Advanced Theory and Problems in Accounting ACNT 2375 - Exam 1 M/C

Most likely, a CPA will be required to conduct what kind of research? a) Applied research b) Academic Research c) Theoretical research d) All of the above

a

The Codification is organized by areas and topics, rather than sequence of issue dates, to make searches easier. There are 9 broad areas. Which of the following are considered "Areas"? a) Presentation, Assets. Liabilities, and Equity b) Cash, Inventory, Investments, and Intangibles c) Recognition, Initial Measurement, and Subsequent Measurement d) Income Statement, Statement of Cash Flows, and Balance Sheet

a

When the FASB began work on creating the Codification in 2003, its goal(s) included: a) Organizing all existing GAAP into 1 electronic database and simplifying the task of researching GAAP. b) Re-creating GAAP to reflect current business circumstances. c) Superseding AICPA in its the role as rule-maker for GAAP. d) Reducing FASB's publishing costs.

a

Which of the following is (are) true about the Private Company Council (PCC)? a) The PCC's primary role is to identify areas within existing and proposed authoritative guidance that should be simplified for private companies and recommend changes to GAAP for private companies. b) The PCC is designed to consider simplification of GAAP for all entities that are not public corporations. c) The PCC is a committee with the AICPA organization. d) None of the above are correct.

a

Which of the following is important to include in an email about a "limited-scope" research question? a) Assumptions, if any, underlying the research. b) Background on the company's financial position and operations. c) An analysis of the business environment in which the client's business operates. d) The researcher's personal opinion of the situation being researched.

a

Collins suggest "drawing a picture" related to the transaction being researched, which sounds a little strange. What does the author mean by "drawing a picture"? a) Providing photos of the people involved in the transaction being researched. b) A diagram of related parties. c) A T-Account of the accounts involved in the transaction. d) None of the above.

b

Currently, AICPA is responsible for: a) Issuing audit standards b) Establishing the professional standards governing CPA's professional responsibilities. c) Overseeing the work of the Private Company Council. d) Serving as a liaison between FASB and the SEC.

b

Nearly, every "Topic" (or subtopic) includes the following section: a) Impact on Net Income b) Scope and Scope Exceptions c) Industry Applications d) None of the above

b

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

b

What best describes FASB and SEC's relationship? a) SEC supervises the FASB, including the approval of FASB board members. b) The SEC works with FASB on a regular basis, monitoring FASB's agendas and providing input on FASB's proposed ASUs. c) FASB board members and the SEC commissioners sit on each other boards. d) SEC and FASB have nothing to do with each other.

b

When FASB issues new GAAP, it is referred to as a) Financial Accounting Standard b) Accounting Standards Update c) Accounting Bulletins d) None of the above

b

Which of the following is true about the SEC? a) The SEC never issues guidance to public companies, except through the FASB Codification. b) Periodically, the SEC issues interpretative guidance to public companies through Staff Accounting Bulletins and Financial Reporting Releases. c) The SEC requires that all companies, domestic and foreign, publicly traded in the US file financial reports in compliance with US GAAP. d) None of the above is correct.

b

FASB gets its authority to set GAAP primarily from the SEC, acting in its authority under the federal Security Exchange Act and Sarbanes-Oxley. Additionally, FASB's authority is derived from a) the IRS. b) the American Accounting Association. c) the AICPA through the Code of Professional Conduct, binding for all CPAs d) SEC is the sole authority governing GAAP.

c

In what category is the actual guidance found in the Codification? a) In the first section of each topic. b) In the summary of the topic. c) In the paragraphs. d) In the Scope section.

c

On December 15, 2000, FASB issued an Accounting Standards Update whose pending content is effective for financial statements issued for fiscal years beginning after December 15, 2001 and interim periods within those fiscal years. Your company has a calendar year-end. When must your company apply the new guidance? a) The new guidance must be reflected in the annual financial statements ending 12/31/2000. b) The new guidance must be reflected in the interim financial statements ending 12/31/01 and the annual financial statements ending 12/31/2002. c) The new guidance must be reflected beginning with the interim report as of 3/31/2002 and for the annual financial statements as of 12/31/2002. d) The new guidance must be reflected in all financial statements issued for any time beginning on 12/15/2001.

