Question 1

The full disclosure principle requires a balance between:

Accepted Answer

A) Comparability and consistency. 
B) Relevance and cost-effectiveness. 
C) Reliability and neutrality. 
D) Timeliness and predictive value. 
A) Comparability and consistency. 
B) Relevance and cost-effectiveness. 
C) Reliability and neutrality. 
D) Timeliness and predictive value. B

Question 2

The funding of the standard-setting bodies that promulgate IFRS is as independent as that underlying U.S.GAAP.

Accepted Answer

A) True 
 B)False  False

Question 3

A rules-based approach to standard-setting stresses professional judgment as opposed to following a list of rules.

Accepted Answer

A) True 
 B)False  False

Question 4

The revenue/expense approach emphasizes determining the appropriate amounts of revenue and expense in each reporting period.

Accepted Answer

A) True 
 B)False

Question 5

The primary responsibility for properly applying GAAP when communicating with investors and creditors through financial statements lies with a firm's auditors.

Accepted Answer

A) True 
 B)False

Question 6

Under IFRS,the conceptual framework:

Accepted Answer

A) Emphasizes the overarching concept of the financial statements providing a "true and fair representation" of the company. 
B) Is not designed to provide guidance to standard setters,but rather only to practitioners. 
C) Is not designed to provide guidance to practitioners,but rather only to standard setters. 
D) Specifies a set of rules that determine what constitutes a true IFRS standard. 
A) Emphasizes the overarching concept of the financial statements providing a "true and fair representation" of the company. 
B) Is not designed to provide guidance to standard setters,but rather only to practitioners. 
C) Is not designed to provide guidance to practitioners,but rather only to standard setters. 
D) Specifies a set of rules that determine what constitutes a true IFRS standard.

Question 7

How does GAAP define fair value?

Accepted Answer

Fair value is defined as the p

Question 8

Accrual accounting attempts to measure revenues and expenses that occurred during accounting periods so they equal net operating cash flow.

Accepted Answer

A) True 
 B)False

Question 9

Use the following to answer questions
The following information ($ in millions)comes from a recent annual report of Amazon.com,Inc.:
  
-Compute Amazon's balance in cash at the beginning of the year.

Accepted Answer

Beginning balance in Cash + Ne

Question 10

The FASB's standard-setting process includes,in the correct order:

Accepted Answer

A) Exposure draft,research,discussion paper,Accounting Standards Update. 
B) Research,exposure draft,discussion paper,Accounting Standards Update. 
C) Research,discussion paper,exposure draft,Accounting Standards Update. 
D) Discussion paper,research,exposure draft,Accounting Standards Update. 
A) Exposure draft,research,discussion paper,Accounting Standards Update. 
B) Research,exposure draft,discussion paper,Accounting Standards Update. 
C) Research,discussion paper,exposure draft,Accounting Standards Update. 
D) Discussion paper,research,exposure draft,Accounting Standards Update.

Question 11

Which of the following best describes the additional information that companies use to meet the requirements of full disclosure in financial statements?

Accepted Answer

A) Parenthetical comments or modifying comments placed on the face of the financial statements. 
B) Disclosure notes conveying additional insights about company operations,accounting principles,contractual agreements,and pending litigation. 
C) Supplemental schedules and tables that report more detailed information than is shown in the primary financial statements. 
D) Comments on the face of the financial statements,and schedules,tables,and narrative disclosures in notes to the financial statements. 
A) Parenthetical comments or modifying comments placed on the face of the financial statements. 
B) Disclosure notes conveying additional insights about company operations,accounting principles,contractual agreements,and pending litigation. 
C) Supplemental schedules and tables that report more detailed information than is shown in the primary financial statements. 
D) Comments on the face of the financial statements,and schedules,tables,and narrative disclosures in notes to the financial statements.

Question 12

Which of the following groups is not among financial intermediaries?

Accepted Answer

A) Mutual fund managers. 
B) Financial analysts. 
C) CPAs. 
D) Credit rating organizations. 
A) Mutual fund managers. 
B) Financial analysts. 
C) CPAs. 
D) Credit rating organizations.

Question 13

What is the SEC and how is it involved with accounting standard-setting?

Accepted Answer

The Securities and Exchange Commission i

Question 14

Over time,accounting standards have developed to reflect changes in the business world as well as changes in our ability to account for such changes.Using the example of marking assets and liabilities to their fair value,explain why you would expect accounting standards to change.

