Question 1

Which of the following presents the steps for the applied accounting research process in the correct order?

Accepted Answer

A)  Identify the issue, understand the facts, search the authoritative literature. 
B)  Search the authoritative literature, evaluate the results, develop conclusions. 
C)  Establish the facts, search the authoritative literature, identify the issue. 
D)  Evaluate the results, write a recommendation, develop conclusions. 
A)  Identify the issue, understand the facts, search the authoritative literature. 
B)  Search the authoritative literature, evaluate the results, develop conclusions. 
C)  Establish the facts, search the authoritative literature, identify the issue. 
D)  Evaluate the results, write a recommendation, develop conclusions.

Question 2

The ________ are uniform throughout the Codification.

Accepted Answer

A)  topics 
B)  subtopics 
C)  sections 
D)  subsections 
A)  topics 
B)  subtopics 
C)  sections 
D)  subsections

Question 3

Which of the following is most likely based on assumptions?

Accepted Answer

A)  Revenue 
B)  Depreciation expense 
C)  Rent expense 
D)  Dividends declared 
A)  Revenue 
B)  Depreciation expense 
C)  Rent expense 
D)  Dividends declared

Question 4

The Basis for Conclusions found in accounting pronouncements is found in the Codification for U.S. GAAP.

Accepted Answer

A) True 
 B)False

Question 5

Larry Smith, CPA does not know how to account for a deferred revenue transaction. In which topic grouping should he begin his research?

Accepted Answer

A)  2XX 
B)  3XX 
C)  4XX 
D)  5XX 
A)  2XX 
B)  3XX 
C)  4XX 
D)  5XX

Question 6

The Codification is divided into ________.

Accepted Answer

A)  chapters, topics, sections, and paragraphs 
B)  topics, subtopics, sections, and paragraphs 
C)  chapters, sections, subsections, and paragraphs 
D)  topics, sections, subsections, and paragraphs 
A)  chapters, topics, sections, and paragraphs 
B)  topics, subtopics, sections, and paragraphs 
C)  chapters, sections, subsections, and paragraphs 
D)  topics, sections, subsections, and paragraphs

Question 7

The final step in the accounting research process is to develop conclusions.

Accepted Answer

A) True 
 B)False

Question 8

In ASC 450-20-35-2, 450 represents the ________.

Accepted Answer

A)  chapter 
B)  topic 
C)  section 
D)  paragraph 
A)  chapter 
B)  topic 
C)  section 
D)  paragraph

Question 9

IFRS standards include all of the following except ________.

Accepted Answer

A)  Standing Interpretations Committee Interpretations 
B)  IFRS Interpretations Committee Interpretations 
C)  Standing Accounting Standards 
D)  International Accounting Standards 
A)  Standing Interpretations Committee Interpretations 
B)  IFRS Interpretations Committee Interpretations 
C)  Standing Accounting Standards 
D)  International Accounting Standards

Question 10

Your accounting client operates a website through which it sells products offered by other companies. You have gathered facts that indicate your client is an order-taker who receives payments from customer-buyers through its website, and then sends the order to the other company so they can ship their product to the customer. You have identified an accounting issue that suggests your client is acting as an agent for the other company which brings into question the way they recognize revenue from the transaction. Briefly describe how you should proceed in resolving this accounting research question.

Accepted Answer

Having gathered the facts and identified

Question 11

Kramerica Corporation is in the research and development stage with a new product. Their accountant is unsure how to account for these costs. In which topic grouping would he find more information about R&D?

Accepted Answer

A)  6XX 
B)  7XX 
C)  8XX 
D)  9XX 
A)  6XX 
B)  7XX 
C)  8XX 
D)  9XX

Question 12

The tendency to agree to an answer or choice based on an attempt to avoid conflict represents the overconfidence bias.

Accepted Answer

A) True 
 B)False

Question 13

Complete the table. Identify the steps in the applied financial accounting research process.
 $$\begin{array} { | l | l | } 
\hline \text { Step in research process } & \text { Description } \
\hline \text { Step 1 } & \
\hline \text { Step 2 } & \
\hline \text { Step 3 } & \
\hline \text { Step 4 } & \
\hline \text { Step 5 } & \
\hline \text { Step 6 } & \
\hline
\end{array}$$

Accepted Answer

\[\begin{array} { | l | l | } 
\hline \t

Question 14

In the Accounting Standards Codification, the section numbers under each subtopic are uniform throughout the Codification.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is true with regards to judgement and flexibility in selecting accounting methods and applying accounting standards?

