Intermediate Accounting I Exam 1

Which of the following instances indicate net operating cash flow may not be a good predictor of long-run cash-generating ability? (Select all that apply.) - A customer pays for services provided in a prior period - A company pays cash to purchase a 2 year insurance policy - A company pays a service technician the day work is performed

- A customer pays for services provided in a prior period - A company pays cash to purchase a 2 year insurance policy

Financial accounting provides investors with information that should help them to evaluate the (Select all that apply.) - amounts of the firm's future cash flow. - uncertainty of the firm's future cash flow. - accuracy of the firm's future cash flow. - timing of the firm's future cash flow.

- amounts of the firm's future cash flow. - uncertainty of the firm's future cash flow. - timing of the firm's future cash flow.

In the United States, corporations acquire capital from which of the following sources? (Select all that apply) - creditors - investors - tax revenues - the SEC

- creditors - investors

The objectives of financial accounting include (Select all that apply.) - provide managers with internal information for decisions. - regulate businesses globally. - regulate businesses in the United States. - provide information used to evaluate future cash flows. - provide information to investors and creditors.

- provide information used to evaluate future cash flows. - provide information to investors and creditors.

What are the most important factors for an investor to consider when choosing an investment? (select all that apply) - amount of assets - rate of return - risk - revenue recognition policies

- rate of return - risk

List the private accounting standard setting bodies in chronological order beginning with the oldest organization. - accounting principles board - committee on accounting procedure - financial accounting standards board

1. Committee on Accounting Procedure 2. Accounting Principles Board 3. Financial Accounting Standards Board

On January 1, 20X1, an investor purchases shares of stock in a company for $10,000 cash. At the end of 20X1, the investor receives $400 in dividends and sells his ownership at the end of 20X1 for $10,600. What is the return on investment? - 9.4% - 4% - 10% - 6% formula: dividends+share price appreciation/initial investment (400+600)/10,000

10%

The acronym for the Accounting Standards Codification is ________.

ASC

The first body to set accounting standards in the U.S. was the ______.

CAP

The first private accounting standard setting body in the United States was the - Securities and Exchange Commission. - Financial Accounting Standards Board. - Committee on Accounting Procedure. - Accounting Principles Board.

Committee on Accounting Procedure

The ______ was established to set U.S. accounting standards and is the current standard setting body.

FASB

The acronym for the private sector organization that sets accounting standards in the United States is the - AICPA - APB - SEC - FASB

FASB

The citation used to reference generally accepted accounting principles is - FAS. - ACSS. - GAAP. - FASB ASC.

FASB ASC

The private sector organization that is currently responsible for setting accounting standards in the United States is the - Securities and Exchange Commission. - Committee on Accounting Procedure. - Accounting Principles Board. - Financial Accounting Standards Board.

Financial Accounting Standards Board

Which accounting standard setting body replaced the Accounting Principles Board in 1973? - Financial Accounting Standards Board - Public Company Accounting Oversight Board - American Institute of Certified Public Accountants - Securities and Exchange Commission

Financial Accounting Standards Board

Generally accepted accounting principles are abbreviated as ______.

GAAP

The acronym GASB refers to the - Governmental Accounting Standards Board. - Generally Accepted Standards Board. - Government Accounting and State Bylaws. - General Accounting Standards Bylaws.

Governmental Accounting Standards Board

The organization that is responsible for Accounting standards and the standard setting process for states and cities in the United States is the - Government Authority for Standards and Bylaws. - Generally Accepted Standards and Bylaws. - Governmental Accounting Standards Board. - General Accounting State Board.

Governmental Accounting Standards Board

The organization that develops global accounting standards is the - International Accounting Standards Board. - International Accountants Society Bylaws. - International Accountants Standards and Bylaws.

International Accounting Standards Board

The uncertainty regarding an investment is also referred to as _______.

Risk

The legal authority to set accounting and reporting standards for companies whose securities are publicly traded lies with the - APB. - FASB. - AICPA. - SEC.

