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Intermediate Accounting, 3e (Gordon/Raedy/Sannella)
R
Chapter 1 The Financial Reporting Environment
1.1 Overview of Financial Reporting
U
1) The financial reporting process generates three basic financial statements.
Answer: FALSE
E
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
S
AACSB: Application of knowledge
2) The demand for financial information is based on market participant demand.
S
Answer: TRUE
Diff: 1
Objective: 1.1
I
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge O
3) Managers of economic entities are best considered to be users of financial information.
Answer: FALSE N
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge
N
4) Managers of economic entities are best considered to be preparers of financial information.
Answer: TRUE O
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge C
5) The Securities and Exchange Commission (SEC) regulates financial reporting for publicly traded
companies. D
Answer: TRUE
Diff: 2
Objective: 1.1
IFRS/GAAP: GAAP
AACSB: Application of knowledge
E
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
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7) The Public Company Accounting Oversight Board (PCAOB) sets financial accounting standards and
R
oversees the audits of public companies in the United States.
Answer: FALSE
Diff: 1
U
Objective: 1.1
IFRS/GAAP: GAAP
AACSB: Application of knowledge
E
8) Financial accounting standards influence the behavior of managers and other internal users.
Answer: TRUE
Diff: 2
Objective: 1.1
S
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge
S
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
I
Diff: 1 O
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge N
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
N
AACSB: Application of knowledge
O
11) What is the term that describes the process of identifying, measuring, and communicating financial
information about an economic entity to various user groups? C
A) financial reporting
B) accounting standard setting
C) financial statement D
D) financial accounting
Answer: D
Diff: 2
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge
E
2
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12) Which element of financial accounting involves identifying the individuals who demand financial
R
information?
A) financial information
B) economic entity
U
C) user groups
D) legal, economic, political, and social environment
Answer: C
Diff: 1
E
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge
S
13) Which of the following is not one of the four basic financial statements?
A) balance sheet
B) trial balance
S
C) cash flows statement
D) statement of comprehensive income
I
Answer: B O
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge N
14) Which organization is responsible for promulgating U.S. GAAP?
A) Financial Accounting Standards Board N
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
O
AACSB: Application of knowledge
C
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
D
C) American Institute of Certified Public Accountants
D) Securities and Exchange Commission
Answer: B
E
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP
AACSB: Application of knowledge
3
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16) Which organization prepares and grades the Uniform CPA Examination?
R
A) Financial Accounting Standards Board
B) Public Company Accounting Oversight Board
C) American Institute of Certified Public Accountants
U
D) International Accounting Standards Board
Answer: C
Diff: 1
Objective: 1.1
E
IFRS/GAAP: GAAP
AACSB: Application of knowledge
S
17) Which of the following user groups consists of individuals that provide guidance to others in making
investment and credit decisions?
A) financial analysts
S
B) equity investors
C) creditors
D) suppliers
I
Answer: A O
Diff: 2
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge N
18) Which of the following user groups consists of individuals who expect to receive a return on their
investment? N
A) employees
B) equity investors
C) creditors
D) suppliers and customers
Answer: B
Diff: 1
O
Objective: 1.1 C
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge
19) Which of the following user groups consist of companies that analyze financial information to identify
D
the reporting entity's objectives, assumptions, overall business strategy, and capabilities?
A) competitors
B) creditors and other debt investors
C) employees and labor unions
D) suppliers and customers
E
Answer: A
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge
4
Copyright © 2022 Pearson Education, Inc.
MEDCONNOISSEURLIBRARIES.COM
Intermediate Accounting, 3e (Gordon/Raedy/Sannella)
R
Chapter 1 The Financial Reporting Environment
1.1 Overview of Financial Reporting
U
1) The financial reporting process generates three basic financial statements.
Answer: FALSE
E
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
S
AACSB: Application of knowledge
2) The demand for financial information is based on market participant demand.
S
Answer: TRUE
Diff: 1
Objective: 1.1
I
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge O
3) Managers of economic entities are best considered to be users of financial information.
Answer: FALSE N
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge
N
4) Managers of economic entities are best considered to be preparers of financial information.
Answer: TRUE O
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge C
5) The Securities and Exchange Commission (SEC) regulates financial reporting for publicly traded
companies. D
Answer: TRUE
Diff: 2
Objective: 1.1
IFRS/GAAP: GAAP
AACSB: Application of knowledge
E
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.
MEDCONNOISSEURLIBRARIES.COM
, MEDCONNOISSEURLIBRARIES.COM
7) The Public Company Accounting Oversight Board (PCAOB) sets financial accounting standards and
R
oversees the audits of public companies in the United States.
Answer: FALSE
Diff: 1
U
Objective: 1.1
IFRS/GAAP: GAAP
AACSB: Application of knowledge
E
8) Financial accounting standards influence the behavior of managers and other internal users.
Answer: TRUE
Diff: 2
Objective: 1.1
S
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge
S
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
I
Diff: 1 O
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge N
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
N
AACSB: Application of knowledge
O
11) What is the term that describes the process of identifying, measuring, and communicating financial
information about an economic entity to various user groups? C
A) financial reporting
B) accounting standard setting
C) financial statement D
D) financial accounting
Answer: D
Diff: 2
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge
E
2
Copyright © 2022 Pearson Education, Inc.
MEDCONNOISSEURLIBRARIES.COM
, MEDCONNOISSEURLIBRARIES.COM
12) Which element of financial accounting involves identifying the individuals who demand financial
R
information?
A) financial information
B) economic entity
U
C) user groups
D) legal, economic, political, and social environment
Answer: C
Diff: 1
E
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge
S
13) Which of the following is not one of the four basic financial statements?
A) balance sheet
B) trial balance
S
C) cash flows statement
D) statement of comprehensive income
I
Answer: B O
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge N
14) Which organization is responsible for promulgating U.S. GAAP?
A) Financial Accounting Standards Board N
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
O
AACSB: Application of knowledge
C
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
D
C) American Institute of Certified Public Accountants
D) Securities and Exchange Commission
Answer: B
E
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP
AACSB: Application of knowledge
3
Copyright © 2022 Pearson Education, Inc.
MEDCONNOISSEURLIBRARIES.COM
, MEDCONNOISSEURLIBRARIES.COM
16) Which organization prepares and grades the Uniform CPA Examination?
R
A) Financial Accounting Standards Board
B) Public Company Accounting Oversight Board
C) American Institute of Certified Public Accountants
U
D) International Accounting Standards Board
Answer: C
Diff: 1
Objective: 1.1
E
IFRS/GAAP: GAAP
AACSB: Application of knowledge
S
17) Which of the following user groups consists of individuals that provide guidance to others in making
investment and credit decisions?
A) financial analysts
S
B) equity investors
C) creditors
D) suppliers
I
Answer: A O
Diff: 2
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge N
18) Which of the following user groups consists of individuals who expect to receive a return on their
investment? N
A) employees
B) equity investors
C) creditors
D) suppliers and customers
Answer: B
Diff: 1
O
Objective: 1.1 C
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge
19) Which of the following user groups consist of companies that analyze financial information to identify
D
the reporting entity's objectives, assumptions, overall business strategy, and capabilities?
A) competitors
B) creditors and other debt investors
C) employees and labor unions
D) suppliers and customers
E
Answer: A
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge
4
Copyright © 2022 Pearson Education, Inc.
MEDCONNOISSEURLIBRARIES.COM
