,Intermediate Accounting, 3e (Gordon/Raedy/Sannella)
mj mj mj
Chapter 1 The Financial Reporting Environment
mj mj mj mj
1.1 Overview of Financial Reporting mj mj mj
1) The financial reporting process generates three basic financial stateme
mj mj mj mj mj mj mj mj
nts. Answer: FALSE
mj m j
Diff:mj1
Objective:m j 1.1mjIFRS/GA
AP:m j GAAP/IFRS
AACSB:m j m j Applicationmjofmjknowledge
2) The demand for financial information is based on market participant dem
mj mj mj mj mj mj mj mj mj mj
and. Answer: TRUE
mj m j
Diff:mj1
Objective:m j 1.1mjIFRS/GA
AP:m j GAAP/IFRS
AACSB:m j m j Applicationmjofmjknowledge
3) Managers of economic entities are best considered to be users of financial informa
mj mj mj mj mj mj mj mj mj mj mj mj
tion. Answer: FALSE
mj m j
Diff:mj1
Objective:m j 1.1mjIFRS/GA
AP:m j GAAP/IFRS
AACSB:m j m j Applicationmjofmjknowledge
4) Managers of economic entities are best considered to be preparers of financial informa
mj mj mj mj mj mj mj mj mj mj mj mj
tion. Answer: TRUE
mj m j
Diff:mj1
Objective:m j 1.1mjIFRS/GA
AP:m j GAAP/IFRS
AACSB:m j m j Applicationmjofmjknowledge
5) The Securities and Exchange Commission (SEC) regulates financial reporting for publicly tra
mj mj mj mj mj mj mj mj mj mj mj
ded companies.
mj
Answer: TRUE m j m j
Diff:mj2
Objective:m j 1.1mjIFRS/GA
AP:m j GAAP
AACSB:m j m j Applicationmjofmjknowledge
6) The FASB gives the SEC authority to regulate accounting for publicly traded compa
mj mj mj mj mj mj mj mj mj mj mj mj
nies. Answer: FALSE
mj m j
Diff:mj1
Objective:m j 1.1mjIFRS/GA
AP:m j GAAP
AACSB:m j m j Applicationmjofmjknowledge
1
Copyright © 2022 Pearson Education, In
mj mj mj mj mj
c.
,7) The Public Company Accounting Oversight Board (PCAOB) sets financial accounting standards
mj mj mj mj mj mj mj mj mj mj mj
and oversees the audits of public companies in the United States.
mj mj mj mj mj mj mj mj mj mj
Answer: FALSE m j m j
Diff:mj1
Objective:m j 1.1mjIFRS/GA
AP:m j GAAP
AACSB:m j m j Applicationmjofmjknowledge
8) Financial accounting standards influence the behavior of managers and other internal u
mj mj mj mj mj mj mj mj mj mj mj
sers. Answer: TRUE
mj m j
Diff:mj2
Objective:m j 1.1mjIFRS/GA
AP:m j GAAP/IFRS
AACSB:m j m j Applicationmjofmjknowledge
9) Theories and procedures that evolve as a result of lobbying from various groups are examp
mj mj mj mj mj mj mj mj mj mj mj mj mj mj
les of proactive factors within the legal, economic, political, and social environment.
mj mj mj mj mj mj mj mj mj mj mj
Answer: FALSE m j m j
Diff:mj1
Objective:m j 1.1mjIFRS/GA
AP:m j GAAP/IFRS
AACSB:m j m j Applicationmjofmjknowledge
10) Financial information includes information that is not governed by rules set forth by the accou
mj mj mj mj mj mj mj mj mj mj mj mj mj mj
nting standard-setting bodies.
mj mj
Answer: TRUE m j m j
Diff:mj1
Objective:m j 1.1mjIFRS/GA
AP:m j GAAP/IFRS
AACSB:m j m j Applicationmjofmjknowledge
11) What is the term that describes the process of identifying, measuring, and communicating fina
mj mj mj mj mj mj mj mj mj mj mj mj mj
ncial information about an economic entity to various user groups?
mj mj mj mj mj mj mj mj mj
A) financial reporting mj
B) accounting standard setting mj mj
C) financial statement mj
D) financial accountin mj
g Answer: D
mj m j
Diff:mj2
Objective:m j 1.1mjIFRS/GA
AP:m j GAAP/IFRS
AACSB:m j m j Applicationmjofmjknowledge
2
Copyright © 2022 Pearson Education, In
mj mj mj mj mj
c.
