TEST BANK For Intermediate Accounting 3rd Edition By Elizabeth A.Gordon | All Chapters | Complete Guide A+

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TEST BANK For Intermediate Accounting 3rd Edition
By Elizabeth A.Gordon - Complete Guide A+

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




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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

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



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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

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



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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

16) Which organization prepares and grades the Uniform CPA Examination?
A) Financial Accounting Standards Board
B) Public Company Accounting Oversight Board
C) American Institute of Certified Public Accountants
D) International Accounting Standards Board
Answer: C
Diff: 1
Objective: 1.1



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