SEC

Which organization is currently the national professional organization for certified professional public accountants? - The AIA - The CAP - The APB - The AICPA

The AICPA

Which of the following provides an underlying structure for the development of accounting standards? - FASB Staff Positions - Statements of Financial Accounting Standards - EITF Issue Consensuses - The Conceptual Framework

The Conceptual Framework

The AICPA is the national professional organization for certified professional public _______.

accountants

The abbreviation GAAP stands for generally accepted _______ principles.

accounting

The financial reporting model used by the majority of profit oriented companies is _______ accounting.

accrual

What financial reporting model is used by most profit-oriented businesses and not-for-profit entities? - cash basis accounting - tax accounting - cost accounting - accrual accounting

accrual accounting

Which of the following models is best in helping predict future cash flows? - Cash accounting - Cost accounting - Accrual accounting

accrual accounting

The accrual accounting model measures the entity's accomplishments and resource sacrifices during the period regardless of when _______ is received or paid.

cash

The accrual accounting model measures the entity's accomplishments and resource sacrifices during the period regardless of when ________ is received or paid.

cash

_______ basis accounting measures the difference between cash receipts and payments during a reporting period.

cash

What accounting model produces a measure called net operating cash flow? - Accrual basis - Cash basis - Cost basis

cash basis

What basis of accounting measures the difference between cash receipts and cash payments from transactions related to providing goods and services to customers during a reporting period? - Cash basis - Accrual basis - Historic basis - Cost basis

cash basis

The FASB Accounting Standards _______ organizes all relevant accounting pronouncements in a searchable, online database.

codification

In 1933 and 1934 Acts were designed to restore investor ________ in the stock market.

confidence

Under the accrual accounting model, the measure of resources sacrificed is called - net income. - expense. - revenue. - net loss.

expense

TRUE OR FALSE: Net operating cash flow is a good indicator of a company's long-run cash-generating ability.

false

If the SEC does not agree with a standard issued by the private sector, it can - issue a new FASB statement. - create another accounting standard setting body. - remove FASB board members from their position. - force a change in the standard.

force a change in the standard

In addition to issuing accounting standards, the FASB has formulated a conceptual _________ to provide an underlying theoretical and conceptual structure for accounting standards.

framework

The accrual accounting model is best able to achieve the goal of predicting ________ cash flows.

future

The IASB is dedicated to developing a set of high-quality, understandable, and enforceable ______ accounting standards.

global

The Emerging Issues Task Force (EITF) was formed to - identify potential problem areas and provide a timely response to issues. - prepare exposure drafts for Statements of Financial Accounting Standards. - address long-term accounting problems and set standards.

identify potential problem areas and provide a timely response to issues

Claire's revenues are greater than her expenses. Claire has net ______ for the period.

income

The Emerging Issues Task Force (EITF) was formed to resolve _________ financial accounting issues within the framework of existing GAAP. - broad-reaching - conceptual - ill-defined - narrowly-defined

narrowly-defined

The difference between revenue and expenses when revenue is greater is called _______ _________.

net income

The difference between revenue and expenses when expenses are greater is called _________ _________

net loss

Net ______ cash flow is the difference between cash receipts and cash disbursements during a reporting period from transactions related to providing goods and services to customers.

operating

Accrual income attempts to measure the resource inflows and outflows generated by the company's __________ during the reporting period.

operations

What is net operating cash flow? - The difference between revenues and expenses during a period. - The difference between cash receipts and cash disbursements from providing goods and services during a period. - The sum of cash receipts and cash disbursements for all expenditures during a period.

the difference between cash receipts and cash disbursements from providing goods and services during a period

Which of the following represent(s) an important objective of the IASB? - To develop high quality global standards - To control the global standard setting process - To lower the cost of capital on global markets

to develop high quality global standards

The Accounting Standards Codification is organized into - statements and interpretations. - topics and subtopics. - standards and opinions. - rules and interpretations.

topics and subtopics

TRUE OR FALSE: Resource inflows and outflows may not correspond to cash inflows and outflows.

true