Test Bank for Intermediate accounting 9th edition by J. David Spiceland and Mark W. Nelson Chapters 1-21 Covered

TEST BANK
FOR INTERMEDIATE
ACCOUNTING 11TH EDITION BY
DAVID SPICELAND LATEST
UPDATE 2026/2027 A+

,Chapter 1 Environment and Theoretical Structure of Financial Accounting

True/false questions

1. The primary function of financial accounting is to provide relevant financial
information to parties external to business enterprises.

Ans: true
Level of learning: 1 easy
learning objective: 01-01
Topic area: environment of financial accounting and
reporting blooms: remember
Aacsb: reflective thinking
aicpa: bb critical thinking


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

Ans: false
Level of learning: 1 easy
learning objective: 01-02
Topic area: cash versus accrual accounting
blooms: understand
Aacsb: reflective thinking
aicpa: fn measurement


3. The fasb is currently the public-sector organization responsible for setting
accounting standards in the united states.

Ans: false
Level of learning: 1 easy
learning objective: 01-03
Topic area: development of accounting and reporting
standards blooms: remember
Aacsb: reflective thinking
aicpa: bb legal


4. The fasb’s due process invites various interested parties to indicate their opinions
about whether financial accounting standards should be changed.

Ans: true
Level of learning: 1 easy
learning objective: 01-04
Topic area: gaap―standard-setting process
blooms: remember
Aacsb: reflective thinking
aicpa: bb legal


5. Accounting for stock-based compensation is an area in which the fasb has
received little political interference.
Intermediate Accounting, Ninth Edition, Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or
distribution without the prior written consent of McGraw-Hill Education. 1–1

,Chapter 1 Environment and Theoretical Structure of Financial Accounting

Ans: false
Level of learning: 1 easy
learning objective: 01-04
Topic area: gaap―standard-setting process
blooms: remember
Aacsb: reflective thinking
aicpa: bb legal


6. The public reform and investor protection act of 2002 (sarbanes-oxley) changed the
entity responsible for setting auditing standards in the united states.

Ans: true
Level of learning: 1 easy
learning objective: 01-05
Topic area: encouraging high-quality financial reporting
blooms: remember
Aacsb: reflective thinking
aicpa: bb legal


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

Ans: false
Level of learning: 1 easy
learning objective: 01-05
Topic area: encouraging high-quality financial reporting
blooms: remember
Aacsb: reflective thinking
aicpa: bb critical thinking


8. Under federal securities laws, the sec has the authority to set accounting
standards in the united states.

Ans: true
Level of learning: 1 easy
learning objective: 01-03
Topic area: development of accounting and reporting
standards blooms: remember
Aacsb: reflective thinking
aicpa: bb legal


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

Ans: false
Level of learning: 1 easy
learning objective: 01-05
Topic area: encouraging high-quality financial reporting
Intermediate Accounting, Ninth Edition, Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or
distribution without the prior written consent of McGraw-Hill Education. 1–2

, Chapter 1 Environment and Theoretical Structure of Financial Accounting

Blooms: remember aacsb:
reflective thinking
Aicpa: bb critical thinking


10. Auditors play an important role in the resource allocation process by adding
credibility to financial statements.

Ans: true
Level of learning: 1 easy
learning objective: 01-05
Topic area: encouraging high-quality financial reporting
blooms: understand
Aacsb: reflective thinking
aicpa: bb critical thinking


11. The purpose of the conceptual framework is to provide a structure and
framework for a consistent set of gaap.

Ans: true
Level of learning: 1 easy
learning objective: 01-06
Topic area: conceptual framework―purpose
blooms: remember
Aacsb: reflective thinking
aicpa: bb critical thinking


12. In the united states the conceptual framework indicates gaap when a more
specific accounting standard does not apply.

Ans: false
Level of learning: 1 easy
learning objective: 01-06
Topic area: conceptual framework―purpose
blooms: remember
Aacsb: reflective thinking
aicpa: bb critical thinking


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

Ans: true
Level of learning: 1 easy
learning objective: 01-07
Topic area: concepts―qualitative
characteristics blooms: remember
Aacsb: reflective thinking
aicpa: bb critical thinking
aicpa: fn measurement



Intermediate Accounting, Ninth Edition, Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or
distribution without the prior written consent of McGraw-Hill Education. 1–3