Chapter 1 SmartBook Assignment

The (IASB/IASC/IFRS) is an accounting standard issued by the (IASB/IASC/IFRS).

IFRS, IASB

Which of the following is true of financial accounting? (Check all that apply).

It may provide information that is helpful in assessing an entity's future prospects. It is measured in dollars. It is a form of historical scorekeeping. It is not the sole source of information about an entity.

Financial reporting is primarily aimed at meeting the needs of:

external users of accounting information who do not otherwise have access to the firm's records.

An internal auditor: (Check all that apply).

in some cases performs functions much like those performed by an independent (external) auditor, but perhaps on a smaller scale.

The consulting practices of several large auditing firms have been split off into separate entities in an effort to help achieve (profitability/independence/control/liquidity) in fact and appearance.

independence

The first known text to describe a comprehensive double-entry bookkeeping system was called the:

method of Venice system

Accounting information is required by governmental units at which of the following levels? (Check all that apply).

municipal, state, federal

The objectives of financial reporting for nonbusiness organizations focus on providing information for resource (providers/allocations/users) rather than investors.

providers

The statutory authority to establish accounting principles for companies whose securities are publicly traded in the United States rests with the ___and ___Commission.

securities and exchange

True or false: The growing complexity of federal, state, municipal, and foreign income tax laws has led to a demand for professional accountants who are specialists in various aspects of taxation.

true

True or false: The numbers reported in a firm's financial statements are not adjusted for changes in the firm's stock price.

true

Tax practitioners typically develop specialization in the taxation of which of the following? (Check all that apply).

trusts and estates, international tax law issues

Accrual accounting records transactions:

when economic activity has occurred.

Financial accounting information is:

based primarily on past transactions and events.

The (cost/benefit) to the user of accounting information should exceed the (cost/benefit) of providing it.

benefit, cost

A primary objective of financial reporting is to provide timely information about a firm's earnings and (employee turnover/cash flow).

cash flow

Which of the following items is not considered a key element of ethical behavior for a professional accountant?

Maintaining profitability: to the greatest extent possible, ensure that the client's accounting records show a profit.

Accounting information is required by which entities? (Check all that apply).

Not-for-profit entities, such as hospitals and voluntary health and welfare organizations Not-for-profit entities, such as trade associations and country clubs

The statutory authority to establish accounting principles for companies whose securities are publicly traded in the United States rests with the:

Securities and Exchange Commission (SEC)

An unqualified, or, clean, independent auditor's opinion does which of the following?

States that it is the independent auditor's responsibility to express an opinion about the financial statements Explains that the audit was conducted in accordance with the standards of the GAAP (United States) States that the named financial statements "present fairly, in all material respects" the entity's cash flows for the period

Which of the following statements is true regarding the Financial Accounting Standards Board's (FASB's) standard-setting process?

The FASB follows an open, due process procedure.

Which of the following statements are true regarding the Financial Accounting Standards Board's (FASB's) standard-setting process?

The FASB invites input from any individual or organization who cares to participate in the process. The FASB follows an open, due process procedure.

Which statement is correct about the role of an internal auditor?

The qualifications of an internal auditor are similar to those of any other professional accountant.

The objectives of financial reporting for government-sponsored entities engaged in activities that are not unique to government should be similar to those of (business/nonbusiness/not-for-profit) enterprises.

business

The Committee on Accounting Procedure of the American Institute of Accountants (1939-1959) and the Accounting Principles Board (1959-1973) both issued important accounting standards but failed to:

develop a conceptual underpinning for accounting and financial reporting

True or false: Concepts Statements are a key part of the Financial Accounting Standards Board (FASB) Accounting Standards Codification, which is the source of authoritative generally accepted accounting principles (GAAP) recognized by the FASB and applied by nongovernmental entities.

false

True or false: The Public Company Accounting Oversight Board (PCAOB) was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

false

The consulting practices of several large auditing firms have been split off into separate entities in an effort to help achieve (profitability/independence/control/liquidity) in fact and appearance. Listen to the complete question

independence

The objectives of financial reporting for nonbusiness organizations focus on providing:

information about obligations, net resources, economic resources, and organizational performance.

Establishment of (objectives/concepts/standards) and identification of fundamental (objectives/concepts/standards) will not directly solve accounting and reporting problems.

objectives, concepts

Financial reporting is designed to meet the needs of users by providing information that is:

relevant to making rational investment and credit decisions and other informed judgments.

A report by management on the effectiveness of the company's internal control over financial reporting is required for all Securities and Exchange Commission-regulated companies under: Multiple choice question.

section 404 of the Sarbanes-Oxley Act of 2002.

The Internal Revenue Code and related regulations:

specify the rules followed in determining an entitys tax liabiity

An unqualified, or "clean" independent auditor's opinion:

states that the auditor's work requires the application of generally accepted auditing standards (GAAS).

The Financial Accounting Standards Board's (FASB's) two predecessor accounting standard-setting bodies in the United States were:

the Committee on Accounting Procedures of the American Institute of Accountants (1939-1959) and the Accounting Principles Board (1959-1973)

One of the objectives of financial reporting is:

to provide timely information about a firm's earnings and cash flow.

The (IASB/IFRS/GAAP) and the FASB have been working together since 2002 to achieve convergence of IFRS and U.S. (IASB/FASB/GAAP).

Blank 1: IASB Blank 2: GAAP

In 2001, the (IASB/IASC/IFRS), which operates under the (IASB/IASC/IFRS) Foundation, was formed in a restructuring effort and has since assumed the responsibilities of the (IASB/IASC/IFRS), which was disbanded at that time.

