Question 1

Listed below are ten organizations followed by a list of phrases that describe or characterize the organizations. Match each phrase with the correct organization.
-FASAC

Accepted Answer

A) FASB's predecessor. 
B) Primary national organization of accountants working in industry. 
C) Regulates the financial reporting for public companies. 
D) The FASB's parent organization. 
E) National organization of certified public accountants.
F)Sets accounting standards in the United States.
G)Provides timely responses to financial reporting issues.
H)Advises the FASB
I)Sets global accounting standards.
J)Establishes auditing standards in the US for public companies.

Question 2

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

Accepted Answer

The answer of What is the SEC and how is...

Question 3

In the United States, the conceptual framework indicates GAAP when a more specific accounting standard does not apply.

Accepted Answer

A) True 
 B)False

Question 4

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Financial Accounting Standards Board

Accepted Answer

A) Its EITF Issues are GAAP when entered in the Accounting Standards Codification. 
B) It is the national organization for CPAs in the United States. 
C) It has the authority to set U.S. accounting standards. 
D) It established GAAP before the FASB. 
E) Undermines representational faithfulness by being inconsistent with neutrality.

Question 5

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-American Institute of CPAs (AICPA)

Accepted Answer

A) Its EITF Issues are GAAP when entered in the Accounting Standards Codification. 
B) It is the national organization for CPAs in the United States. 
C) It has the authority to set U.S. accounting standards. 
D) It established GAAP before the FASB. 
E) Undermines representational faithfulness by being inconsistent with neutrality.

Question 6

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.

Question 7

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.

Question 8

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Consistency

Accepted Answer

A) The decision to include an amount in the financial statements. 
B) Accounting information should be unbiased. 
C) Considers the value of using information relative to cost of providing it. 
D) Important in analysis between firms. 
E) Applying the same accounting practices over time.

Question 9

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Neutrality

Accepted Answer

A) The decision to include an amount in the financial statements. 
B) Accounting information should be unbiased. 
C) Considers the value of using information relative to cost of providing it. 
D) Important in analysis between firms. 
E) Applying the same accounting practices over time.

Question 10

A constraint on qualitative characteristics of accounting information is:

Accepted Answer

A)  Timeliness. 
B)  Going concern. 
C)  Neutrality. 
D)  Cost-effectiveness.

Question 11

Four different competent accountants independently agree on the amount and method of reporting an economic event. The concept demonstrated is:

Accepted Answer

A)  Reliability. 
B)  Comparability. 
C)  Completeness. 
D)  Verifiability.

Question 12

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Materiality

Accepted Answer

A) Basis of measurement for fixed assets. 
B) Reporting of all information that could affect decisions. 
C) Occurs when goods or services are transferred to the customer. 
D) Discounts future cash flows. 
E) Application of GAAP sometimes avoided under this constraint.

Question 13

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.

Question 14

The most political issue in the FASB's most recent deliberations and amendments to GAAP on stock options was:

Accepted Answer

A)  The negative effects on earnings of companies in the tech industry if they had to recognize expenses associated with stock compensation. 
B)  The negative effects on assets of recognizing stock options in equity. 
C)  The disclosure of stock compensation expense in the notes. 
D)  Accounting for stock options that have not yet been granted to employees.

Question 15

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.

Question 16

What provisions did the Public Company Accounting Reform and Investor Protection (Sarbanes-Oxley) Act of 2002 make for performance of nonaudit services by an audit firm?

Accepted Answer

The answer of What provisions did the Public Company Accounting...

Question 17

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Equity

Accepted Answer

A) Net assets. 
B) Transfers of resources in exchange for common and preferred stock. 
C) Claims of creditors against the assets of a business. 
D) Outflows of resources to generate revenues. 
E) Cash dividends.

Question 18

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Going concern assumption

Accepted Answer

A) Implies consensus among different observers. 
B) Assumes an entity will continue to operate indefinitely. 
C) Ignores the possibility of inflation. 
D) Assumes all transactions can be identified with a particular entity. 
E) Requires reporting the financial life of an entity in discrete time frames.

Question 19

External decision makers would not look primarily to financial accounting information to assist them in making decisions on:

Accepted Answer

A)  Granting credit. 
B)  Capital budgeting. 
C)  Selecting stocks. 
D)  Mergers and acquisitions.

Question 20

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.

Exam 1: Environment and Theoretical Structure of Financial Accounting

Listed below are ten organizations followed by a list of phrases that describe or characterize the organizations. Match each phrase with the correct organization. -FASAC

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

In the United States, the conceptual framework indicates GAAP when a more specific accounting standard does not apply.

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Financial Accounting Standards Board

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -American Institute of CPAs (AICPA)

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:

A firm's comprehensive income always:

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Consistency

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Neutrality