC, then the CAP, and now FASB c. SEC, then APB, then the CAP, and now FASB d. CAP was first granted authority, then the SEC, then the APB, and now FASB

The SEC was first granted authority, then the Committee on Accounting Procedure (CAP), then the Accounting Principles Board (APB), and now the Financial Accounting Standards Board (FASB)

Which organization has the authority to determine whether IFRS is adopted for use in the U.S.? a. The American Institute of Certified Public Accountants (AICPA) b. The IFRS Advisory Council c. The U.S. Securities and Exchange Commission (SEC) d. The IFRS Foundation's Monitoring Board e. The U.S. Financial Accounting Standards Board (FASB)

The U.S. Securities and Exchange Commission (SEC)

____ is the authoritative source of governmental auditing standards. In other words, governmental auditing standards are found in this source/document. a. The GASB Codification (or GARS Online) b. The Yellow Book c. The FASB Codification d. The FASAB Handbook

The Yellow Book

Where should a researcher go first to find guidance on present value measurements? a. Non-authoritative resources, such as firm guide books b. ASC 825 (Financial Instruments) c. Concepts Statement No. 7 (CON 7) d. ASC 820-10 (Fair Value Measurements), Section 55 (Implementation Guidance)

ASC 820-10 (Fair Value Measurements), Section 55 (Implementation Guidance)

AICPA Code of Professional Conduct identifies adverse interest, advocacy, familiarity, and self-interest as examples of a. Interpretations b. Threats c. Conceptual Frameworks d. Safeguards e. Rules

Threats

When new guidance (that is, an "Accounting Standards Update") is issued by the FASB, it is added to the codification and labeled as a. "Emerging guidance" b. "Transitional content" c. "Newly effective content" d. "Pending content"

"Pending content"

Ideally, companies with sufficient resources will perform accounting research for a transaction at which time? a. After financial statements are issued b. All of the answers are correct c. At the time when, or after, a transaction occurs d. Before a transaction occurs

Before a transaction occurs

To browse to the "Leases" topic, in which "Area" should your research begin? a. Expenses b. Broad transactions c. Assets d. Presentation

Broad transactions

Which of the following search methods does the FASB suggest researchers should use as a starting point when conducting research? (this is also generally the most efficient search method.) a. Mater glossary search b. Keyword/advanced keyword search c. Browse searches d. Cross-reference feature

Browse searches

Within which step of the research process can listening skills be especially crucial? a. Stop and think b. Justify and document your conclusion c. Define the problem d. Understanding the facts/background of the transaction e. Understanding the industry/business

Understanding the facts/background of the transaction

Which of the following statements is false? a. The AICPA Code of Professional Conduct also applies to public company auditors b. Before applying a Conceptual Framework within the AICPA Code of Conduct, a researcher should see whether a more specific rule and interpretation are available that address the research question. c. The PCAOB's Rules of the Board both govern its own conduct as an organization and establish certain requirements for auditor conduct d. Unlike in accounting research, in which accounting positions frequently require documentations, auditing research generally does not require documentation

Unlike in accounting research, in which accounting positions frequently require documentations, auditing research generally does not require documentation

Companies are required to provide extensive disclosure of the methods they use to compute fair value. These narrative disclosures of fair value measurement methods are referred to as ______ disclosures.

Valuation Technique

An accounting issues memo may be necessary when a transaction is which of the following? a. Complex b. Highly material c. Judgmental d. All answers are correct

All answers are correct

Why use a research process? a. Because researchers who do not use a research process often have to make several back-and-forth trips to a supervisor to gather additional facts b. Because a thoughtful research process will allow you to carefully identify and evaluate alternatives c. Because in practice, accounting researchers actually apply a similar process d. All answers are correct

All answers are correct

Within which of the following environments is accounting research performed? a. International companies b. U.S. public companies c. Governmental entities d. U.S. private companies e. All answers are correct

All answers are correct

Which standard setter has authority for financial statements of the NY water authority? a. AICPA b. GASB c. FASAB d. GAO e. FASB

GASB

Based on your understanding of the FASB's Concepts Statements, which of the following statements would you not expect to have come from the Concept Statements? a. Assets are defined as "probable future economic benefits..." b. "The primary objective of general purpose financial reporting is to provide information that is useful to users" c. Expenses are defined as "outflows or other using up of assets or incurrences of liabilities..." d. "An entity shall initially recognize the financial statement effects of a tax position when it is more likely than not..."

