,Intermediate Accounting, 3e (Gordon/Raedy/Sannella)
sx sx sx
Chapter 1 The Financial Reporting Environment
sx sx sx sx
1.1 Overview of Financial Reporting sx sx sx
1) The financial reporting process generates three basic financial statement
sx sx sx sx sx sx sx sx
s. Answer: FALSE
sx s x
Diff:sx1
Objective:s x 1.1sxIFRS/GA
AP:s x GAAP/IFRS
AACSB:s x s x Applicationsxofsxknowledge
2) The demand for financial information is based on market participant deman
sx sx sx sx sx sx sx sx sx sx
d. Answer: TRUE
sx s x
Diff:sx1
Objective:s x 1.1sxIFRS/GA
AP:s x GAAP/IFRS
AACSB:s x s x Applicationsxofsxknowledge
3) Managers of economic entities are best considered to be users of financial informati
sx sx sx sx sx sx sx sx sx sx sx sx
on. Answer: FALSE
sx s x
Diff:sx1
Objective:s x 1.1sxIFRS/GA
AP:s x GAAP/IFRS
AACSB:s x s x Applicationsxofsxknowledge
4) Managers of economic entities are best considered to be preparers of financial informati
sx sx sx sx sx sx sx sx sx sx sx sx
on. Answer: TRUE
sx s x
Diff:sx1
Objective:s x 1.1sxIFRS/GA
AP:s x GAAP/IFRS
AACSB:s x s x Applicationsxofsxknowledge
5) The Securities and Exchange Commission (SEC) regulates financial reporting for publicly trad
sx sx sx sx sx sx sx sx sx sx sx
ed companies.
sx
Answer: TRUE s x s x
Diff:sx2
Objective:s x 1.1sxIFRS/GA
AP:s x GAAP
AACSB:s x s x Applicationsxofsxknowledge
6) The FASB gives the SEC authority to regulate accounting for publicly traded compani
sx sx sx sx sx sx sx sx sx sx sx sx
es. Answer: FALSE
sx s x
Diff:sx1
Objective:s x 1.1sxIFRS/GA
AP:s x GAAP
AACSB:s x s x Applicationsxofsxknowledge
1
Copyright © 2022 Pearson Education, Inc.
sx sx sx sx sx
,7) The Public Company Accounting Oversight Board (PCAOB) sets financial accounting standards a
sx sx sx sx sx sx sx sx sx sx sx
nd oversees the audits of public companies in the United States.
sx sx sx sx sx sx sx sx sx sx
Answer: FALSE s x s x
Diff:sx1
Objective:s x 1.1sxIFRS/GA
AP:s x GAAP
AACSB:s x s x Applicationsxofsxknowledge
8) Financial accounting standards influence the behavior of managers and other internal use
sx sx sx sx sx sx sx sx sx sx sx
rs. Answer: TRUE
sx s x
Diff:sx2
Objective:s x 1.1sxIFRS/GA
AP:s x GAAP/IFRS
AACSB:s x s x Applicationsxofsxknowledge
9) Theories and procedures that evolve as a result of lobbying from various groups are example
sx sx sx sx sx sx sx sx sx sx sx sx sx sx
s of proactive factors within the legal, economic, political, and social environment.
sx sx sx sx sx sx sx sx sx sx sx
Answer: FALSE s x s x
Diff:sx1
Objective:s x 1.1sxIFRS/GA
AP:s x GAAP/IFRS
AACSB:s x s x Applicationsxofsxknowledge
10) Financial information includes information that is not governed by rules set forth by the account
sx sx sx sx sx sx sx sx sx sx sx sx sx sx
ing standard-setting bodies.
sx sx
Answer: TRUE s x s x
Diff:sx1
Objective:s x 1.1sxIFRS/GA
AP:s x GAAP/IFRS
AACSB:s x s x Applicationsxofsxknowledge
11) What is the term that describes the process of identifying, measuring, and communicating finan
sx sx sx sx sx sx sx sx sx sx sx sx sx
cial information about an economic entity to various user groups?
sx sx sx sx sx sx sx sx sx
A) financial reporting sx
B) accounting standard setting sx sx
C) financial statement sx
D) financial accounting sx
Answer: D
sx s x
Diff:sx2
Objective:s x 1.1sxIFRS/GA
AP:s x GAAP/IFRS
AACSB:s x s x Applicationsxofsxknowledge
2
Copyright © 2022 Pearson Education, Inc.
