Test Bank for Intermediate Accounting (4th Edition, Global Edition) – Gordon, Raedy & Sannella | & Practice Questions with Answers

,Intermediate Accounting, 4the (Gordon/Raedy/Sannella)
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Chapter 1 The Financial Reporting Environment
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1.1 Overview of Financial Reporting G! G! G!




1) The financial reporting process generates three basic financial statemen
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ts. Answer: FALSE
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Diff:G!1
Objective:G ! 1.1G!IFRS/GA
AP:G ! GAAP/IFRS
AACSB:G ! G ! ApplicationG!ofG!knowledge

2) The demand for financial information is based on market participant dema
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nd. Answer: TRUE
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Diff:G!1
Objective:G ! 1.1G!IFRS/GA
AP:G ! GAAP/IFRS
AACSB:G ! G ! ApplicationG!ofG!knowledge

3) Managers of economic entities are best considered to be users of financial informat
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ion. Answer: FALSE
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Diff:G!1
Objective:G ! 1.1G!IFRS/GA
AP:G ! GAAP/IFRS
AACSB:G ! G ! ApplicationG!ofG!knowledge

4) Managers of economic entities are best considered to be preparers of financial informat
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ion. Answer: TRUE
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Diff:G!1
Objective:G ! 1.1G!IFRS/GA
AP:G ! GAAP/IFRS
AACSB:G ! G ! ApplicationG!ofG!knowledge

5) The Securities and Exchange Commission (SEC) regulates financial reporting for publicly tra
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ded companies.
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Answer: TRUE G ! G !


Diff:G!2
Objective:G ! 1.1G!IFRS/GA
AP:G ! GAAP
AACSB:G ! G ! ApplicationG!ofG!knowledge

6) The FASB gives the SEC authority to regulate accounting for publicly traded compa
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nies. Answer: FALSE
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Diff:G!1
Objective:G ! 1.1G!IFRS/GA
AP:G ! GAAP
AACSB:G ! G ! ApplicationG!ofG!knowledge




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,7) The Public Company Accounting Oversight Board (PCAOB) sets financial accounting standards
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and oversees the audits of public companies in the United States.
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Answer: FALSE G ! G !


Diff:G!1
Objective:G ! 1.1G!IFRS/GA
AP:G ! GAAP
AACSB:G ! G ! ApplicationG!ofG!knowledge

8) Financial accounting standards influence the behavior of managers and other internal us
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ers. Answer: TRUE
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Diff:G!2
Objective:G ! 1.1G!IFRS/GA
AP:G ! GAAP/IFRS
AACSB:G ! G ! ApplicationG!ofG!knowledge

9) Theories and procedures that evolve as a result of lobbying from various groups are exampl
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es of proactive factors within the legal, economic, political, and social environment.
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Answer: FALSE G ! G !


Diff:G!1
Objective:G ! 1.1G!IFRS/GA
AP:G ! GAAP/IFRS
AACSB:G ! G ! ApplicationG!ofG!knowledge

10) Financial information includes information that is not governed by rules set forth by the accou
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nting standard-setting bodies.
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Answer: TRUE G ! G !


Diff:G!1
Objective:G ! 1.1G!IFRS/GA
AP:G ! GAAP/IFRS
AACSB:G ! G ! ApplicationG!ofG!knowledge

11) What is the term that describes the process of identifying, measuring, and communicating fina
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ncial information about an economic entity to various user groups?
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A) financial reporting G!


B) accounting standard setting G! G!


C) financial statement G!


D) financial accounting G!


Answer: D
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Diff:G!2
Objective:G ! 1.1G!IFRS/GA
AP:G ! GAAP/IFRS
AACSB:G ! G ! ApplicationG!ofG!knowledge




2

, 12) Which element of financial accounting involves identifying the individuals who demand finan
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cial information?
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A) financial information G!


B) economic entity G!


C) user groups G!


D) legal, economic, political, and social environme
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nt Answer: C
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Diff:G!1
Objective:G ! 1.1G!IFRS/GA
AP:G ! GAAP/IFRS
AACSB:G ! G ! ApplicationG!ofG!knowledge

13) Which of the following is not one of the four basic financial statements?
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A) balance sheet G!


B) trial balance G!


C) cash flows statement
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D) statement of comprehensive incom G! G! G!


e Answer: B
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Diff:G!1
Objective:G ! 1.1G!IFRS/GA
AP:G ! GAAP/IFRS
AACSB:G ! G ! ApplicationG!ofG!knowledge

14) Which organization is responsible for promulgating U.S. GAAP?
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A) Financial Accounting Standards BoardG! G! G!


B) Public Company Accounting Oversight Board
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C) International Accounting Standards Board G! G! G!


D) Securities and Exchange Commissio G! G! G!


n Answer: A
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Diff:G!1
Objective:G ! 1.1G!IFRS/GA
AP:G ! GAAP/IFRS
AACSB:G ! G ! ApplicationG!ofG!knowledge

15) Which organization is responsible for setting auditing standards and overseeing the audits of p
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ublic companies in the United States?
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A) Financial Accounting Standards BoardG! G! G!


B) Public Company Accounting Oversight Board
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C) American Institute of Certified Public Accountants
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D) Securities and Exchange Commissio G! G! G!


n Answer: B
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Diff:G!1
Objective:G ! 1.1G!IFRS/GA
AP:G ! GAAP
AACSB:G ! G ! ApplicationG!ofG!knowledge




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