Question 1

Pronouncements issued by the Committee on Accounting Procedures:

Accepted Answer

A)   Dealt with specific accounting and reporting problems.
B)   Were based on exposure drafts and public comment letters.
C)   Originated from congressional studies and SEC directives.
D)   Were the outcome of research studies and a theoretical framework.E) A) and C)
F) None of the above

Question 2

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Comparability

Accepted Answer

A)  The decision to include an amount in the financial statements.
B)  Accounting information should be unbiased.
C)  Considers the value of using information relative to cost of providing it.
D)  Important in analysis between firms.
E)  Applying the same accounting practices over time.F) A) and E)
G) C) and D)

Question 3

The most likely important flaw leading to the demise of the APB was the perceived lack of:

Accepted Answer

A)   Confidence.
B)   Competence.
C)   Independence.
D)   Importance.E) A) and B)
F) C) and D)

Question 4

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Distributions to owners

Accepted Answer

A)  Net assets.
B)  Transfers of resources in exchange for common and preferred stock.
C)  Claims of creditors against the assets of a business.
D)  Outflows of resources to generate revenues.
E)  Cash dividends.F) B) and C)
G) All of the above

Question 5

Listed below are ten organizations followed by a list of phrases that describe or characterize the organizations. Match each phrase with the correct organization.
-AICPA

Accepted Answer

A)  FASB's predecessor.
B)  Primary national organization of accountants working in industry.
C)  Regulates the financial reporting for public companies.
D)  The FASB's parent organization.
E)  National organization of certified public accountants.F) Sets accounting standards in the United States.G) Provides timely responses to financial reporting issues.H) Advises the FASBI) Sets global accounting standards.J) Establishes auditing standards in the US for public companies.K) D) and I)
L) A) and C)

Question 6

Elements of financial statements do not include:

Accepted Answer

A)   Monetary unit.
B)   Investments by owners.
C)   Comprehensive income.
D)   Losses.E) A) and B)
F) C) and D)

Question 7

Which of the following groups is not among the external users for whom financial statements are prepared?

Accepted Answer

A)   Customers.
B)   Suppliers.
C)   Employees.
D)   Customers, suppliers, and employees are all external users of financial statements.E) B) and C)
F) A) and B)

Question 8

Explain and show an example of how the FASB's conceptual framework is needed in formulating standards on controversial topics.

Accepted Answer

In order to provide consistency, a conce...

Question 9

An important historical reason for the FASB reversing its positions when political pressures occur is:

Accepted Answer

A)   The cost of gathering data was prohibitive.
B)   The difficulties in measurement were too great.
C)   Companies withdraw financial support for the FASB.
D)   The SEC did not support the FASB position.E) B) and D)
F) A) and C)

Question 10

Identify or define the following terms: periodicity, monetary unit.

Accepted Answer

Periodicity-The life of a company...

Question 11

Listed below are ten organizations followed by a list of phrases that describe or characterize the organizations. Match each phrase with the correct organization.
-IMA

Accepted Answer

A)  FASB's predecessor.
B)  Primary national organization of accountants working in industry.
C)  Regulates the financial reporting for public companies.
D)  The FASB's parent organization.
E)  National organization of certified public accountants.F) Sets accounting standards in the United States.G) Provides timely responses to financial reporting issues.H) Advises the FASBI) Sets global accounting standards.J) Establishes auditing standards in the US for public companies.K) F) and J)
L) All of the above

Question 12

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Present value

Accepted Answer

A)  Basis of measurement for fixed assets.
B)  Reporting of all information that could affect decisions.
C)  Occurs when goods or services are transferred to the customer.
D)  Discounts future cash flows.
E)  Application of GAAP sometimes avoided under this constraint.F) C) and D)
G) A) and E)

Question 13

Under IFRS, the role of the conceptual framework:

Accepted Answer

A)   Primarily involves guiding standard setters to make sure that standards are consistent with each other.
B)   Includes serving as a guide for practitioners when a specific standard does not apply.
C)   Is less important than in U.S. GAAP.
D)   Has resulted primarily from a convergence with U.S. GAAP.E) A) and B)
F) A) and C)

Question 14

Gains or losses result, respectively, from the disposition of business assets for greater than, or less than, their book values.

Accepted Answer

A) True 
 B)False

Question 15

Determining fair value by calculating the present value of future cash flows is a level 1 type of input.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following best demonstrates the full disclosure principle?

Accepted Answer

A)   The multi-step income statement.
B)   The auditors' report.
C)   The company's tax return.
D)   Disclosure notes to financial statements.E) A) and B)
F) All of the above

Question 17

CPAs are licensed by:

Accepted Answer

A)   The AICPA.
B)   The SEC.
C)   The federal government.
D)   State governments.E) A) and B)
F) B) and C)

Question 18

The assumption that in the absence of contrary information a business entity will continue indefinitely is the:

Accepted Answer

A)   Periodicity assumption.
B)   Entity assumption.
C)   Going concern assumption.
D)   Historical cost assumption.E) B) and D)
F) C) and D)

Question 19

Revenue should not be recognized until:

Accepted Answer

A)   The seller has transferred goods or services to a customer.
B)   Contracts have been signed and payment has been received.
C)   Work has been performed and customer has been billed.
D)   Collection has been made and warrantees have expired.E) A) and B)
F) B) and C)

Question 20

How does GAAP define fair value?

Accepted Answer

Fair value is defined as the p...

Exam 1: Environment and Theoretical Structure of Financial Accounting

How does GAAP define fair value?

Correct AnswerverifiedFair value is defined as the p...View AnswerShow Answer

Listed below are ten organizations followed by a list of phrases that describe or characterize the organizations. Match each phrase with the correct organization. -AICPA

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Under IFRS, the role of the conceptual framework:

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Elements of financial statements do not include:

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Determining fair value by calculating the present value of future cash flows is a level 1 type of input.

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Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Distributions to owners

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Identify or define the following terms: periodicity, monetary unit.

Correct AnswerverifiedPeriodicity-The life of a company...View AnswerShow Answer

Which of the following groups is not among the external users for whom financial statements are prepared?

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Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Comparability

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The assumption that in the absence of contrary information a business entity will continue indefinitely is the:

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Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Present value

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Gains or losses result, respectively, from the disposition of business assets for greater than, or less than, their book values.

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Explain and show an example of how the FASB's conceptual framework is needed in formulating standards on controversial topics.

Correct AnswerverifiedIn order to provide consistency, a conce...View AnswerShow Answer

Pronouncements issued by the Committee on Accounting Procedures:

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An important historical reason for the FASB reversing its positions when political pressures occur is:

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CPAs are licensed by:

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Listed below are ten organizations followed by a list of phrases that describe or characterize the organizations. Match each phrase with the correct organization. -IMA

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The most likely important flaw leading to the demise of the APB was the perceived lack of:

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Revenue should not be recognized until:

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Which of the following best demonstrates the full disclosure principle?

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Fair value is defined as the p...
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Periodicity-The life of a company...
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In order to provide consistency, a conce...
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