"An entity shall initially recognize the financial statement effects of a tax position when it is more likely than not..."

Put the five steps of the revenue process in order. (1) Identify the performance obligations in the contract (2) Recognize revenue when (or as) the entity satisfies a performance obligation (3) Identify the contract with a customer (4) Determine the transaction price (5) Allocate the transaction price to the performance obligations in the contract

(1) = 2 (2) = 5 (3) = 1 (4) = 3 (5) = 4

Chronological order of standard setters *She Can Actually Fail*

(1) SEC (2) CAP (3) APB (4) FASB

The IFRS Interpretation include (choose two): a. IFRS Interpretations Committee (IFRIC) Interpretations, issued since 2001 b. International Financial Reporting Standards (IFRS), issued since 2001 c. Standards Interpretations Committee (SIC) Interpretations, issued pre-2001 d. International Accounting Standards (IAS), issued pre-2001

-IFRS Interpretations Committee (IFRIC) Interpretations, issued since 2001 -Standards Interpretations Committee (SIC) Interpretations, issued pre-2001

Which two of the following measurements would you describe as recurring fair value measurements? a. Measurements of derivative assets b. Impairments of property, plant, and equipment c. Measurements of marketable equity securities d. Measurements of assets and liabilities acquired in a business combination

-Measurements of derivative assets -Measurements of marketable equity securities

Recognition guidance is presented within which section of certain codification topics? a. 15 b. 25 c. 30 d. 32 e. 35 f. 40 g. 55

25

Derecognition guidance is presented within which section of certain Codification topics? a. 15 b. 25 c. 30 d. 32 e. 35 f. 40 g. 55

40

In the following reference, which number reflects the Codification topic? ASC 842-20-25-1 a. 1 b. 25 c. 20 d. 842

842

The standards of the ____ are incorporated by reference into governmental auditing standards. That is, these standards must be followed in addition to governmental auditing standards.

AICPA

The IASB created the IFRS for SMEs publication for which of the following reasons? a. The application of full IFRS can be highly complex b. The IASB acknowledged differences in the use and users of smaller company financial statements c. Small and medium-sized entities generally have fewer resources available for preparing financial statements d. All of the answers are true

All of the answers are true

Which of the following correctly describes the role of national standard setters today? a. In some cases, a country's endorsement process can result in country-specific versions of IFRS, referred to as "jurisdictional" IFRS b. Even in countries that have adopted IFRS, many countries retain their national standard setters c. Some countries require that their national standard setter must "endorse" each new IFRS before it is accepted for use in that country d. All of the statements are true

All of the statements are true

Correct statements about the Codification include which of the following? a. The FASB has designated the Codification as the sole source for its authoritative guidance b. The Codification became effective in 2009 c. The purpose of the Codification is to simplify research d. All statements are true

All statements are true

Which of the following items is measured at fair value for disclosure purposes only? a. Items for which the fair value option has been elected b. Property, plant, and equipment for which an impairment has been recorded c. Marketable equity securities d. An entity's own long-term debt

An entity's own long-term debt

The GASB's original pronouncements (i.e., its standards and interpretations) a. Were superseded by issuance of the GASB Codification b. Are still authoritative (despite the existence of the GASB Codification) c. Were never authoritative d. Have a different level of authority than the GASB

Are still authoritative (despite the existence of the GASB Codification)

Accounting measurement describes which of the following? a. What, when, and how an item should be recorded b. Whether the guidance in a particular topic applies to a given situation c. At what value (i.e., for how much) a financial statement item should be recorded d. How items should be presented on the balance sheet and in financial statement footnotes

At what value (i.e., for how much) a financial statement item should be recorded

A(n) ____ service is a type of assurance service in which an accountant reports on the reliability of an assertion that is the responsibility of a third party.

Attestation

According to the IAS 8 Hierarchy, the IASB's Conceptual Framework for Financial Reporting is a. Nonauthoritative b. Authoritative, and is equally authoritative as standards c. In development and has not yet been issued d. Authoritative, but has a lesser degree of authority than standards

Authoritative, but has a lesser degree of authority than standards

Which standard setter has authority for financial statements of the U.S. Department of Education? a. GASB b. FASAB c. GAO d. AICPA e. FASB

FASAB

Which standard setter has three "sponsor agencies", the Office of Management and Budget, the Department of Treasury, and the Government Accountability Office? a. AICPA b. GASB c. GAO d. FASAB e. FASB

FASAB

The FASAB's authoritative guidance is compiled and codified in which of the following? a. GASB Codification b. Yellow Book c. FASAB Handbook d. FASAB Standards Guide

FASAB Handbook

(T/F): The FASB Codification's guidance applies to governmental entities.