Blank 1: IASB Blank 2: IFRS Blank 3: IASC

Which of the following statements are true about the Cost Accounting Standards Board (CASB)? (Check all that apply).

CASB is authorized by the U.S. Congress to establish cost accounting standards for government contractors. CASB operated as a governmental body to establish standards applicable to government contracts during the 1970-1980 period.

The five-member Public Company Accounting Oversight Board (PCAOB) has the authority to set and enforce which of the following?

Ethics and independence standards for public companies Auditing standards for public companies Quality control standards for public companies Attestation standards for public companies

The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have achieved convergence of the U.S. GAAP and IFRS accounting standards with respect to which of the following?

Fair value measurements and borrowing costs Reporting for business combinations and noncontrolling interests Revenue recognition and stock compensation

The authoritative accounting standard-setting body for state and local governmental units in the United States since 1984 has been the:

Governmental Accounting Standards Board (GASB)

The Financial Accounting Standards Board (FASB) reports directly to the:

Financial Accounting Foundation (FAF)

The authoritative accounting standard-setting body for companies whose securities are publicly traded in the United States since 1973 has been the:

FASB

Section 404 of the Sarbanes-Oxley Act of 2002 requires all SEC-regulated companies to include in their annual reports:

a report by management on the effectiveness of the company's internal control over financial reporting.

In recent years, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have backed away almost completely from the goal of a single global accounting language due to which of the following?

The huge switching cost that domestic companies and auditors would have to pay to change from U.S. GAAP to IFRS A lack of interest in accounting convergence on the part of U.S. investors and corporations

Which of the following statements are true regarding the Governmental Accounting Standards Board (GASB)? (Check all that apply).

The GASB reports directly to the FAF, which is also the parent organization of the FASB. The GASB was established to develop accounting and reporting standards for state and local governmental units. The GASB is attempting to unify the accounting practices of many state and municipal entities in the U.S.

Financial accounting information as presented in financial statements may help users to assess which of the following?

The firm's future earnings potential based on an analysis of past results The firm's working capital and cash management practices Relative strengths and weaknesses of the firm's financial position

A qualified audit opinion may be issued in cases where which of the following are true?

The independent auditor is unable to perform certain auditing procedures. The independent auditor determines that one or more items presented in the financial statements represent a significant departure from GAAP.

A qualified audit opinion may be issued in which of the following cases?

When the independent auditor determines that one or more items as shown in the financial statements are not presented fairly When an explanatory paragraph is added regarding the firm's inability to continue as a going concern

Which of the following best describe Luca Pacioli?

He was a mathematics professor. He was the author of "method of Venice" system. He was a Franciscan monk.

Which of the following statements are true about the Cost Accounting Standards Board (CASB)? (Check all that apply).

CASB operated as a governmental body to establish standards applicable to government contracts during the 1970-1980 period. CASB is authorized by the U.S. Congress to establish cost accounting standards for government contractors.

An unqualified, or "clean," independent auditor's opinion does which of the following?

Describes briefly the work that is involved in performing an audit States that the named financial statements "present fairly, in all material respects" the entity's results of operations for the period States that the named financial statements "present fairly, in all material respects" the financial position of the entity

Which of the following statements are true regarding the objectives of general-purpose external financial reporting for government-sponsored entities engaged in activities that are not unique to government?

They should be similar to those of business enterprises engaged in similar activities. They should be similar to those of nonbusiness organizations engaged in similar activities.

The Cost Accounting Standards Board (CASB) establishes which of the following? (Check all that apply).

Cost accounting standards applicable to colleges and universities that receive major federal research grants Cost accounting standards applicable to government contracts in excess of $750,000

The Sarbanes-Oxley Act of 2002 (SOX) now prohibits:

auditing firms from performing a variety of non-auditing services for financial statement audit clients.

The IASB and the (FASB/IFRS/GAAP) have been working together since 2002 to achieve convergence of (IASB/FASB/IFRS) and U.S. GAAP.

Blank 1: FASB Blank 2: IFRS

Which of the following are true regarding the Financial Accounting Standards Board (FASB) Accounting Standards Codification?

It superseded the FASB's SFAS series and other divergent sources of U.S. generally accepted accounting principles (GAAP). It became effective in July 2009. It made it easier to access and research authoritative accounting standards.

Which of the following items are considered key elements of ethical behavior for a professional accountant?

Maintaining integrity: being honest and forthright in one's dealings and communication with others. Maintaining objectivity: being impartial and free from conflicts of interest. Having competence by acquiring and maintaining the professional knowledge and skill to adequately perform the work assigned. Accepting an obligation to serve in the best interests of the employer, the client, and the public. Maintaining independence, both in appearance and in fact.

Accounting for the effect of a transaction when the activity takes place rather than when the cash receipt or payment takes place is known as (activity/conservative/accrual/matching) accounting.

accrual

Earnings information is reported on a(n) ______ basis of accounting.

accrual

In the process of measuring a firm's (cash/accrual) accounting earnings, some costs applicable to one year's results of operations may have to be estimated.

accrual

The Financial Accounting Standards Board (FASB)_____ reorganized divergent sources of U.S. generally accepted accounting principles (GAAP) in a more accessible and researchable format.

codification

It is important to recognize that financial accounting information is developed at a (cost/benefit) and that the (cost/benefit) to the user of the information should exceed the cost of providing it.

cost, benefit

Which statement is correct regarding the statutory authority of the U.S. Internal Revenue Code?

The U.S. Internal Revenue Code and related regulations specify the rules to be followed in determining an entity's income tax liability.