Accepted Answer

Historically,financial accounting relied

Question 15

The FASB's conceptual framework's qualitative characteristics of accounting information include:

Accepted Answer

A) Full disclosure. 
B) Relevance. 
C) Going concern. 
D) Historical cost. 
A) Full disclosure. 
B) Relevance. 
C) Going concern. 
D) Historical cost.

Question 16

If a company has declared bankruptcy,its financial statements likely violate:

Accepted Answer

A) The fair value measurement approach. 
B) The present value measurement approach. 
C) The stable monetary unit assumption. 
D) The going concern assumption. 
A) The fair value measurement approach. 
B) The present value measurement approach. 
C) The stable monetary unit assumption. 
D) The going concern assumption.

Question 17

A firm's comprehensive income always:

Accepted Answer

A) Is the same as its net income. 
B) Is greater than its net income. 
C) Is less than its net income. 
D) Could be greater than or less than net income. 
A) Is the same as its net income. 
B) Is greater than its net income. 
C) Is less than its net income. 
D) Could be greater than or less than net income.

Question 18

An important argument in support of historical cost information is:

Accepted Answer

A) Relevance. 
B) Predictive quality for future cash flows. 
C) Materiality. 
D) Verifiability. 
A) Relevance. 
B) Predictive quality for future cash flows. 
C) Materiality. 
D) Verifiability.

Question 19

The main issue in the debate over accounting for employee stock options was:

Accepted Answer

A) Which employees should receive options. 
B) The amount of compensation expense that a company should recognize. 
C) How many options should be granted to key executives. 
D) The tax consequences of employee stock options. 
A) Which employees should receive options. 
B) The amount of compensation expense that a company should recognize. 
C) How many options should be granted to key executives. 
D) The tax consequences of employee stock options.

Question 20

Which of the following is not true about net operating cash flow?

Accepted Answer

A) It is the difference between cash receipts and cash disbursements from providing goods and services. 
B) It is a measure used in accrual accounting and is recognized as the best predictor of future operating cash flows. 
C) Over short periods,it may not be indicative of long-run cash-generating ability. 
D) It is easy to understand and all information required to measure it is factual. 
A) It is the difference between cash receipts and cash disbursements from providing goods and services. 
B) It is a measure used in accrual accounting and is recognized as the best predictor of future operating cash flows. 
C) Over short periods,it may not be indicative of long-run cash-generating ability. 
D) It is easy to understand and all information required to measure it is factual.

Exam 1: Environment and Theoretical Structure of Financial Accounting

The full disclosure principle requires a balance between:

The funding of the standard-setting bodies that promulgate IFRS is as independent as that underlying U.S.GAAP.

A rules-based approach to standard-setting stresses professional judgment as opposed to following a list of rules.

The revenue/expense approach emphasizes determining the appropriate amounts of revenue and expense in each reporting period.

The primary responsibility for properly applying GAAP when communicating with investors and creditors through financial statements lies with a firm's auditors.

Under IFRS,the conceptual framework:

How does GAAP define fair value?

Accrual accounting attempts to measure revenues and expenses that occurred during accounting periods so they equal net operating cash flow.

Use the following to answer questions The following information ($ in millions)comes from a recent annual report of Amazon.com,Inc.: -Compute Amazon's balance in cash at the beginning of the year.

The FASB's standard-setting process includes,in the correct order:

Which of the following best describes the additional information that companies use to meet the requirements of full disclosure in financial statements?

Which of the following groups is not among financial intermediaries?

What is the SEC and how is it involved with accounting standard-setting?

Over time,accounting standards have developed to reflect changes in the business world as well as changes in our ability to account for such changes.Using the example of marking assets and liabilities to their fair value,explain why you would expect accounting standards to change.

The FASB's conceptual framework's qualitative characteristics of accounting information include:

If a company has declared bankruptcy,its financial statements likely violate:

A firm's comprehensive income always:

An important argument in support of historical cost information is:

The main issue in the debate over accounting for employee stock options was:

Which of the following is not true about net operating cash flow?

Review of the Accounting Process

The Balance Sheet and Financial Disclosures

The Income Statement, comprehensive Income, and the Statement of Cash Flows

Income Measurement

Time Value of Money Concepts

Cash and Receivables

Inventories: Measurement

Inventories: Additional Issues

Property, plant, and Equipment and Intangible Assets: Acquisition and Disposition

Property, plant, and Equipment and Intangible Assets: Utilization and Impairment

Investments

Current Liabilities and Contingencies

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Pensions and Other Postretirement Benefits

Shareholders Equity

Share-Based Compensation and Earnings Per Share

Accounting Changes

The Statement of Cash Flows

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