Question 1

Managers of economic entities are best considered to be preparers of financial information.

Accepted Answer

A) True 
 B)False  True

Question 2

Principles-based standards involve few,if any,exceptions.

Accepted Answer

A) True 
 B)False  True

Question 3

Which need is the primary influence on the demand for financial information?

Accepted Answer

A) the need for managers to make decisions that improve organizational effectiveness and efficiency 
B) the need for society to maintain an equilibrium of good and services 
C) the need for user groups to make decisions regarding resource allocation 
D) the need for regulators to control improper business behavior 
A) the need for managers to make decisions that improve organizational effectiveness and efficiency 
B) the need for society to maintain an equilibrium of good and services 
C) the need for user groups to make decisions regarding resource allocation 
D) the need for regulators to control improper business behavior C

Question 4

Rules-based standards require a significant amount of professional judgment.

Accepted Answer

A) True 
 B)False

Question 5

Which type of standard relies on theories and concepts that are linked to a well-developed theoretical framework?

Accepted Answer

A) objectives-based standard 
B) principles-based standard 
C) theories-based standard 
D) rules-based standard 
A) objectives-based standard 
B) principles-based standard 
C) theories-based standard 
D) rules-based standard

Question 6

How does accounting help in the capital allocation process?

Accepted Answer

Financial accounting provides informatio

Question 7

Which of the following is not a current trend in accounting-standards setting?

Accepted Answer

A) increase in political involvement 
B) move toward principles-based system 
C) focus on asset/liability approach 
D) emphasis on measuring fair value 
A) increase in political involvement 
B) move toward principles-based system 
C) focus on asset/liability approach 
D) emphasis on measuring fair value

Question 8

Which organization is responsible for promulgating U.S.GAAP?

Accepted Answer

A) Financial Accounting Standards Board 
B) Public Company Accounting Oversight Board 
C) International Accounting Standards Board 
D) Securities Exchange Commission 
A) Financial Accounting Standards Board 
B) Public Company Accounting Oversight Board 
C) International Accounting Standards Board 
D) Securities Exchange Commission

Question 9

The demand for financial information is based on market factors.

Accepted Answer

A) True 
 B)False

Question 10

Financial accounting standards influence the behavior of managers and other internal users.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is a characteristic of rules-based standards?

Accepted Answer

A) involve few,if any,exceptions 
B) result in inconsistencies between standards 
C) contain no bright-line tests 
D) provide insufficient guidance 
A) involve few,if any,exceptions 
B) result in inconsistencies between standards 
C) contain no bright-line tests 
D) provide insufficient guidance

Question 12

The Public Company Accounting Oversight Board (PCAOB)sets financial accounting standards and oversees the audits of public companies in the United States.

Accepted Answer

A) True 
 B)False

Question 13

What is the term that describes the process of identifying,measuring,and communicating financial information about an economic entity to various user groups?

Accepted Answer

A) financial reporting 
B) accounting standard setting 
C) financial statement 
D) financial accounting 
A) financial reporting 
B) accounting standard setting 
C) financial statement 
D) financial accounting

Question 14

U.S.Congress has given the Securities Exchange Commission the power to promulgate accounting standards.

Accepted Answer

A) True 
 B)False

Question 15

Which organization prepares and grades the Uniform CPA Examination?

Accepted Answer

A) Financial Accounting Standards Board 
B) Public Company Accounting Oversight Board 
C) American Institute of Certified Public Accountants 
D) International Accounting Standards Board 
A) Financial Accounting Standards Board 
B) Public Company Accounting Oversight Board 
C) American Institute of Certified Public Accountants 
D) International Accounting Standards Board

Question 16

Which of the following is a characteristic of objectives-based standards?

Accepted Answer

A) do not rely on professional judgment 
B) increase bright-line tests 
C) somewhere between principles-based and rules-based 
D) no exceptions 
A) do not rely on professional judgment 
B) increase bright-line tests 
C) somewhere between principles-based and rules-based 
D) no exceptions

Question 17

Principles-based standards are more consistent with the asset/liability approach and rules-based standards are more consistent with the income statement approach.

Accepted Answer

A) True 
 B)False

Question 18

Which organization is responsible for the oversight,financing,and administration of all accounting standard setting organizations in the United States?

Accepted Answer

A) American Institute of Certified Public Accountants (AICP
A)  
B) Financial Accounting Foundation (FAF) 
C) Securities Exchange Commission (SE
C)  
D) Financial Accounting Standards Advisory Council (FASA
C)  
A) American Institute of Certified Public Accountants (AICP
A)  
B) Financial Accounting Foundation (FAF) 
C) Securities Exchange Commission (SE
C)  
D) Financial Accounting Standards Advisory Council (FASA
C)

Question 19

The FASB and the IFRS work together to converge U.S.and international standards to eliminate differences.

Accepted Answer

A) True 
 B)False

Question 20

In what ways does accounting information proactively interact with its environment?

Accepted Answer

Financial accounting is proactive in tha

Exam 1: The Financial Reporting Environment

Managers of economic entities are best considered to be preparers of financial information.

Principles-based standards involve few,if any,exceptions.

Which need is the primary influence on the demand for financial information?

Rules-based standards require a significant amount of professional judgment.

Which type of standard relies on theories and concepts that are linked to a well-developed theoretical framework?

How does accounting help in the capital allocation process?

Which of the following is not a current trend in accounting-standards setting?

Which organization is responsible for promulgating U.S.GAAP?

The demand for financial information is based on market factors.

Financial accounting standards influence the behavior of managers and other internal users.

Which of the following is a characteristic of rules-based standards?

The Public Company Accounting Oversight Board (PCAOB)sets financial accounting standards and oversees the audits of public companies in the United States.

What is the term that describes the process of identifying,measuring,and communicating financial information about an economic entity to various user groups?

U.S.Congress has given the Securities Exchange Commission the power to promulgate accounting standards.

Which organization prepares and grades the Uniform CPA Examination?

Which of the following is a characteristic of objectives-based standards?

Principles-based standards are more consistent with the asset/liability approach and rules-based standards are more consistent with the income statement approach.

Which organization is responsible for the oversight,financing,and administration of all accounting standard setting organizations in the United States?

The FASB and the IFRS work together to converge U.S.and international standards to eliminate differences.

In what ways does accounting information proactively interact with its environment?

Financial Reporting Theory

Judgment and Applied Financial Accounting Research

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

OL: Revenue Recognition

Short-Term Operating Assets: Cash and Receivables

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, cost Allocation, and Derecognition

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

OL: Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

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