Question 1

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 2

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

Accepted Answer

To answer the questions relate

Question 3

Typically ________ use the applied financial accounting research process.

Accepted Answer

A) auditors 
B) investors 
C) financial statement preparers 
D) both A & C 
A) auditors 
B) investors 
C) financial statement preparers 
D) both A & C

Question 4

When the FASB issues a new pronouncement,it is referred to as an ________.

Accepted Answer

A) Accounting Standards Update 
B) Accounting Codification Update 
C) Accounting Topic Update 
D) Accounting Reporting Update 
A) Accounting Standards Update 
B) Accounting Codification Update 
C) Accounting Topic Update 
D) Accounting Reporting Update

Question 5

The steps in the financial accounting research process ________.

Accepted Answer

A) must be completed in order 
B) can be an iterative process 
C) are not all necessary 
D) must be disclosed in form 8Q 
A) must be completed in order 
B) can be an iterative process 
C) are not all necessary 
D) must be disclosed in form 8Q

Question 6

The confirmatory bias is the tendency to use the data that is most readily available or most easily recalled to make a decision.

Accepted Answer

A) True 
 B)False

Question 7

Regina Woods,CPA is unsure about the presentation of one of the financial statements.In which topic grouping should she begin her research?

Accepted Answer

A) 1XX 
B) 2XX 
C) 3XX 
D) 4XX 
A) 1XX 
B) 2XX 
C) 3XX 
D) 4XX

Question 8

Which account balance is least likely to be based on an estimate?

Accepted Answer

A) Accounts Receivable 
B) Property,Plant,and Equipment 
C) Accounts Payable 
D) Contingent Liabilities 
A) Accounts Receivable 
B) Property,Plant,and Equipment 
C) Accounts Payable 
D) Contingent Liabilities

Question 9

Which of the following situations might influence management to intentionally bias estimates and impede the use of good judgment?

Accepted Answer

A) Earnings are on track to surpass analysts' forecasts. 
B) Managements' bonuses are tied to net income. 
C) Employees work for commission. 
D) All of the above. 
A) Earnings are on track to surpass analysts' forecasts. 
B) Managements' bonuses are tied to net income. 
C) Employees work for commission. 
D) All of the above.

Question 10

Financial statement users can look to the ________ to determine whether a company uses income-increasing or income-reducing accounting policies.

Accepted Answer

A) revenue policies footnote 
B) contingencies footnote 
C) accounting policies footnote 
D) intangibles explanation footnote 
A) revenue policies footnote 
B) contingencies footnote 
C) accounting policies footnote 
D) intangibles explanation footnote

Question 11

It is important to understand the facts of a transaction prior to conducting research because ________.

Accepted Answer

A) it is necessary for documentation 
B) misunderstood facts can lead to incorrect conclusions 
C) it provides direction when searching the Codification 
D) it is useful when comparing similar transactions 
A) it is necessary for documentation 
B) misunderstood facts can lead to incorrect conclusions 
C) it provides direction when searching the Codification 
D) it is useful when comparing similar transactions

Question 12

When evaluating research,you find that you need additional facts related to the business transaction.What should you do?

Accepted Answer

A) Make a note of your questions,but continue on through the steps. 
B) Return to step 2. 
C) Return to step 1. 
D) Ask for help,you clearly didn't pose the right question to begin with. 
A) Make a note of your questions,but continue on through the steps. 
B) Return to step 2. 
C) Return to step 1. 
D) Ask for help,you clearly didn't pose the right question to begin with.

Question 13

Tracy Smith is researching a financial reporting issue.She did not find guidance for the specific transaction in the Accounting Standards Codification.Briefly explain how she should proceed in resolving her accounting research question.

Accepted Answer

She must look elsewhere in the authorita

Question 14

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 15

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

Accepted Answer

A) True 
 B)False

Question 16

Caesar Company needs to purchase a new delivery truck.Rather than taking the time to research which truck would best fit the company's needs,the manager calls his friend to ask which truck he would recommend.The manager is exhibiting ________.

Accepted Answer

A) bad judgment 
B) overconfidence bias 
C) availability bias 
D) anchoring bias 
A) bad judgment 
B) overconfidence bias 
C) availability bias 
D) anchoring bias

Question 17

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 18

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 19

You just landed your dream job - doing accounting for a small,organic farm! Due to high demand for the popular honeycrisp apples,the owner is looking to expand.She has asked you to prepare a set of financial statements for the bank to review with her loan application.The apples have been picked and boxed up,but have not been sold or shipped yet.You are unsure how to report the apples on the balance sheet.You have never dealt with inventory valuation for agricultural products.Complete the first two steps of the research process based on the information provided in this problem.

Accepted Answer

Establish and Understand the Facts:The p

Question 20

What is the first step in the financial accounting research process?

Accepted Answer

A) identify the issue 
B) search the authoritative literature 
C) establish and understand the facts 
D) review the transaction reports 
A) identify the issue 
B) search the authoritative literature 
C) establish and understand the facts 
D) review the transaction reports

Exam 3: Judgment and Applied Financial Accounting Research

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

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

Typically ________ use the applied financial accounting research process.

When the FASB issues a new pronouncement,it is referred to as an ________.

The steps in the financial accounting research process ________.

The confirmatory bias is the tendency to use the data that is most readily available or most easily recalled to make a decision.

Regina Woods,CPA is unsure about the presentation of one of the financial statements.In which topic grouping should she begin her research?

Which account balance is least likely to be based on an estimate?

Which of the following situations might influence management to intentionally bias estimates and impede the use of good judgment?

Financial statement users can look to the ________ to determine whether a company uses income-increasing or income-reducing accounting policies.

It is important to understand the facts of a transaction prior to conducting research because ________.

When evaluating research,you find that you need additional facts related to the business transaction.What should you do?

Tracy Smith is researching a financial reporting issue.She did not find guidance for the specific transaction in the Accounting Standards Codification.Briefly explain how she should proceed in resolving her accounting research question.

The ________ are uniform throughout the Codification.

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

Caesar Company needs to purchase a new delivery truck.Rather than taking the time to research which truck would best fit the company's needs,the manager calls his friend to ask which truck he would recommend.The manager is exhibiting ________.

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

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

What is the first step in the financial accounting research process?

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

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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