Question 1

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 and Exchange Commission

Question 2

Which of the following statements is false?

Accepted Answer

A)  The SEC permits the use of IFRS-based financial statements by international companies with shares trading on U.S. stock exchanges. 
B)  Non-U.S. companies operate in the United States but prepare their financial statements using IFRS. 
C)  Accountants must convert to U.S. GAAP the IFRS financial statements of foreign subsidiaries that belong to U.S. companies. 
D)  The accounting profession has determined that a working knowledge of IFRS is not important for accountants working in the United States.

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Accounting standards setters do which of the following?

Accepted Answer

A)  protect investors and creditors 
B)  develop concepts, rules, and guidelines for financial reporting 
C)  assure transparent and truthful reporting and guarantee the efficient functioning of the capital markets 
D)  prosecute violators of their rules and guidelines so as to maintain the public trust and to ensure the efficient functioning of capital markets

Question 5

Which of the following is not a reason why an accountant in the United States should learn international accounting standards?

Accepted Answer

A)  The United States has plans to adopt IFRS in the near future. 
B)  The SEC permits the use of IFRS-based financial statements by international companies with shares trading on the U.S. stock exchanges. 
C)  An accountant may work for, or assist, a foreign company that operates in the U.S. and uses IFRS for financial reporting. 
D)  U.S. companies operate subsidiaries outside of the United States which report under IFRS in their home countries.

Question 6

When accountants work on the financial statements of U.S. companies with foreign subsidiaries prepared under IFRS in the home countries, the accountants do not convert the subsidiaries' financial statements to U.S. GAAP.

Accepted Answer

A) True 
 B)False

Question 7

In recent years, the FASB standards that have been set indicate that the income statement is more important than the balance sheet.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

U.S. GAAP contains more rules-based standards than IFRS.

Accepted Answer

A) True 
 B)False

Question 10

The FASB gives the SEC authority to regulate accounting for publicly traded companies.

Accepted Answer

A) True 
 B)False

Question 11

The financial reporting process generates three basic financial statements.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is not true of FASB?

Accepted Answer

A)  The FASB is a full-time board of seven members. 
B)  Board members must sever all relationships with outside entities. 
C)  Board members must be CPAs. 
D)  The FASB is not a subcommittee of the AICPA.

Question 13

The American Institute of Certified Public Accountants tests IFRS on the uniform CPA exam.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements correctly identifies accounting standard setters?

Accepted Answer

A)  The AICPA promulgates accounting standards in the U.S. and the IFRS issues international accounting standards. 
B)  The AICPA promulgates accounting standards in the U.S. and the IASB issues international accounting standards. 
C)  The FASB promulgates accounting standards in the U.S. and the IFRS issues international accounting standards. 
D)  The FASB promulgates accounting standards in the U.S. and the IASB issues international accounting standards.

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is not one of the four basic financial statements?

Accepted Answer

A)  balance sheet 
B)  general-purpose financial statement 
C)  cash flows statement 
D)  statement of comprehensive income

Question 17

List the seven steps of the FASB standard-setting process.

Accepted Answer

The answer of List the seven steps of the FASB...

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Which regulatory body sets auditing standards and oversees the audits of public companies in the United States?

Accepted Answer

A)  Public Company Accounting Oversight Board (PCAO
B)  
B)  Financial Accounting Standards Board (FAS
B)  
C)  American Institute of Certified Public Accountants (AICP
A)  
D)  Securities and Exchange Commission (SE
C)

Question 20

The demand for financial information is based on market factors.

Accepted Answer

A) True 
 B)False

Exam 1: The Financial Reporting Environment

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

Which of the following statements is false?

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

Accounting standards setters do which of the following?

Which of the following is not a reason why an accountant in the United States should learn international accounting standards?

When accountants work on the financial statements of U.S. companies with foreign subsidiaries prepared under IFRS in the home countries, the accountants do not convert the subsidiaries' financial statements to U.S. GAAP.

In recent years, the FASB standards that have been set indicate that the income statement is more important than the balance sheet.

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

U.S. GAAP contains more rules-based standards than IFRS.

The FASB gives the SEC authority to regulate accounting for publicly traded companies.

The financial reporting process generates three basic financial statements.

Which of the following is not true of FASB?

The American Institute of Certified Public Accountants tests IFRS on the uniform CPA exam.

Which of the following statements correctly identifies accounting standard setters?

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

Which of the following is not one of the four basic financial statements?

List the seven steps of the FASB standard-setting process.

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

Which regulatory body sets auditing standards and oversees the audits of public companies in the United States?

The demand for financial information is based on market factors.