Intermediate Accounting Final Exam Questions With 100% Correct Answers

Intermediate Accounting Final Exam Questions With 100% Correct Answers General-purpose financial statements are the product of financial accounting. managerial accounting. both financial and managerial accounting. neither financial nor managerial accounting. - answerfinancial accounting. Which of the following represents a form of communication through financial reporting but not through financial statements? Balance sheet. Income statement. Notes to financial statements. President's letter. - answerPresident's letter. The process of identifying, measuring, analyzing, and communicating financial information needed by management to plan, evaluate, and control an organization's operations is called managerial accounting. auditing. tax accounting. financial accounting. - answermanagerial accounting. How does accounting help the capital allocation process attract investment capital? By encouraging innovation. By providing timely, relevant information. By promoting productivity. By providing timely, relevant information and by encouraging innovation. - answerBy providing timely, relevant information. What is the objective of financial reporting? Provide information about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors. Provide information that clearly portrays nonfinancial transactions. Provide information that excludes claims to the resources. Provide information that is useful to management in making decisions. - answerProvide information about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors. Which of the following is of interest to investors in decision-making? Assessing the company's ability to collect debts. Assessing the company's ability to generate net cash inflows. Assessing management's ability to protect and enhance the capital providers' investments. Both assessing the company's ability to generate net cash inflows and assessing management's ability to protect and enhance the capital provider's investments. - answerBoth assessing the company's ability to generate net cash inflows and assessing management's ability to protect and enhance the capital provider's investments. Which perspective is adopted as a part of the objective of general-purpose financial reporting? A decision-usefulness perspective. A financial reporting perspective. A proprietary perspective. An entity perspective. - answerAn entity perspective. Which of the following is a requirement for an accounting principle to be called "generally accepted"? The principle has been accepted as appropriate because of its universal application. An authoritative accounting rule-making body has established it and it has been accepted because of its universal application. Each company develops its own standards. An authoritative accounting rule-making body has established it in an official pronouncement. - answerAn authoritative accounting rule-making body has established it and it has been accepted because of its universal application. Which of the following organizations currently is responsible for establishing and improving standards of financial accounting and reporting for the guidance and education of the public, which includes issuers, auditors, and users of financial information? The Accounting Principles Board. The Committee on Accounting Procedure. The Financial Accounting Standards Board. All of the answer choices are correct. - answerAll of the answer choices are correct. Why did the AICPA create the Accounting Principles Board? No such organization existed in the past. The reason was to revert to the written expression of accounting principles. The SEC disbanded the previous standard setting organization. The previous standard setting organization did not provide a structured set of accounting principles. - answerThe previous standard setting organization did not provide a structured set of accounting principles. What is the purpose of Emerging Issues Task Force? Provide implementation guidance within the Codification framework to reduce diversity in practice on a timely basis. Provide timely guidance on select issues. Provide interpretation of existing standards. Provide interpretive guidance. - answerProvide implementation guidance within the Codification framework to reduce diversity in practice on a timely basis. Each of the following are true of the Securities and Exchange Commission except that the FASB relies on the SEC to develop accounting standards. the SEC's involvement in the development of accounting standards varies. it is a federal agency. the SEC requires registrants to adhere to GAAP. - answerthe FASB relies on the SEC to develop accounting standards. The Financial Accounting Foundation works with the Financial Accounting Standards Advisory Council to provide information to interested parties on financial reporting issues. oversees the operations of the FASB. provides information to interested parties on financial reporting issues. oversees the operations of the AICPA. - answeroversees the operations of the FASB. The Financial Accounting Standards Board employs a "due process" system which