Exam 1: The Financial Reporting Environment

Rules-based standards result in inconsistencies between standards.

Which organization is responsible for setting auditing standards and oversees the audits of public companies in the United States?

Both financial and governmental accounting standards are under the auspices of the Financial Accounting Foundation.

In recent years,the FASB standards that have been set indicate they believe the income statement is deemed to dominate the balance sheet.

Which party involved in the financial reporting process provides assurance that financial statements prepared by management fairly present the financial position and performance of the company?

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

Which financial statement is implicitly considered dominant as standard setting have shifted toward the asset/liability approach?

________ is the amount at which a liability could be incurred or settled in a current transaction between willing parties.

Currently,what is the single source of generally accepted accounting principles in the United States?

The FASB Accounting Standards Codification is the one and only single source of GAAP in the United States.

Fair value of an asset is the amount at which the asset could be bought in a current transaction between willing parties.

The SEC permits the use of IFRS-based financial statements by international companies with shares trading on U.S.stock exchanges.

The Private Company Council has authority to make the final decision about changing U.S.GAAP for private companies.

Which of the following organizations is responsible for setting accounting standards for state and local governments?

IFRS refers to generally accepted accounting standards that apply globally.

Which of the following statements correctly identifies accounting standard setters?

The financial reporting process generates three basic financial statements.

Accounting standard setting began in the United States with the 1934 Securities Exchange Act.

Principles-based standards typically provide sufficient guidance to implement a standard.

Which of the following statements about the global standard-setting structure is false?