Accepted Answer

A)  Flexibility makes it difficult if not impossible to prepare financial statements that allow users to compare the results of operations of similar companies in the same industry. 
B)  Accounting standards allow very little flexibility in the choice of methods as accounting rules tend to be strict and clear minimizing the opportunity for management judgement. 
C)  Flexibility in the selection of methods and application of accounting standards allows management to best reflect the economic realities of a company. 
D)  Financial statement information is not enhanced by allowing flexibility in the choice of accounting methods used. 
A)  Flexibility makes it difficult if not impossible to prepare financial statements that allow users to compare the results of operations of similar companies in the same industry. 
B)  Accounting standards allow very little flexibility in the choice of methods as accounting rules tend to be strict and clear minimizing the opportunity for management judgement. 
C)  Flexibility in the selection of methods and application of accounting standards allows management to best reflect the economic realities of a company. 
D)  Financial statement information is not enhanced by allowing flexibility in the choice of accounting methods used.

Question 16

Why is it important for accountants to build good research skills?

Accepted Answer

A)  There are too many standards for accountants to commit to memory. 
B)  If their assistant is busy, they'll need to find information on their own. 
C)  Research skills look good on a resume. 
D)  None of the above 
A)  There are too many standards for accountants to commit to memory. 
B)  If their assistant is busy, they'll need to find information on their own. 
C)  Research skills look good on a resume. 
D)  None of the above

Question 17

After deciding to record a business event, accountants use assumptions and estimates for what purpose?

Accepted Answer

To answer the questions relate

Question 18

Costanos Casino has an industry-specific question. In which topic grouping would the accountant begin his/her research?

Accepted Answer

A)  3XX 
B)  5XX 
C)  7XX 
D)  9XX 
A)  3XX 
B)  5XX 
C)  7XX 
D)  9XX

Question 19

Your classmate, Marla Smith, tells you that she likes accounting because it provides a clear-cut set of methods and rules to follow. As a result, it should be an easy job to get the hang of. Explain to her why accountants frequently need to use their judgment. Give specific examples.

Accepted Answer

Marla, while it's true that accounting d

Question 20

Complete the following table. Identify which cognitive bias is represented in each example.
 $$\begin{array} { |l | l| } 
\hline \text { Example } & \text { Cognitive Bias } \
\hline \text { The new manager at Danio Fisheries makes several investments on the } & \
\text { company's behalf. Even though he has no experience related to } & \
\text { investments, he is sure that he has made a smart move for the company. } & \
\hline \text { The audit team Bob, Chris, and Belle, are deciding which sampling } & \
\text { methods to use on their current audit. Belle is bossy, and Bob and Chris } & \
\text { defer to her choice without fully exploring the options. } & \
\hline \text { The manager at Betta Co. needs to determine the useful life for the new } & \
\text { equipment used to filter water for the fish tanks. The owner has asked } & \
\text { that he research the topic, but he decides to just use the useful life based } & \
\text { on the claims made by the salesperson. } & \
\hline
\end{array}$$

Accepted Answer

\[\begin{array} { |l | l |} 
\hline \tex

Exam 3: Judgment and Applied Financial Accounting Research

Which of the following presents the steps for the applied accounting research process in the correct order?

The ________ are uniform throughout the Codification.

Which of the following is most likely based on assumptions?

The Basis for Conclusions found in accounting pronouncements is found in the Codification for U.S. GAAP.

Larry Smith, CPA does not know how to account for a deferred revenue transaction. In which topic grouping should he begin his research?

The Codification is divided into ________.

The final step in the accounting research process is to develop conclusions.

In ASC 450-20-35-2, 450 represents the ________.

IFRS standards include all of the following except ________.

Kramerica Corporation is in the research and development stage with a new product. Their accountant is unsure how to account for these costs. In which topic grouping would he find more information about R&D?

The tendency to agree to an answer or choice based on an attempt to avoid conflict represents the overconfidence bias.

Complete the table. Identify the steps in the applied financial accounting research process. Step in research process Description Step 1 Step 2 Step 3 Step 4 Step 5 Step 6

In the Accounting Standards Codification, the section numbers under each subtopic are uniform throughout the Codification.

Which of the following is true with regards to judgement and flexibility in selecting accounting methods and applying accounting standards?

Why is it important for accountants to build good research skills?

After deciding to record a business event, accountants use assumptions and estimates for what purpose?

Costanos Casino has an industry-specific question. In which topic grouping would the accountant begin his/her research?

Your classmate, Marla Smith, tells you that she likes accounting because it provides a clear-cut set of methods and rules to follow. As a result, it should be an easy job to get the hang of. Explain to her why accountants frequently need to use their judgment. Give specific examples.

The Financial Reporting Environment

Financial Reporting Theory

Review of the Accounting Cycle

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Revenue Recognition

Extenssion: Ol Revenue Recognition Previous Standard

Short-Term Operating Assets: Cash and Receivables

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, Cost Allocation

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Leases

Extension: Ol Accounting for Leases Current Standard

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

The Statement of Cash Flows

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