False

To what types of entities does FASAB guidance apply? a. Private companies b. Public companies c. Federal government entities d. State and local governments

Federal government entities

An account receivable is a "contract that conveys...[the right to] receive cash." For this reason, it is considered what?

Financial Asset

The GAO's auditing standards, included within the Yellow Book, apply to which of the following? a. Performance (program) audits only b. Financial statement audits only c. Financial statements and performance audits d. CPA's professional conduct

Financial statements and performance audits

Which of the following statements is not true of foreign private issuers? a. Foreign private issuers issue securities (such as shares of stock) in the U.S. b. Foreign private issuers must present a reconciliation in their financial statements between U.S. GAAP and IFRS c. Foreign private issuers are generally entities with significant foreign ownership, where a significant portion of the executives and directors live outside of the U.S., and where the operations generally take place outside of the U.S. d. Foreign private issuers are permitted to file their financial statements in the U.S. under IFRS

Foreign private issuers must present a reconciliation in their financial statements between U.S. GAAP and IFRS

Guidance issued by the FASAB is referred to as

GAAP for federal entities

The ___ is the organization primarily responsible for establishing governmental auditing standards.

GAO

The FASB codification is an aggregation of many, many accounting standards that have been issued over the course of the past century. Which of the following original standards was not used to populate the codification? a. GASB statements b. FASB statements and interpretation c. AICPA statements of position d. EITF Abstracts e. Accounting Research Bulletins

GASB statements

IFRS Standards are currently set by the

IASB

IFRS Interpretations are currently issued by the

IFRIC

Changes in an asset or liability's fair value may be recorded a. In other comprehensive income (OCI) only b. On the income statement only c. Neither in income or OCI d. In income or OCI, depending on the asset or liability

In income or OCI, depending on the asset or liability

Which of the following is not a step that a researcher might take in order to fully understand a transaction and why it is being entered into? a. Reading transaction documents, including draft or final contracts b. Talking to parties within the organization with knowledge of the transaction c. Considering past company transactions that are similar to this transaction, by reviewing prior memos d. Consider whether peer companies have completed similar transactions, by reviewing peer company 10-Ks e. Interviewing individuals from the SEC to inquire whether they have encountered similar transactions

Interviewing individuals from the SEC to inquire whether they have encountered similar transactions

Before you even begin the research process, the book advocates that researchers begin with a "pre-step". What is this Pre-sep? a. Perform preliminary research within the FASB codification b. Document your initial views on the research question c. Inquire of others within the organization about the transaction d. Learn about the client's business (industry)

Learn about the client's business (industry)

Implementation guidance for IFRS 2 indicates that it "accompanies, but is not part of, IFRS 2." In other words, this implementation guidance is considered a. Integral to the standard b. To have equal authority as IFRS 2 c. Mandatory d. Not integral to the standard

Not integral to the standard

The Financial Accounting Foundation (FAF) a. Oversees the operations and funding of the FASAB b. Oversees the operations and funding of the GAO c. Is a second standard setter for state and local government entities d. Oversees the operations and funding of the GASB

Oversees the operations and funding of the GASB

The International Accounting Standards Committee (IASC)

Preceded the current International Accounting Standards Board (IASB) and was replaced by the IASB in 2001

What type of entity is permitted to apply "Accounting Alternatives" within the codification? a. International companies b. Governmental entities c. Public companies d. Private (nonpublic) companies

Private (nonpublic) companies

Actions that may eliminate a threat or reduce a threat to an acceptable level are referred to as

Safeguards

Both the AICPA and PCAOB state that which of the following terms indicates a presumptively mandatory responsibility?

