Intermediate 1 Quiz 1

Under the FASB Accounting Standards Codification, updates to GAAP are made as Statements of Financial Accounting Standards. Exposure Drafts. Accounting Standard Updates. Accounting Statements of Position.

ASU

Which of the following documents is typically issued as part of the due-process activities of the Financial Accounting Standards Board (FASB) for amending the FASB Accounting Standards Codification? A proposed accounting standards update. A proposed statement of position. A proposed accounting research bulletin. A proposed staff accounting bulletin.

A proposed accounting standards update

The FASB amends the Accounting Standards Codification through the issuance of Staff Accounting Bulletins. Technical Bulletins. Statements of Financial Accounting Standards. Accounting Standards Updates

Accounting standards updates

Which basis of accounting is most likely to provide the best assessment of an entity's past and future ability to generate net cash inflows? Tax basis of accounting. Modified cash basis of accounting. Accrual basis of accounting. Cash basis of accounting.

Accrual Basis of accounting

According to the FASB's conceptual framework, which of the following is an essential characteristic of an asset? The claims to an asset's benefits are legally enforceable. An asset provides future benefits An asset is obtained at a cost An asset is tangible

An asset provides future benefits

According to the FASB's conceptual framework, for financial reporting to be useful, it must Directly measure the value of the entity being reported on. Be understandable to those who have a limited knowledge of business activities. Provide information useful for making business and investment decisions. Be in accordance with generally accepted accounting principles.

Be understandable to those who have a limited knowledge of business activities

How are amendments incorporated into the FASB Accounting Standards Codification? By issuing an exposure draft. By releasing an accounting standards update. By publishing a statement of financial accounting standards. By producing a discussion paper.

By releasing an accounting standards update

What is the underlying concept that supports the immediate recognition of a contingent loss? Conservatism. Substance over form. Consistency. Matching.

Conservatism

According to the FASB's conceptual framework, which of the following decreases shareholder equity? Acquisition of assets in a cash transaction. Issuance of stock. Distributions to owners. Investments by owners.

Distributions to owners

Which of the following characteristics means that information is reasonably free from error and bias? Relevance. Predictive value. Faithful representation. Consistency.

Faithful representation

Reporting LIFO inventory at the lower of cost or market (LCM) is a departure from the accounting principle of Historical cost. Consistency. Conservatism. Full disclosure.

Historical cost

The principal benefit of a single set of global financial reporting standards is Increased ease of capital flow. The convergence of global financial reporting standards. Simplified enforcement for local and national regulatory bodies. Minimization of the amount of professional judgment required to implement them.

Increased ease of capital flow

Financial information is most likely to be verifiable when an accounting transaction occurs that Allocates revenues or expense items in a rational and systematic manner. Involves an arm's-length transaction between two independent parties. Is promptly recorded in a fixed amount of monetary units. Furthers the objectives of the entity.

Involves an arm's length transaction between two independent parties

The FASB Accounting Standards codification Expanded the gap hierarchy Includes guidance on state and local governmental accounting Is the single authoritative source of US GAAP other than SEC pronouncements Increases the risk of noncompliance with GAAP

Is the single authoritative source of US GAAP other than SEC pronouncements

According to the FASB's conceptual framework, which of the following is an essential characteristic of a liability? The identity of the recipient entity must be known to the obligated entity before the time of settlement. Liabilities are obligations resulting from previous transactions or events. Liabilities must be legally enforceable. Liabilities must require the obligated entity to pay cash to a recipient entity.

Liabilities are obligations resulting from previous transactions or events

Which of the following is true regarding the comparison of management and financial accounting? Management accounting has a past focus, and financial accounting has a future focus. Management accounting need not follow generally accepted accounting principles (GAAP), while financial accounting must follow them. Management accounting is generally more precise. The emphasis on management accounting is relevance, and the emphasis on financial accounting is timeliness.

Management accounting need not follow GAAP, while financial accounting must follow them

According to the FASB's conceptual framework, what does the concept of faithful representation in financial reporting include? Neutrality. Predictive value. Perfect accuracy. Certainty.

Neutrality

During the lifetime of an entity, accountants produce financial statements at arbitrary moments in time in accordance with which basic accounting concept? Conservatism. Verifiability. Matching. Periodicity.

Periodicity

According to the FASB's conceptual framework, the process of reporting an item in the financial statements of an entity is Recognition. Realization. Matching. Allocation.

Recognition

Which of the following bodies has the original authority to set accounting standards for publicly traded companies in the U.S.? The Financial Accounting Standards Board (FASB). The American Institute of Certified Public Accountants (AICPA). The International Accounting Standards Board (IASB). The Securities and Exchange Commission (SEC).

SEC

The SEC has affirmed that it will recognize which of the following entities as an accounting standard-setter for filings under the securities laws? The GASB. The FASB. The IASB. The AICPA.

The FASB

Other than SEC pronouncements, which of the following accounting pronouncements applicable to nongovernmental entities is recognized by the FASB as the most authoritative? AICPA Statements of Position. FASB Statement of Financial Accounting Concepts. FASB Technical Bulletins. The FASB's Accounting Standards Codification

The FASB's Accounting Standards codification

Which of the following is a true statement about the objective of general-purpose financial reporting? The information provided relates to the entity's economic resources and claims. The objective applies only to information that is useful for investment professionals. Financial reporting directly measures management performance. Financial reporting is ordinarily focused on industries rather than individual entities.

The information provided relates to the entity's economic resources and claims

What is the primary objective of financial reporting? To provide management with an accurate evaluation of their financial performance. To provide forecasts for future cash flows and financial performance. To provide economic information that is comprehensible to all users. To provide information that is useful for economic decision making.

To provide information that is useful for economic decision making

Which of the following is included in the FASB Accounting Standards Codification? Governmental accounting standards. All SEC guidance. U.S. GAAP for nongovernmental entities. Guidance for special purpose frameworks.

US GAAP for nongovernmental entities

A newly acquired plant asset is to be depreciated over its useful life. What is the basis for this accounting method? Monetary-unit assumption. Materiality. Going-concern assumption. Economic-entity assumption.

going concern assumption

An accrued expense can best be described as an amount Not paid and not currently matched with earnings. Paid and not currently matched with earnings. Not paid and currently matched with earnings. Paid and currently matched with earnings.

not paid and currently matched with earnings

All of the following are defined as elements of an income statement except Shareholders' equity. Gains and losses. Revenues. Expenses.

shareholders equity

What is the purpose of information presented in notes to the financial statements? To provide disclosures required by generally accepted accounting principles. To provide recognition of amounts not included in the totals of the financial statements. To correct improper presentation in the financial statements. To present management's responses to auditor comments.

to provide disclosures required by generally accepted accounting principles

Which of the following accounting concepts states that an accounting transaction should be supported by sufficient evidence to allow two or more qualified individuals to arrive at essentially similar measures and conclusions? Periodicity. Matching. Verifiability. Stable monetary unit.

verifiability