sx sx sx sx sx
, 12) Which element of financial accounting involves identifying the individuals who demand financ
sx sx sx sx sx sx sx sx sx sx sx
ial information?
sx
A) financial information sx
B) economic entity sx
C) user groups sx
D) legal, economic, political, and social environmen
sx sx sx sx sx
t Answer: C
sx s x
Diff:sx1
Objective:s x 1.1sxIFRS/GA
AP:s x GAAP/IFRS
AACSB:s x s x Applicationsxofsxknowledge
13) Which of the following is not one of the four basic financial statements?
sx sx sx sx sx sx sx sx sx sx sx sx
A) balance sheet sx
B) trial balancesx
C) cash flows statement
sx sx
D) statement of comprehensive income sx sx sx
Answer: B
sx s x
Diff:sx1
Objective:s x 1.1sxIFRS/GA
AP:s x GAAP/IFRS
AACSB:s x s x Applicationsxofsxknowledge
14) Which organization is responsible for promulgating U.S. GAAP?
sx sx sx sx sx sx sx
A) Financial Accounting Standards Board
sx sx sx
B) Public Company Accounting Oversight Board
sx sx sx sx
C) International Accounting Standards Board sx sx sx
D) Securities and Exchange Commission sx sx sx
Answer: A
sx s x
Diff:sx1
Objective:s x 1.1sxIFRS/GA
AP:s x GAAP/IFRS
AACSB:s x s x Applicationsxofsxknowledge
15) Which organization is responsible for setting auditing standards and overseeing the audits of pu
sx sx sx sx sx sx sx sx sx sx sx sx sx
blic companies in the United States?
sx sx sx sx sx
A) Financial Accounting Standards Board
sx sx sx
B) Public Company Accounting Oversight Board
sx sx sx sx
C) American Institute of Certified Public Accountants
sx sx sx sx sx
D) Securities and Exchange Commission sx sx sx
Answer: B
sx s x
Diff:sx1
Objective:s x 1.1sxIFRS/GA
AP:s x GAAP
AACSB:s x s x Applicationsxofsxknowledge
3
Copyright © 2022 Pearson Education, Inc.
sx sx sx sx sx
sx sx sx
Chapter 1 The Financial Reporting Environment
sx sx sx sx
1.1 Overview of Financial Reporting sx sx sx
1) The financial reporting process generates three basic financial statement
sx sx sx sx sx sx sx sx
s. Answer: FALSE
sx s x
Diff:sx1
Objective:s x 1.1sxIFRS/GA
AP:s x GAAP/IFRS
AACSB:s x s x Applicationsxofsxknowledge
2) The demand for financial information is based on market participant deman
sx sx sx sx sx sx sx sx sx sx
d. Answer: TRUE
sx s x
Diff:sx1
Objective:s x 1.1sxIFRS/GA
AP:s x GAAP/IFRS
AACSB:s x s x Applicationsxofsxknowledge
3) Managers of economic entities are best considered to be users of financial informati
sx sx sx sx sx sx sx sx sx sx sx sx
on. Answer: FALSE
sx s x
Diff:sx1
Objective:s x 1.1sxIFRS/GA
AP:s x GAAP/IFRS
AACSB:s x s x Applicationsxofsxknowledge
4) Managers of economic entities are best considered to be preparers of financial informati
sx sx sx sx sx sx sx sx sx sx sx sx
on. Answer: TRUE
sx s x
Diff:sx1
Objective:s x 1.1sxIFRS/GA
AP:s x GAAP/IFRS
AACSB:s x s x Applicationsxofsxknowledge
5) The Securities and Exchange Commission (SEC) regulates financial reporting for publicly trad
sx sx sx sx sx sx sx sx sx sx sx
ed companies.
sx
Answer: TRUE s x s x
Diff:sx2
Objective:s x 1.1sxIFRS/GA
AP:s x GAAP
AACSB:s x s x Applicationsxofsxknowledge
6) The FASB gives the SEC authority to regulate accounting for publicly traded compani
sx sx sx sx sx sx sx sx sx sx sx sx
es. Answer: FALSE
sx s x
Diff:sx1
Objective:s x 1.1sxIFRS/GA
AP:s x GAAP
AACSB:s x s x Applicationsxofsxknowledge
1
Copyright © 2022 Pearson Education, Inc.