Should

The AICPA's Auditing and Accounting Guides are considered an interpretive publication. This means that

This guidance has some authority, but to a lesser degree than an auditing standard

The PCAOB's operations are funded primarily by a. Sales of publications b. Voluntary contributions c. Sanctions/fines imposed on public company auditors d. Accounting support fees

Accounting support fees

What measurement attribute generally applies to the allowance for credit losses on an entity's accounts receivable? a. Incurred losses b. Lower of cost or market c. Amount expected to be collected d. Historical cost

Amount expected to be collected

If authoritative U.S. GAAP is not available for a particular research issue, and the researcher looks to IFRS for similar transactions, the researcher is said to be a. Applying the IFRS Framework b. Deferring to the IFRS c. Analogizing to IFRS d. Defaulting to IFRS

Analogizing to IFRS

If a car salesman markets a used car with a $15,000 sticker price and the customer offers to pay $14,000, this could be an example of which type of bias? a. Hindsight bias b. Confirmation bias c. Anchoring and adjustment bias d. Availability bias e. Groupthink bias

Anchoring and adjustment bias

What resource should a researcher consult in order to determine whether a cost should be recorded as an asset or expense? Assume that no topic-specific guidance is available for this issue in the Codification. a. AICPA guidance b. Accounting firm guidance c. IFRS d. Conceptual framework

Conceptual framework

Which of the following features allows researchers to link Codification topics with the original standards that were used to populate the Codification? a. Advanced keyword search b. Cross reference c. The "go to" button, for searching by ASC reference number d. Browse search

Cross reference

Transactions are often complex. A picture of a transaction can often improve a reader's understanding of the relationships and parties involved in an issue. In what section of the issues memo is this picture generally included? a. Conclusion b. Financial statement and disclosure impacts c. Questions/issue(s) d. Facts e. Analysis

Facts

What term is used collectively to refer to financial assets and financial liabilities? a. Marketable contracts b. Financial instruments c. Fair value instruments d. Derivatives

Financial Instruments

Which of the following is not a suggestion that the author makes for drafting effective emails? a. Limit your use of authoritative guidance to one excerpt b. Describe any assumptions you made in performing the research c. Include an excerpt from the authoritative guidance to support your response d. Re-state the research question

Limit your use of authoritative guidance to one excerpt

Which of the following applies to all CPAs, regardless of the type of service being performed? a. The AICPA's rules and regulations b. The AICPA's auditing standards c. The AICPA's consulting services standards d. The AICPA's Code of Professional Conduct

The AICPA's Code of Professional Conduct

In the pre-step of "understanding the business", which of the following is not a source recommended by the book for getting to know a particular industry? a. The Wall Street Journal b. AICPA Audit and Accounting Guides c. Online databases such as Hoovers or IBIS d. A company's 10-k

The Wall Street Journal

Which of the following was not a criticism of the early standard-setting boards, the CAP and APB? a. The boards moved too quickly, issuing guidance that was not sufficiently vetted b. The boards lacked independence, because the members served in only part-time capacity c. The boards did not have a common conceptual framework serving as a foundation for their decisions d. The boards did not respond to emerging issues in a timely manner

The boards moved too quickly, issuing guidance that was not sufficiently vetted

(T/F): Initial measurements are also known as "day 1" measurements. Subsequent measurements are also known as "day 2" measurements.

True

Generally speaking, a researcher should begin his or her search for measurement guidance a. Within the fair value measurement topic (ASC 820) b. Within individual Codification topics: sections 30 and 35 c. With CON 5's definition of measurement attributes d. Within CON 6's definitions of elements

Within individual Codification topics: sections 30 and 35

Which two of the following statements, about the conclusion section of a memo, are true? a. A researcher can choose to include only a single conclusion section, or multiple conclusions (one for each issue) depending on the complexity of the issues b. The conclusion section should bring in additional, new arguments to make the case for the position you select c. The conclusion section should summarize the rationale for the alternative you select d. The conclusion section should include guidance excerpts

-A researcher can choose to include only a single conclusion section, or multiple conclusions (one for each issue) depending on the complexity of the issues -The conclusion section should summarize the rationale for the alternative you select

Identify which of the following statements, regarding the issues section of an issues memo, is/are true. a. All of the researchable questions (or issues) to be addressed in the memo should be listed in this section b. The issues section should match case facts to the authoritative guidance c. Each issue should be phrased in the form of a question d. Issues should be listed in illogical order

-All of the researchable questions (or issues) to be addressed in the memo should be listed in this section -Each issue should be phrased in the form of a question

Limited conceptual guidance is available on the subject of accounting measurement. In particular (select two): a. CON 6 offers general measurement principles applicable to long-term assets and liabilities b. CON 5 broadly defines several measurements attributes and describes when they may be used c. CON 7 describes how to measure present value d. CON 8 describes measurement as an objective of useful financial information

-CON 5 broadly defines several measurements attributes and describes when they may be used -CON 7 describes how to measure present value

