,Intermediate Accounting, 3e (Gordon/Raedy/Sannella)
r r r
Chapter 1 The Financial Reporting Environment
r r r r
1.1 Overview of Financial Reporting r r r
1) The financial reporting process generates three basic financial statements. A
r r r r r r r r r
nswer: FALSE
r
Diff:r1
Objective:r 1.1rIFRS/GAAP
:r GAAP/IFRS
AACSB:r r Applicationrofrknowledge
2) The demand for financial information is based on market participant demand. A
r r r r r r r r r r r
nswer: TRUE
r
Diff:r1
Objective:r 1.1rIFRS/GAAP
:r GAAP/IFRS
AACSB:r r Applicationrofrknowledge
3) Managers of economic entities are best considered to be users of financial information. A
r r r r r r r r r r r r r
nswer: FALSE
r
Diff:r1
Objective:r 1.1rIFRS/GAAP
:r GAAP/IFRS
AACSB:r r Applicationrofrknowledge
4) Managers of economic entities are best considered to be preparers of financial information. A
r r r r r r r r r r r r r
nswer: TRUE
r
Diff:r1
Objective:r 1.1rIFRS/GAAP
:r GAAP/IFRS
AACSB:r r Applicationrofrknowledge
5) The Securities and Exchange Commission (SEC) regulates financial reporting for publicly traded co
r r r r r r r r r r r r
mpanies.
Answer: TRUE r r
Diff:r2
Objective:r 1.1rIFRS/GAAP
:r GAAP
AACSB:r r Applicationrofrknowledge
6) The FASB gives the SEC authority to regulate accounting for publicly traded companies. A
r r r r r r r r r r r r r
nswer: FALSE
r
Diff:r1
Objective:r 1.1rIFRS/GAAP
:r GAAP
AACSB:r r Applicationrofrknowledge
1
Copyright © 2022 Pearson Education, Inc.
r r r r r
,7) The Public Company Accounting Oversight Board (PCAOB) sets financial accounting standards and o
r r r r r r r r r r r r
versees the audits of public companies in the United States.
r r r r r r r r r
Answer: FALSE r r
Diff:r1
Objective:r 1.1rIFRS/GAAP
:r GAAP
AACSB:r r Applicationrofrknowledge
8) Financial accounting standards influence the behavior of managers and other internal users. A
r r r r r r r r r r r r
nswer: TRUE
r
Diff:r2
Objective:r 1.1rIFRS/GAAP
:r GAAP/IFRS
AACSB:r r Applicationrofrknowledge
9) Theories and procedures that evolve as a result of lobbying from various groups are examples of pr
r r r r r r r r r r r r r r r r
oactive factors within the legal, economic, political, and social environment.
r r r r r r r r r
Answer: FALSE r r
Diff:r1
Objective:r 1.1rIFRS/GAAP
:r GAAP/IFRS
AACSB:r r Applicationrofrknowledge
10) Financial information includes information that is not governed by rules set forth by the accounting sta
r r r r r r r r r r r r r r r
ndard-setting bodies. r
Answer: TRUE r r
Diff:r1
Objective:r 1.1rIFRS/GAAP
:r GAAP/IFRS
AACSB:r r Applicationrofrknowledge
11) What is the term that describes the process of identifying, measuring, and communicating financial inf
r r r r r r r r r r r r r r
ormation about an economic entity to various user groups?
r r r r r r r r
A) financial reporting r
B) accounting standard setting r r
C) financial statement r
D) financial accounting r r
Answer: D r
Diff:r2
Objective:r 1.1rIFRS/GAAP
:r GAAP/IFRS
AACSB:r r Applicationrofrknowledge
2
Copyright © 2022 Pearson Education, Inc.r r r r r
, 12) Which element of financial accounting involves identifying the individuals who demand financial in
r r r r r r r r r r r r
formation?
A) financial information r
B) economic entity r
C) user groups
r
D) legal, economic, political, and social environment
r r r r r r
Answer: C r
Diff:r1
Objective:r 1.1rIFRS/GAAP
:r GAAP/IFRS
AACSB:r r Applicationrofrknowledge
13) Which of the following is not one of the four basic financial statements?
r r r r r r r r r r r r
A) balance sheet r
B) trial balance
r
C) cash flows statement
r r
D) statement of comprehensive income r r r r
Answer: B r
Diff:r1
Objective:r 1.1rIFRS/GAAP
:r GAAP/IFRS
AACSB:r r Applicationrofrknowledge
14) Which organization is responsible for promulgating U.S. GAAP?
r r r r r r r
A) Financial Accounting Standards Board
r r r
B) Public Company Accounting Oversight Board
r r r r
C) International Accounting Standards Board r r r
D) Securities and Exchange Commission r r r r
Answer: A r
Diff:r1
Objective:r 1.1rIFRS/GAAP
:r GAAP/IFRS
AACSB:r r Applicationrofrknowledge
15) Which organization is responsible for setting auditing standards and overseeing the audits of public co
r r r r r r r r r r r r r r
mpanies in the United States?
r r r r
A) Financial Accounting Standards Board
r r r
B) Public Company Accounting Oversight Board
r r r r
C) American Institute of Certified Public Accountants
r r r r r
D) Securities and Exchange Commission r r r r
Answer: B r
Diff:r1
Objective:r 1.1rIFRS/GAAP
:r GAAP
AACSB:r r Applicationrofrknowledge
3
Copyright © 2022 Pearson Education, Inc.
