Test Bank for Intermediate Accounting, 4th Edition (IFRS) by Wiley – Complete Questions & Answers

TEST BANK




TEST BANK

, CHAPTER 1
FINANCIAL REPORTING AND
ACCOUNTING STANDARDS

CHAPTER LEARNING OBJECTIVES
1. Describe the global financial markets and their relation to financial reporting.
2. Explain the objective of financial reporting.
3. Identify the major policy-setting bodies and their role in the standard-setting process.
4. Discuss the challenges facing financial reporting.

,1-2 Test Bank for Intermediate Accounting: IFRS Edition,4e

TRUE-FALSE—Conceptual
1. Financial statements are the principal means through which financial information is
communicated to those outside an enterprise.
Ans: T
LO: 1.1
Bloom: K
Difficulty: Easy
Min: 1
AACSB: Analytic
AICPA BB: Strategic/Critical Thinking
AICPA FN: Measurement
AICPA PC: Problem Solving and Decision-making
IMA: None

2. Capital markets are increasingly integrated and companies have greater flexibility in deciding
where to raise capital.
Ans: T
LO: 1.1
Bloom: K
Difficulty: Easy
Min: 1
AACSB: Analytic
AICPA BB: Strategic/Critical Thinking
AICPA FN: Measurement
AICPA PC: Problem Solving and Decision-making
IMA: None

3. The major financial statements used under International Financial Reporting Standards
(IFRS) include the statement of changes in financial position and the statement of
stockholders’ equity.
Ans: F
LO: 1.1
Bloom: K
Difficulty: Easy
Min: 1
AACSB: Analytic
AICPA BB: Strategic/Critical Thinking
AICPA FN: Measurement
AICPA PC: Problem Solving and Decision-making
IMA: None

4. General-purpose financial statements are not considered cost-effective because, while they
provide useful information, the cost to provide the information is quite high.
Ans: F
LO: 1.2
Bloom: K
Difficulty: Easy
Min: 1
AACSB: Analytic
AICPA BB: Strategic/Critical Thinking

, Financial Reporting and Accounting Standards 1-3

AICPA FN: Measurement
AICPA PC: Problem Solving and Decision-making
IMA: None

5. Investors and creditors are considered the primary user group of general-purpose financial
reporting.
Ans: T
LO: 1.2
Bloom: K
Difficulty: Easy
Min: 1
AACSB: Analytic
AICPA BB: Strategic/Critical Thinking
AICPA FN: Measurement
AICPA PC: Problem Solving and Decision-making
IMA: None

6. An effective process of capital allocation promotes productivity and provides an efficient
market for buying and selling securities and obtaining and granting credit.
Ans: T
LO: 1.2
Bloom: K
Difficulty: Easy
Min: 1
AACSB: Analytic
AICPA BB: Strategic/Critical Thinking
AICPA FN: Measurement
AICPA PC: Problem Solving and Decision-making
IMA: None

7. The emphasis on “assessing cash flow prospects” means that the cash basis is preferred
over the accrual basis of accounting.
Ans: F
LO: 1.2
Bloom: K
Difficulty: Easy
Min: 1
AACSB: Analytic
AICPA BB: Strategic/Critical Thinking
AICPA FN: Measurement
AICPA PC: Problem Solving and Decision-making
IMA: None

8. While objectives for financial reporting exist on an informal basis, no formal objectives have
been adopted.
Ans: F
LO: 1.2
Bloom: K
Difficulty: Easy
Min: 1
AACSB: Analytic
AICPA BB: Strategic/Critical Thinking