Initial measurement can be complicated in certain circumstances. These include (choose two): a. In non-monetary exchanges b. When an item is purchased for cash in an arm's length transaction c. When assets are self-constructed d. When cash flows are short-term in nature

-In non-monetary exchanges -When assets are self-constructed

In the list below, identify three references that the book would characterize as "strong" references to the Codification: a. I found the following guidance in ASC 842: b. Per ASC 842, c. ASC 842 states... d. The FASB says... e. According to ASC 842 (Leases),

-Per ASC 842, -ASC 842 states -According to ASC 842 (Leases)

What two measurement attributes are broadly defined in the Codification. Meaning, the definition of these attributes are applied across many Codification topics. a. Present value b. Fair value c. Historical value d. NRV

-Present value -Fair value

Correctly explain the relationship between rules and interpretations in the AICPA's Code of Professional Conduct

-Rules set forth the Code's requirements -Interpretations provide detailed guidance for applying specific rules

What two pieces of information are missing from the following citation? Deloitte's publication, A Roadmap to Accounting for Income Taxes, states: "When disclosing gross DTAs and DTLs, an entity should separately disclose deductible and taxable temporary differences." a. Date accessed from Deloitte's website b. The relevant section and page number c. Year of publication d. Name of standard

-The relevant section and page number -Year of publication

-recognized/unrecognized -should/should not The sale of bonds in January by a calendar year-end company is a(n) ____ subsequent event; the financial statements _____ be adjusted to reflect this event.

-unrecognized -should not

In the following Code of Professional Conduct reference, which number refers to the "Topic" being applied? ET 1.200.001 a. .200 b. 1 c. The topic number is not shown d. .001

.200

A customer at Cuppa Joe orders an espresso (also earning a punch on her loyalty card) and pays with cash. How many performance obligations does Cuppa Joe identify with this contract? a. 0: Cuppa Joe is not required to identify performance obligations on contracts b. 1: Cuppa Joe only identifies the performance obligation of providing the customer with her espresso c. 1: Cuppa Joe only identities the performance obligation of the punch of the loyalty card as a performance obligation because it provides the customer with a material right to future benefit d. 2: Cuppa Joe identifies providing the customer with her espresso and the punch on the loyalty card as distinct performance obligations

2: Cuppa Joe identifies providing the customer with her espresso and the punch on the loyalty card as distinct performance obligations

Which standard setter has authority to issue guidance for the following professional services? Public accountant providing consulting services to Alphabet (primary source of professional services guidance)? a. FASB b. AICPA c. SEC d. PCAOB

AICPA

As a result of the Private Company Council's work, a. Anytime a new ASU is issued, private companies will be granted one additional year to apply the guidance. b. Accounting alternatives are now available to private companies within the codification c. It is not optional for private companies to apply the FASB codification d. Private company auditors must follow certain standards issued by the PCAOB

Accounting alternatives are now available to private companies within the codification

The guidance currently used by the FASB to update the Codification is referred to as which of the following? a. FASB statements b. Exposure drafts c. EITF issues d. Accounting standards updates

Accounting standards updates

The FASB is funded primarily by which of the following? a. Private donations b. Accounting support fees c. The U.S. Congress (via an approved budget) d. Sales of publications and Codification access

Accounting support fees

As a researcher, ways that you can avoid distractions when performing research include which of the following? a. Setting your phone to airplane mode to avoid beeps and alters b. If you do stop research, jotting down on a post-it where you left off c. Finding a quiet place to perform research d. All of the answers are correct

All of the answers are correct

In some cases, when evaluating the scope of a certain topic, a researcher may also have to refer to which of the following? a. Glossary terms b. Non-Authoritative sources c. Implementation guidance d. All of the answers are correct

All of the answers are correct

Is it acceptable to cite from accounting firm guide books, in your technical documentation? a. Yes, but only if used to supplement authoritative resources, such as to offer additional interpretation b. Yes, but care should be taken to ensure that the guide book you are reviewing is current (not outdated) c. Yes, but any guidance that can be used from the Codification (such as definitions of key terms) should be taken from the Codification directly, not from the guide book d. All of the answers are correct

All of the answers are correct

It may not always be possible to research the accounting for proposed transactions. Research may be required at the time, or after, a transaction is executed if a. Communication broke down between the accounting team and the operations team in the organization, and the accounting team was not made aware of the proposed transaction b. The transaction was time-sensitive, and there was not sufficient lead time to research the account c. The transaction or event could not have been anticipated, such as issues arising from a fire or natural disaster d. The preparer has limited resources and therefore only performs research for final transactions e. All of the answers are correct

