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Test Bank for Intermediate Accounting, 3rd Edition by Elizabeth A. Gordon, Jana S. Raedy & Alexander J. Sannella | 22 Chapters | Practice Questions with Correct Answers & Detailed Rationales

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Course Intermediate Accounting, 3rd Edition
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Prepare effectively for Intermediate Accounting, 3rd Edition by Elizabeth A. Gordon, Jana S. Raedy, and Alexander J. Sannella with this comprehensive study resource covering the book’s 22 chapters. Pearson identifies the 3rd Edition as incorporating updated accounting standards and regulations while emphasizing conceptual understanding, critical thinking, judgment, and application to real-world financial reporting. Practice questions with correct answers and detailed explanations can help accounting students reinforce financial-reporting concepts, strengthen problem-solving skills, and build confidence for accounting quizzes, midterms, finals, and CPA-oriented coursework. KEY TOPICS COVERED Financial Reporting Environment: Review the role of financial reporting, accounting standards, users of financial information, and the reporting environment. Financial Reporting Theory: Explore conceptual frameworks, accounting principles, qualitative characteristics, and financial-reporting objectives. Accounting Research & Judgment: Practice applied accounting research, professional judgment, and analysis of financial-reporting issues. Accounting Cycle: Review the accounting cycle, adjusting entries, closing procedures, and preparation of financial statements. Financial Statements: Study income statements, comprehensive income, statements of financial position, cash flows, and annual reports. Time Value of Money: Reinforce present value, future value, interest calculations, and accounting applications. Revenue Recognition: Review current revenue-recognition standards and their application to financial reporting. Cash & Receivables: Explore short-term operating assets, cash, receivables, allowances, and related accounting procedures. Inventory: Study inventory measurement, valuation, cost-flow assumptions, and financial-statement effects. Long-Term Assets: Review acquisition, cost allocation, depreciation, derecognition, and departures from historical cost. Liabilities & Contingencies: Practice accounting for operating liabilities, contingencies, and financing liabilities. Stockholders’ Equity: Review equity transactions, contributed capital, retained earnings, and related reporting considerations. Investments: Study accounting for investments in financial assets and related measurement and reporting requirements. Income Taxes: Explore accounting for income taxes and related financial-reporting considerations. Leases: Review lease accounting under the newer standards and related recognition and measurement concepts. Employee Compensation & Benefits: Study accounting for compensation, pensions, and employee benefit obligations. Earnings per Share: Reinforce basic and diluted EPS concepts and related calculations. Accounting Changes & Errors: Review accounting changes, error corrections, retrospective application, and financial-statement effects. Statement of Cash Flows: Practice classification and presentation of operating, investing, and financing cash flows. WHY THIS STUDY RESOURCE IS USEFUL Comprehensive 3rd Edition review 22 chapters covered Financial accounting and reporting concepts Updated accounting standards Financial-statement analysis Revenue recognition Inventory and long-term assets Liabilities and equity Investments and income taxes Lease accounting Employee benefits Earnings per share Accounting changes and errors Statement of cash flows Practice questions with correct answers Detailed explanations and rationales Pearson's official table of contents confirms 22 chapters, beginning with the financial reporting environment and ending with the statement of cash flows.

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,Intermediate Accounting, 3e (Gordon/Raedy/Sannella)
Chapter 1 The Financial Reporting Environment

1.1 Overview of Financial Reporting

1) The financial reporting process generates three basic financial statements.
Answer: FALSE
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge

2) The demand for financial information is based on market participant demand.
Answer: TRUE
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge

3) Managers of economic entities are best considered to be users of financial information.
Answer: FALSE
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge

4) Managers of economic entities are best considered to be preparers of financial information.
Answer: TRUE
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge

5) The Securities and Exchange Commission (SEC) regulates financial reporting for publicly traded
companies.
Answer: TRUE
Diff: 2
Objective: 1.1
IFRS/GAAP: GAAP
AACSB: Application of knowledge

6) The FASB gives the SEC authority to regulate accounting for publicly traded companies.
Answer: FALSE
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP
AACSB: Application of knowledge




1
Copyright © 2022 Pearson Education, Inc.

,7) The Public Company Accounting Oversight Board (PCAOB) sets financial accounting standards and
oversees the audits of public companies in the United States.
Answer: FALSE
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP
AACSB: Application of knowledge

8) Financial accounting standards influence the behavior of managers and other internal users.
Answer: TRUE
Diff: 2
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge

9) Theories and procedures that evolve as a result of lobbying from various groups are examples of
proactive factors within the legal, economic, political, and social environment.
Answer: FALSE
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge

10) Financial information includes information that is not governed by rules set forth by the accounting
standard-setting bodies.
Answer: TRUE
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge

11) What is the term that describes the process of identifying, measuring, and communicating financial
information about an economic entity to various user groups?
A) financial reporting
B) accounting standard setting
C) financial statement
D) financial accounting
Answer: D
Diff: 2
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge




2
Copyright © 2022 Pearson Education, Inc.

, 12) Which element of financial accounting involves identifying the individuals who demand financial
information?
A) financial information
B) economic entity
C) user groups
D) legal, economic, political, and social environment
Answer: C
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge

13) Which of the following is not one of the four basic financial statements?
A) balance sheet
B) trial balance
C) cash flows statement
D) statement of comprehensive income
Answer: B
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge

14) Which organization is responsible for promulgating U.S. GAAP?
A) Financial Accounting Standards Board
B) Public Company Accounting Oversight Board
C) International Accounting Standards Board
D) Securities and Exchange Commission
Answer: A
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge

15) Which organization is responsible for setting auditing standards and overseeing the audits of public
companies in the United States?
A) Financial Accounting Standards Board
B) Public Company Accounting Oversight Board
C) American Institute of Certified Public Accountants
D) Securities and Exchange Commission
Answer: B
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP
AACSB: Application of knowledge




3
Copyright © 2022 Pearson Education, Inc.

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