Question 1

Enhancing qualitative characteristics of accounting information include each of the following except:

Accepted Answer

A) Timeliness. 
B) Materiality. 
C) Comparability. 
D) Verifiability. 
A) Timeliness. 
B) Materiality. 
C) Comparability. 
D) Verifiability.

Question 2

The recognition of which of the following expenses exemplifies the application of the matching principle?

Accepted Answer

A) President's salary. 
B) Research and development. 
C) Cost of goods sold. 
D) Advertising. 
A) President's salary. 
B) Research and development. 
C) Cost of goods sold. 
D) Advertising.

Question 3

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 4

Identify or define the following terms: periodicity, monetary unit.

Accepted Answer

Periodicity-The life of a company can be

Question 5

The FASB's conceptual framework lists relevance and timeliness as the two fundamental qualitative characteristics of decision useful information.

Accepted Answer

A) True 
 B)False

Question 6

When a registrant company submits its annual filing to the SEC, it uses:

Accepted Answer

A) Form 10-A. 
B) Form 10-K. 
C) Form 10-Q. 
D) Form S-1. 
A) Form 10-A. 
B) Form 10-K. 
C) Form 10-Q. 
D) Form S-1.

Question 7

Determining fair value by calculating the present value of future cash flows is a level 1 type of input.

Accepted Answer

A) True 
 B)False

Question 8

Surefeet Corporation changed its inventory valuation method. Which characteristic is jeopardized by this change?

Accepted Answer

A) Comparability. 
B) Representational faithfulness. 
C) Consistency. 
D) Feedback value. 
A) Comparability. 
B) Representational faithfulness. 
C) Consistency. 
D) Feedback value.

Question 9

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 10

In the Norwalk Agreement, the FASB and IASB pledged to:

Accepted Answer

A) Combine their organizations to form the BUSYB. 
B) Make progress on specific MOU projects. 
C) Achieve convergence by the year 2015. 
D) Remove existing differences between their standards. 
A) Combine their organizations to form the BUSYB. 
B) Make progress on specific MOU projects. 
C) Achieve convergence by the year 2015. 
D) Remove existing differences between their standards.

Question 11

Materiality can be affected by the dollar amount of an item, the nature of the item, or both.

Accepted Answer

A) True 
 B)False

Question 12

Maltec Corporation has started placing its quarterly financial statements on its web page, thereby reducing by 10 days the time to get information to investors and creditors. The qualitative concept improved is:

Accepted Answer

A) Comparability. 
B) Consistency. 
C) Timeliness. 
D) Faithful representation. 
A) Comparability. 
B) Consistency. 
C) Timeliness. 
D) Faithful representation.

Question 13

The possibility that the capital markets' focus on periodic profits may tempt a company's management to bend or even break accounting rules to inflate reported net income is an example of:

Accepted Answer

A) An ethical dilemma. 
B) An accounting theory issue. 
C) A technical accounting issue. 
D) None of the above is correct. 
A) An ethical dilemma. 
B) An accounting theory issue. 
C) A technical accounting issue. 
D) None of the above is correct.

Question 14

The asset/liability approach emphasizes:

Accepted Answer

A) Whether amounts on the balance sheet meet the definitions of assets and liabilities. 
B) A close relation between the balance sheet and the statement of cash flows. 
C) The distinction between net assets and gross assets. 
D) All of the above are correct. 
A) Whether amounts on the balance sheet meet the definitions of assets and liabilities. 
B) A close relation between the balance sheet and the statement of cash flows. 
C) The distinction between net assets and gross assets. 
D) All of the above are correct.

Question 15

The primary professional organization for those accountants working in the industry is the:

Accepted Answer

A) AAA. 
B) AICPA. 
C) IIA. 
D) IMA. 
A) AAA. 
B) AICPA. 
C) IIA. 
D) IMA.

Question 16

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 17

List the four financial statements most frequently provided to external users.

Accepted Answer

Balance sheet, Incom

Question 18

The most recent example of the political process at work in standard setting is the heated debate that occurred on the issue of:

Accepted Answer

A) Pension plan accounting. 
B) Accounting for postretirement benefits other than pensions. 
C) Accounting for business combinations. 
D) Accounting for stock-based compensation. 
A) Pension plan accounting. 
B) Accounting for postretirement benefits other than pensions. 
C) Accounting for business combinations. 
D) Accounting for stock-based compensation.

Question 19

Recognizing expected losses immediately, but deferring expected gains, is an example of:

Accepted Answer

A) Materiality. 
B) Conservatism. 
C) Cost-effectiveness. 
D) Timeliness. 
A) Materiality. 
B) Conservatism. 
C) Cost-effectiveness. 
D) Timeliness.

Question 20

Net income equals:

Accepted Answer

A) Assets minus liabilities. 
B) Revenues minus cost of goods sold. 
C) Revenues minus expenses. 
D) Cash receipts minus cash payments. 
A) Assets minus liabilities. 
B) Revenues minus cost of goods sold. 
C) Revenues minus expenses. 
D) Cash receipts minus cash payments.

Exam 1: Environment and Theoretical Structure of Financial Accounting

Enhancing qualitative characteristics of accounting information include each of the following except:

The recognition of which of the following expenses exemplifies the application of the matching principle?

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

Identify or define the following terms: periodicity, monetary unit.

The FASB's conceptual framework lists relevance and timeliness as the two fundamental qualitative characteristics of decision useful information.

When a registrant company submits its annual filing to the SEC, it uses:

Determining fair value by calculating the present value of future cash flows is a level 1 type of input.

Surefeet Corporation changed its inventory valuation method. Which characteristic is jeopardized by this change?

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

In the Norwalk Agreement, the FASB and IASB pledged to:

Materiality can be affected by the dollar amount of an item, the nature of the item, or both.

Maltec Corporation has started placing its quarterly financial statements on its web page, thereby reducing by 10 days the time to get information to investors and creditors. The qualitative concept improved is:

The possibility that the capital markets' focus on periodic profits may tempt a company's management to bend or even break accounting rules to inflate reported net income is an example of:

The asset/liability approach emphasizes:

The primary professional organization for those accountants working in the industry is the:

Which of the following groups is not among financial intermediaries?

List the four financial statements most frequently provided to external users.

The most recent example of the political process at work in standard setting is the heated debate that occurred on the issue of:

Recognizing expected losses immediately, but deferring expected gains, is an example of:

Net income equals:

Review of the Accounting Process

The Balance Sheet and Financial Disclosures

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

Income Measurement and Profitability Analysis

Time Value of Money Concepts

Cash and Receivables

Inventories: Measurement

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

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 Key

Share-Based Compensation and Earnings Per Share

Accounting Changes and Error Corrections

The Statement of Cash Flows Revisited

Filters