All of the answers are correct

Which of the following statements is true about the analysis section of a memo? a. In this section, the researcher must relate the guidance to his or her fact pattern b. This section should include "guidance sandwiches" or "writing with authority" c. This section should present available alternatives d. Additional subheaders can be used to organize content within this section e. All of the statements are true

All of the statements are true

Which of the following is NOT a consideration (or source) a researcher might consult when weighing alternative accounting treatments? a. Does non-authoritative guidance address this issue? b. Is this alternative consistent with my company's past practices? c. Have I consulted the SEC to request the SEC's opinion? d. Does authoritative guidance appear to express a preference for one alternative? e. All of these are considerations

All of these are considerations

Standalone selling price is a measurement attribute used within topic 606 to a. Estimate customer returns b. Allocate a single transaction price to multiple performance obligations c. Determine whether multiple deliverables qualify for separate recognition d. Apply sales incentives to customer purchases

Allocate a single transaction price to multiple performance obligations

The AICPA's FRF for SMEs is a. Guidance to assist small private companies in applying the Codification b. Another comprehensive basis of accounting- that is, a non-GAAP framework c. A simplified framework that private companies can apply in order to still get a clean audit opinion d. All of the answers are correct

Another comprehensive basis of accounting- that is, a non-GAAP framework

To browse the "Inventory" topic, in which "Area" should your research begin? a. Broad Transactions b. Assets c. Expenses d. Presentation

Assets

Which of the following statements contrasting the CON 5 and CON 6 views of revenue is true? a. CON 5 and CON 6 generally offer consistent definitions of revenue b. CON 5 focuses on the earnings process, whereas CON 6 focuses on revenue resulting from a change in assets and liabilities c. CON 5 focuses on collectibility, whereas CON 6 focuses on delivery d. CON 5 and CON 6 both describe revenue as arising when it is (1) earned and (2) realized/realizable

CON 5 focuses on the earnings process, whereas CON 6 focuses on revenue resulting from a change in assets and liabilities

If a researcher prepares a memo based on draft, not-yet-executed contracts, he or she should do which of the following? a. Carefully review final contracts once available, to ensure consistency with draft conclusions b. Not share the memo with management or the audit team until final contracts are available c. Hold off on preparing the conclusion section of the memo until final contracts have been reviewed d. All of the answers are correct

Carefully review final contracts once available, to ensure consistency with draft conclusions

The book introduces the concept of a guidance sandwich. This means that a. Commentary in your own words should precede and follow all guidance excerpts b. Any nonauthoritative guidance cited should be preceded and followed by authoritative excerpts c. Your analysis section should primarily consist of authoritative excerpts; thus, the analysis section should generally start off with an excerpt and conclude with an excerpt d. In order to give memo readers context for guidance excerpts, the paragraph in the literature preceding and following your chosen excerpt should also be included in the memo

Commentary in your own words should precede and follow all guidance excerpts

In a(n) ____ engagement, an accountant or other service provider performs a value-added service for the benefit of management. Independence is not required. a. Consulting/advisory b. Auditing c. Attestation d. Review

Consulting/advisory

Determining whether a transaction is within the scope of ASC 845 (Non-monetary transactions) is often a two-step process. For example, to evaluate whether an exchange involving monetary consideration is within the scope of ASC 845, an entity must do which of the following? a. (1) Evaluate the list of scope exclusions and (2) perform a detailed scope test b. Evaluate (1) the authoritative guidance and (2) applicable nonauthoritative guidance c. Evaluate both (1) "general" Topic 845 scope guidance, and (2) subsection scope guidance d. All of the answers are correct

Evaluate both (1) "general" Topic 845 scope guidance, and (2) subsection scope guidance

Your company has just received insurance proceeds from a facility fire; you've been asked whether to classify the proceeds as "revenue" or "gain". Assume Codification guidance is not available. a. The Basis for Conclusions in an ASU or pre-Codification standard b. Accounting firm guide book c. FASB Concept Statements d. Accounting firm whitepapers and technical updates

FASB Concept Statements

A group of executives attended a meeting in which the CFO was the attendee with the most senior ranking. When the meeting began, the CFO offered his views on the matter at hand, and the other meeting attendees expressed agreement with his approach. This scenario could be an example of which type of bias? a. Groupthink bias b. Availability bias c. Confirmation bias d. Hindsight bias e. Anchoring and adjustment bias