r r r r r
r r r
Chapter 1 The Financial Reporting Environment
r r r r
1.1 Overview of Financial Reporting r r r
1) The financial reporting process generates three basic financial statements. A
r r r r r r r r r
nswer: FALSE
r
Diff:r1
Objective:r 1.1rIFRS/GAAP
:r GAAP/IFRS
AACSB:r r Applicationrofrknowledge
2) The demand for financial information is based on market participant demand. A
r r r r r r r r r r r
nswer: TRUE
r
Diff:r1
Objective:r 1.1rIFRS/GAAP
:r GAAP/IFRS
AACSB:r r Applicationrofrknowledge
3) Managers of economic entities are best considered to be users of financial information. A
r r r r r r r r r r r r r
nswer: FALSE
r
Diff:r1
Objective:r 1.1rIFRS/GAAP
:r GAAP/IFRS
AACSB:r r Applicationrofrknowledge
4) Managers of economic entities are best considered to be preparers of financial information. A
r r r r r r r r r r r r r
nswer: TRUE
r
Diff:r1
Objective:r 1.1rIFRS/GAAP
:r GAAP/IFRS
AACSB:r r Applicationrofrknowledge
5) The Securities and Exchange Commission (SEC) regulates financial reporting for publicly traded co
r r r r r r r r r r r r
mpanies.
Answer: TRUE r r
Diff:r2
Objective:r 1.1rIFRS/GAAP
:r GAAP
AACSB:r r Applicationrofrknowledge
6) The FASB gives the SEC authority to regulate accounting for publicly traded companies. A
r r r r r r r r r r r r r
nswer: FALSE
r
Diff:r1
Objective:r 1.1rIFRS/GAAP
:r GAAP
AACSB:r r Applicationrofrknowledge
1
Copyright © 2022 Pearson Education, Inc.
r r r r r
,7) The Public Company Accounting Oversight Board (PCAOB) sets financial accounting standards and o
r r r r r r r r r r r r
versees the audits of public companies in the United States.
r r r r r r r r r
Answer: FALSE r r
Diff:r1
Objective:r 1.1rIFRS/GAAP
:r GAAP
AACSB:r r Applicationrofrknowledge
8) Financial accounting standards influence the behavior of managers and other internal users. A
r r r r r r r r r r r r
nswer: TRUE
r
Diff:r2
Objective:r 1.1rIFRS/GAAP
:r GAAP/IFRS
AACSB:r r Applicationrofrknowledge
9) Theories and procedures that evolve as a result of lobbying from various groups are examples of pr
r r r r r r r r r r r r r r r r
oactive factors within the legal, economic, political, and social environment.
r r r r r r r r r
Answer: FALSE r r
Diff:r1
Objective:r 1.1rIFRS/GAAP
:r GAAP/IFRS
AACSB:r r Applicationrofrknowledge
10) Financial information includes information that is not governed by rules set forth by the accounting sta
r r r r r r r r r r r r r r r
ndard-setting bodies. r
Answer: TRUE r r
Diff:r1
Objective:r 1.1rIFRS/GAAP
:r GAAP/IFRS
AACSB:r r Applicationrofrknowledge
11) What is the term that describes the process of identifying, measuring, and communicating financial inf
r r r r r r r r r r r r r r
ormation about an economic entity to various user groups?
r r r r r r r r
A) financial reporting r
B) accounting standard setting r r
C) financial statement r
D) financial accounting r r
Answer: D r
Diff:r2
Objective:r 1.1rIFRS/GAAP
:r GAAP/IFRS
AACSB:r r Applicationrofrknowledge
2
Copyright © 2022 Pearson Education, Inc.r r r r r
, 12) Which element of financial accounting involves identifying the individuals who demand financial in
r r r r r r r r r r r r
formation?
A) financial information r
B) economic entity r
C) user groups
r
D) legal, economic, political, and social environment
r r r r r r
Answer: C r
Diff:r1
Objective:r 1.1rIFRS/GAAP
:r GAAP/IFRS
AACSB:r r Applicationrofrknowledge
13) Which of the following is not one of the four basic financial statements?
r r r r r r r r r r r r
A) balance sheet r
B) trial balance
r
C) cash flows statement
r r
D) statement of comprehensive income r r r r
Answer: B r
Diff:r1
Objective:r 1.1rIFRS/GAAP
:r GAAP/IFRS
AACSB:r r Applicationrofrknowledge
14) Which organization is responsible for promulgating U.S. GAAP?
r r r r r r r
A) Financial Accounting Standards Board
r r r
B) Public Company Accounting Oversight Board
r r r r
C) International Accounting Standards Board r r r
D) Securities and Exchange Commission r r r r
Answer: A r
Diff:r1
Objective:r 1.1rIFRS/GAAP
:r GAAP/IFRS
AACSB:r r Applicationrofrknowledge
15) Which organization is responsible for setting auditing standards and overseeing the audits of public co
r r r r r r r r r r r r r r
mpanies in the United States?
r r r r
A) Financial Accounting Standards Board
r r r
B) Public Company Accounting Oversight Board
r r r r
C) American Institute of Certified Public Accountants
r r r r r
D) Securities and Exchange Commission r r r r
Answer: B r
Diff:r1
Objective:r 1.1rIFRS/GAAP
:r GAAP
AACSB:r r Applicationrofrknowledge
3
Copyright © 2022 Pearson Education, Inc.
r r r r r