c

References to the codification are presented using the following format: a) Subtopic - Glossary - Paragraph b) Area - Topic - Paragraph c) Topic - Subtopic - Section - Paragraph d) Paragraph - Section - Subtopic - Topic

c

The FASB Accounting Standards Codification is the single, authoritative source of GAAP for non-governmental entities. When created in 2009, a) FASB created new GAAP that was then housed in the Codification. b) FASB decided to include all SEC rules and regulations in the Codification for the public companies. c) It included all existing GAAP, as represented by Statements of Financial Accounting Standards (SFAS), Interpretations of Financial Accounting Standards, Accounting Research Bulletins (ARB), and Accounting Principle Board Opinions (APBO) as well as other documents considered authoritative prior to 2009. d) It included all guidance for both private and governmental entities.

c

What is "limited scope" research? a) A memo about possible researchable questions which could be the basis of further research about the topic. b) A critique of an accounting research memo before the memo is released. c) A written response about some part of the accounting question being researched. d) Research about only 1 topic of concern to the client.

c

What is a SEC "comment letter"? a) A SEC "comment" letter is the SEC's formal input to Exposure drafts issued by FASB. b) A SEC "comment" letter is the SEC's approval of a company's audit report. c) A SEC comment letter is a request to a company for additional information and clarification as a result of the SEC review of the submitted 10-K. d) A SEC "comment" letter is an advisory opinion to a company about their 10-K, but has no binding authority.

c

What level of detail is necessary with respect to a Codification citation in an accounting memo? a) Subtopic b) Section c) Paragraph d) The level of detail is the researcher's judgment call.

c

What would the standard format of an accounting research memo not include? a) Analysis related to the researchable questions b) The impact on the financial statements and/or disclosures that may be required. c) The company's annual report. d) Facts/Background

c

When should footnotes be used in accounting research memos? a) Every quoted section of the codification requires a footnote. b) Footnotes are never used. c) If guidance is from a source other than the Codification, then a footnote may be required. d) None of the above.

c

Which of the following has the federal statutory authority to set accounting standards in the United States? a) AICPA b) FASB c) SEC d) IRS

c

Which of the following would be considered the stronger reference to a codification citation? a) ASC xxx asks readers to..."quote from the Codification" b) The Codification writes..." quote from the Codification" c) Per ASC xxx: "quote from the Codification" d) The FASB says..."quote from the Codification"

c

A key objective(s) of accounting research is (are): a) To create the documentation to support the conclusion reached on how to record a transaction. b) To provide clients with authoritative guidance about the acceptability of a transaction's accounting treatment before the transaction occurs. c) To document the CPA's exercise of due professional care in the preparation of financial statements, audit reports, and tax returns. d) All of the above

d

The Codification is the sole source of authoritative guidance for a) For-profit entities only b) For-profit public companies only. c) for all governmental and non-governmental entities. d) for non-governmental entities only, including for profit entities and not-for-profit entities.

d

What is true of pre-codification standards that made up GAAP before 2009? a) Pre-codification standards are now considered non-authoritative guidance for CPAs. b) Pre-codification standards are included as a resource in the Codification web-site. c) Pre-codification standards include FASB Statements , Emerging Issues Task-force (EITF) Abstracts, the Committee on Accounting Procedures' Accounting Research Bulletins, and the Accounting Principle Board's Opinions. d) All of the above.

d

Which of the following is (are) correct? a) The Committee on Accounting Procedures (CAP) and the Accounting Principles Board (APB) were predecessors of FASB, created by the AICPA. b) Some of the guidance issued by CAP between 1939 and 1959 and by ABP between 1959 and 1972 are still in effect as they have been absorbed into the Codification. c) One of the greatest concerns about CAP and APB, which led to the creation of FASB, is the lack of independence of the members of the organization, as all were volunteers and continued in their primary jobs. d) All of the above

d