Groupthink bias

When two alternative accounting treatments are available for your transaction, but only one can be selected, it is a best practice to do which of the following? a. Evaluate both conditions when there is an "and" requirement, and evaluate only one if there is an "or" requirement b. Fully evaluate the alternative you've selected (including merits and concerns), and only briefly mention the alternative you have not selected c. Identify both alternatives, and present the merits and concerns related to each d. Provide a complete analysis of only the most relevant alternative

Identify both alternatives, and present the merits and concerns related to each

The facts section of an issues memo should do which of the following? a. Present the alternative views that will be described in more detail in the memo b. Summarize the key guidance excerpts what will be cited as support for the accounting position c. Provide a brief history of the company and its business d. Include all relevant facts necessary to understand the transaction and its accounting e. All of the answers are correct

Include all relevant facts necessary to understand the transaction and its accounting

An Accounting Standards Update a. Is authoritative, but has less authority than the codification. It is used to make changes to the Codification b. Is the document issued by the Emerging Issues Task Force c. Is not authoritative. It serves only to update the authoritative Codification d. Includes the Board's basis for conclusions, which then becomes part of the authoritative Codification

Is not authoritative. It serves only to update the authoritative Codification

Which of the following is NOT a benefit of researching a proposed transaction? a. It allows investors to research a company's choice of accounting methods before the transaction is finalized b. The accounting team can prepare timely documentation of the expected accounting position c. Researching a proposed transaction allows management to evaluate whether the expected financial statements impacts of the transaction are acceptable d. The audit team can review the proposed accounting position before the transaction is recorded e. Management can use this information to adjust forecasted earnings to reflect the expected impacts of the transaction

It allows investors to research a company's choice of accounting methods before the transaction is finalized

Which level of the fair value hierarchy reflects the use of unobservable inputs, or inputs that rely heavily on management assumptions? a. Level 1 b. Level 2 c. Level 3 d. All the Levels

Level 3

What measurement attribute generally applies to the subsequent measurement of inventory? a. Historical cost b. Lower of cost or market c. Fair value d. Market value

Lower of cost or market

Buyer and Office Supply Co. enter into a contract on 1/1/X1. Office Supply Co. promises to sell 100 hole punchers to Buyer on 1/1/X2, at a price of $4 per hole puncher. Is this contract a derivative? Why or why not? a. No; there is no underlying b. No; there is no notional amount c. No; there is an initial net investment d. No; the contract cannot be net settled e. Yes; this contract meets the definition of a derivative instrument

No; the contract cannot be net settled

A company purchased 100 storage boxes for its office. The boxes cost $10 each and should last at least 10 years. Which part of the definition of an asset is not met, or at least not certain of being met? a. Probable future economic benefit b. Company has risks and rewards of ownership c. As a result of a past transaction or event d. Currently controlled by the entity

Probable future economic benefit

Quotation marks should always be included around authoritative excerpts, with which exception? a. Quotation marks aren't necessary if you've changed words within the quote b. Quotation marks aren't necessary if you include brackets around the excerpt c. Quotation marks aren't necessary if you include a clear reference to the ASC (such as ASC 842-10-25-1) d. Quotation marks aren't necessary if you indent the excerpt and include a clear reference to the ASC (such as ASC 842-10-25-1)

Quotation marks aren't necessary if you indent the excerpt and include a clear reference to the ASC (such as ASC 842-10-25-1)

A fair value measurement (of an asset or a liability) that is required or permitted every period is referred to as which to the following? a. A recurring fair value measurement b. An initial fair value measurement c. A nonrecurring fair value measurement d. A level 1 fair value measurement

Recurring fair value measurement

An accountant in this role may perform accounting research in order to understand accounting positions of the companies or industries his/her agency oversees, and these individuals may send comment letters to the extent they question a given position. a. Regulator b. Investor c. Auditor d. Corporate accountant

Regulator

Where within ASC 820-10 (Fair Value Measurement) would a researcher find most of the critical discussion about how to measure fair value, including the definition of fair value, discussion of valuation techniques, and guidance on valuation inputs? a. Section 50, Disclosure b. Section 35, Subsequent Measurement c. Section 15, Scope d. Section 30, Initial Measurement

Section 35, Subsequent Measurement

Where should a researcher go first to find guidance on present value measurements?

