ACCT301

The financial statements most frequently provided include all of the following:

1. Statement of Cash Flows 2. Balance Sheet 3. Income Statement

Which of the following is not a major challenge facing the accounting profession?

Accounting for hard assets

Which of the following is a requirement for an accounting principle to be called "generally accepted"?

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

Which perspective is adopted as a part of the objective of general-purpose financial reporting?

An entity perspective.

Which of the following is of interest to investors in decision-making?

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.

What would be an advantage of having all countries adopt and follow the same accounting standards?

Comparability and lower preparation costs.

Which of the following is a source of pressure that may influence the accounting standard setting process?

Congress Lobbyists CPA firms

Which of the following is an ethical concern of accountants?

Earnings manipulation

GAAP does not have substantial authoritative support.

False

Which of the following is not true of generally accepted accounting principles? a)GAAP changes over time as the nature of the business environment changes. b) GAAP includes detailed practices and procedures as well as broad guidelines of general application. c) GAAP is influenced by pronouncements of the SEC. d) GAAP does not have substantial authoritative support.

GAAP does not have substantial authoritative support.

Which of the following organizations has not been instrumental in the development of financial accounting standards in the United States?

IASB

he purpose of financial accounting is to provide information primarily for which of the following groups?

Investors and creditors.

The process of identifying, measuring, analyzing, and communicating financial information needed by management to plan, evaluate, and control an organization's operations is called:

Managerial Accounting

Which of the following represents a form of communication through financial reporting but not through financial statements?

President's letter

What is the purpose of Emerging Issues Task Force?

Provide implementation guidance within the Codification framework to reduce diversity in practice on a timely basis.

What is the objective of financial reporting?

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

Which of the following is not related to an effective capital allocation?

Provides timely, relevant information and encourages innovation.

Companies that are listed on a stock exchange are required to submit their financial statements to the:

SEC.

Which organization was responsible for issuing Accounting Research Bulletins?

The Committee on Accounting Procedure.

Why was it believed that accounting standards that were issued by the Financial Accounting Standards Board would carry more weight than standards previously issued?

The FASB follows due process.

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.

The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB)

Which of the following organizations currently is responsible for establishing and improving standards of financial accounting and reporting for the guidance and education of the public, which includes issuers, auditors, and users of financial information?

The Financial Accounting Standards Board.

What is the relationship between the Securities and Exchange Commission and accounting standard setting in the United States?

The SEC has a mandate to establish accounting standards for enterprises under its jurisdiction.

What is the "expectations gap"?

The difference between what the public thinks the accountant should do and what the accountants think they can do.

Why did the AICPA create the Accounting Principles Board?

The previous standard setting organization did not provide a structured set of accounting principles.

The Financial Accounting Standards Board Accounting Standards Codification is the only authoritative accounting literature.

True

The major distinction between the Financial Accounting Standards Board (FASB) and its predecessor, the Accounting Principles Board (APB), is

all members of the FASB are fully remunerated, serve full time, and are independent of any companies or institutions.

Financial accounting standard-setting in the United States

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.

The Financial Accounting Standards Board employs a "due process" system which

enables interested parties to express their views on issues under consideration.

General-purpose financial statements are the product of

financial accounting.

The purpose of Statements of Financial Accounting Concepts is to

form a conceptual framework for solving existing and emerging problems.

The passage of a new FASB Accounting Standards Update requires the support of

four Board members.

A common set of accounting standards and procedures is called:

generally accepted accounting principles.

Members of the Financial Accounting Standards Board are

independent of any other organization.

Accrual accounting is used because:

it provides a better indication of a company's ability to generate cash flows over time than the cash basis.

The Financial Accounting Foundation

oversees the operations of the FASB

All the following are ways in which accounting information is used by financial accounting users except to: a) decide whether to invest in the company. b) evaluate borrowing capacity to determine the extent of a loan to grant. c) plan and control company's operations. d) buy, sell, hold equity and debt instruments.

plan and control company's operations.

Each of the following are true of the Securities and Exchange Commission except that:

the FASB relies on the SEC to develop accounting standards.