sx sx sx sx sx
,7) The Public Company Accounting Oversight Board (PCAOB) sets financial accounting standards a
sx sx sx sx sx sx sx sx sx sx sx
nd oversees the audits of public companies in the United States.
sx sx sx sx sx sx sx sx sx sx
Answer: FALSE s x s x
Diff:sx1
Objective:s x 1.1sxIFRS/GA
AP:s x GAAP
AACSB:s x s x Applicationsxofsxknowledge
8) Financial accounting standards influence the behavior of managers and other internal use
sx sx sx sx sx sx sx sx sx sx sx
rs. Answer: TRUE
sx s x
Diff:sx2
Objective:s x 1.1sxIFRS/GA
AP:s x GAAP/IFRS
AACSB:s x s x Applicationsxofsxknowledge
9) Theories and procedures that evolve as a result of lobbying from various groups are example
sx sx sx sx sx sx sx sx sx sx sx sx sx sx
s of proactive factors within the legal, economic, political, and social environment.
sx sx sx sx sx sx sx sx sx sx sx
Answer: FALSE s x s x
Diff:sx1
Objective:s x 1.1sxIFRS/GA
AP:s x GAAP/IFRS
AACSB:s x s x Applicationsxofsxknowledge
10) Financial information includes information that is not governed by rules set forth by the account
sx sx sx sx sx sx sx sx sx sx sx sx sx sx
ing standard-setting bodies.
sx sx
Answer: TRUE s x s x
Diff:sx1
Objective:s x 1.1sxIFRS/GA
AP:s x GAAP/IFRS
AACSB:s x s x Applicationsxofsxknowledge
11) What is the term that describes the process of identifying, measuring, and communicating finan
sx sx sx sx sx sx sx sx sx sx sx sx sx
cial information about an economic entity to various user groups?
sx sx sx sx sx sx sx sx sx
A) financial reporting sx
B) accounting standard setting sx sx
C) financial statement sx
D) financial accounting sx
Answer: D
sx s x
Diff:sx2
Objective:s x 1.1sxIFRS/GA
AP:s x GAAP/IFRS
AACSB:s x s x Applicationsxofsxknowledge
2
Copyright © 2022 Pearson Education, Inc.
sx sx sx sx sx
, 12) Which element of financial accounting involves identifying the individuals who demand financ
sx sx sx sx sx sx sx sx sx sx sx
ial information?
sx
A) financial information sx
B) economic entity sx
C) user groups sx
D) legal, economic, political, and social environmen
sx sx sx sx sx
t Answer: C
sx s x
Diff:sx1
Objective:s x 1.1sxIFRS/GA
AP:s x GAAP/IFRS
AACSB:s x s x Applicationsxofsxknowledge
13) Which of the following is not one of the four basic financial statements?
sx sx sx sx sx sx sx sx sx sx sx sx
A) balance sheet sx
B) trial balancesx
C) cash flows statement
sx sx
D) statement of comprehensive income sx sx sx
Answer: B
sx s x
Diff:sx1
Objective:s x 1.1sxIFRS/GA
AP:s x GAAP/IFRS
AACSB:s x s x Applicationsxofsxknowledge
14) Which organization is responsible for promulgating U.S. GAAP?
sx sx sx sx sx sx sx
A) Financial Accounting Standards Board
sx sx sx
B) Public Company Accounting Oversight Board
sx sx sx sx
C) International Accounting Standards Board sx sx sx
D) Securities and Exchange Commission sx sx sx
Answer: A
sx s x
Diff:sx1
Objective:s x 1.1sxIFRS/GA
AP:s x GAAP/IFRS
AACSB:s x s x Applicationsxofsxknowledge
15) Which organization is responsible for setting auditing standards and overseeing the audits of pu
sx sx sx sx sx sx sx sx sx sx sx sx sx
blic companies in the United States?
sx sx sx sx sx
A) Financial Accounting Standards Board
sx sx sx
B) Public Company Accounting Oversight Board
sx sx sx sx
C) American Institute of Certified Public Accountants
sx sx sx sx sx
D) Securities and Exchange Commission sx sx sx
Answer: B
sx s x
Diff:sx1
Objective:s x 1.1sxIFRS/GA
AP:s x GAAP
AACSB:s x s x Applicationsxofsxknowledge
3
Copyright © 2022 Pearson Education, Inc.
sx sx sx sx sx