Section 55 (implementation guidance)

Why was the private company council created to advise the FASB? That is, what is the concern this body was created to address? a. The concern that GAAP is currently too complex and too costly for private companies to apply b. The concern that audit standards for private companies are beginning to diverge from audit standards for public companies due to new PCAOB issuances c. The concern that private companies should be able to follow the same standards as governmental entities d. The concern that GAAP for private companies is not adequately converged with IFRS for private companies

The concern that GAAP is currently too complex and too costly for private companies to apply

Fair value is defined as which of the following? a. The price that would be received to sell an asset or paid to transfer a liability in a distressed sale between market participants at the measurement date b. The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the original purchase date c. The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date d. The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between related parties at the measurement date

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date

Which of the following statements is true? a. The timing of subsequent measurements can vary based on the asset or liability being measured b. Assets and liabilities are never remeasured and remain at their historical costs c. Most assets and liabilities are measured annually d. Assets and liabilities are generally remeasured at each reporting date

The timing of subsequent measurements can vary based on the asset or liability being measured

Which of the following is not a benefit of identifying the "researchable question" for a research assignment? a. Identifying a researchable question will help focus your research b. The question can help you draw connections between contract terms and research topics c. These questions can help you identify a starting point for conducting your codification searches d. These are all benefits

These are all benefits

Which of the following is not a benefit of consulting nonauthoritative sources? a. These sources can offer interpretive guidance to help researchers understand and apply the Codification requirements b. These sources can offer additional context to understand the intent of Codification guidance c. These sources may provide guidance for issues that are not addressed in the Codification d. These sources can offer alternatives to the practices required in the Codification

These sources can offer alternatives to the practices required in the Codification

In 2009, when the codification was populated with original accounting standards, what happened to these original standards? a. They were superseded and became nonauthoritative b. They were superseded and became authoritative c. They remained equally authoritative as the the Codification d. They remained authoritative, but now have a lesser degree of authority than the Codification

They were superseded and became nonauthoritative

As discussed in the chapter, the SEC periodically writes comment letters a. To governmental agencies, requesting additional explanation of an agency's financial reporting b. To public companies, requesting additional explanation of a company's financial reporting c. To the FASB, to formally document the positions of its appointed observer attending FASB meetings d. To registered public accounting firms, describing concerns observed during its inspections of public company audits

To public companies, requesting additional explanation of a company's financial reporting

What is the purpose of the fair value hierarchy set forth in ASC 820? a. To require companies to report more changes in fair value through income, as opposed to through OCI b. To indicate fair value hierarchy information on the face of the financial statements, for the benefit of financial statement users c. To discourage companies from performing measurements outside of level 1 or level 2 in the fair value hierarchy d. To show financial statement users, through disclosures, the extent to which a company's fair value measurements are based on observable, market information

To show financial statement users, through disclosures, the extent to which a company's fair value measurements are based on observable, market information

Recognition guidance within a topic tells you a. What, when, and how to record an item b. How a transaction should be presented in the financial statements c. Whether the guidance in a particular topic applies to a transaction d. At what value an item should be recorded

What, when, and how to record an item

Which of the following statements is false? a. When weighing alternative accounting treatments, a researcher should only consider authoritative sources of guidance b. A researcher who does not first understand the client's business runs the risk of asking questions about a transaction that are not informed c. The chapter generally recommends that researchers should think through accounting issues on their own before turning to the Codification for guidance d. It's common for researchers to refine their research questions as they work through the research process

When weighing alternative accounting treatments, a researcher should only consider authoritative sources of guidance

Scope guidance within a topic tells you a. How a transaction should be presented in the financial statements b. Whether the guidance in a particular topic applies to a transaction c. What, when, and how to record an item d. At what value an item should be recorded

Whether the guidance in a particular topic applies to a transaction

A gross-receipts tax [a] within the scope of ASC 740 (income taxes), because it [b] a. Is b. Is not c. Is a tax based on income d. Is not a tax based on income

[a]- Is not [b]- Is not a tax based on income

Cuppa Joe [a] include sales tax amounts collected in measuring its transaction price. Cuppa Joe [b] include sales tax amounts collected in the journal entry to record the sale of a cup of coffee. a. Should b. should not c. Has the choice to d. I have no idea

[a]- should not [b]- should

Inventory costing is a matter of [x] measurement. Inventory obsolescence is a matter of [y] measurement. a. Scope b. Initial c. Subsequent d. Derecognition

[x]- Initial [y]- Subsequent