, 12) Which element of financial accounting involves identifying the individuals who demand fina
mj mj mj mj mj mj mj mj mj mj mj
ncial information?
mj
A) financial information mj
B) economic entity mj
C) user groups
mj
D) legal, economic, political, and social environme
mj mj mj mj mj
nt Answer: C
mj m j
Diff:mj1
Objective:m j 1.1mjIFRS/GA
AP:m j GAAP/IFRS
AACSB:m j m j Applicationmjofmjknowledge
13) Which of the following is not one of the four basic financial statements?
mj mj mj mj mj mj mj mj mj mj mj mj
A) balance sheet mj
B) trial balance
mj
C) cash flows statement
mj mj
D) statement of comprehensive incommj mj mj
e Answer: B
mj m j
Diff:mj1
Objective:m j 1.1mjIFRS/GA
AP:m j GAAP/IFRS
AACSB:m j m j Applicationmjofmjknowledge
14) Which organization is responsible for promulgating U.S. GAAP?
mj mj mj mj mj mj mj
A) Financial Accounting Standards Board
mj mj mj
B) Public Company Accounting Oversight Board
mj mj mj mj
C) International Accounting Standards Board mj mj mj
D) Securities and Exchange Commissio
mj mj mj
n Answer: A
mj m j
Diff:mj1
Objective:m j 1.1mjIFRS/GA
AP:m j GAAP/IFRS
AACSB:m j m j Applicationmjofmjknowledge
15) Which organization is responsible for setting auditing standards and overseeing the audits of p
mj mj mj mj mj mj mj mj mj mj mj mj mj
ublic companies in the United States?
mj mj mj mj mj
A) Financial Accounting Standards Board
mj mj mj
B) Public Company Accounting Oversight Board
mj mj mj mj
C) American Institute of Certified Public Accountants
mj mj mj mj mj
D) Securities and Exchange Commissio
mj mj mj
n Answer: B
mj m j
Diff:mj1
Objective:m j 1.1mjIFRS/GA
AP:m j GAAP
AACSB:m j m j Applicationmjofmjknowledge
3
Copyright © 2022 Pearson Education, In
mj mj mj mj mj
c.
mj mj mj
Chapter 1 The Financial Reporting Environment
mj mj mj mj
1.1 Overview of Financial Reporting mj mj mj
1) The financial reporting process generates three basic financial stateme
mj mj mj mj mj mj mj mj
nts. Answer: FALSE
mj m j
Diff:mj1
Objective:m j 1.1mjIFRS/GA
AP:m j GAAP/IFRS
AACSB:m j m j Applicationmjofmjknowledge
2) The demand for financial information is based on market participant dem
mj mj mj mj mj mj mj mj mj mj
and. Answer: TRUE
mj m j
Diff:mj1
Objective:m j 1.1mjIFRS/GA
AP:m j GAAP/IFRS
AACSB:m j m j Applicationmjofmjknowledge
3) Managers of economic entities are best considered to be users of financial informa
mj mj mj mj mj mj mj mj mj mj mj mj
tion. Answer: FALSE
mj m j
Diff:mj1
Objective:m j 1.1mjIFRS/GA
AP:m j GAAP/IFRS
AACSB:m j m j Applicationmjofmjknowledge
4) Managers of economic entities are best considered to be preparers of financial informa
mj mj mj mj mj mj mj mj mj mj mj mj
tion. Answer: TRUE
mj m j
Diff:mj1
Objective:m j 1.1mjIFRS/GA
AP:m j GAAP/IFRS
AACSB:m j m j Applicationmjofmjknowledge
5) The Securities and Exchange Commission (SEC) regulates financial reporting for publicly tra
mj mj mj mj mj mj mj mj mj mj mj
ded companies.
mj
Answer: TRUE m j m j
Diff:mj2
Objective:m j 1.1mjIFRS/GA
AP:m j GAAP
AACSB:m j m j Applicationmjofmjknowledge
6) The FASB gives the SEC authority to regulate accounting for publicly traded compa
mj mj mj mj mj mj mj mj mj mj mj mj
nies. Answer: FALSE
mj m j
Diff:mj1
Objective:m j 1.1mjIFRS/GA
AP:m j GAAP
AACSB:m j m j Applicationmjofmjknowledge
1
Copyright © 2022 Pearson Education, In
mj mj mj mj mj
c.
,7) The Public Company Accounting Oversight Board (PCAOB) sets financial accounting standards
mj mj mj mj mj mj mj mj mj mj mj
and oversees the audits of public companies in the United States.
mj mj mj mj mj mj mj mj mj mj
Answer: FALSE m j m j
Diff:mj1
Objective:m j 1.1mjIFRS/GA
AP:m j GAAP
AACSB:m j m j Applicationmjofmjknowledge
8) Financial accounting standards influence the behavior of managers and other internal u
mj mj mj mj mj mj mj mj mj mj mj
sers. Answer: TRUE
mj m j
Diff:mj2
Objective:m j 1.1mjIFRS/GA
AP:m j GAAP/IFRS
AACSB:m j m j Applicationmjofmjknowledge
9) Theories and procedures that evolve as a result of lobbying from various groups are examp
mj mj mj mj mj mj mj mj mj mj mj mj mj mj
les of proactive factors within the legal, economic, political, and social environment.
mj mj mj mj mj mj mj mj mj mj mj
Answer: FALSE m j m j
Diff:mj1
Objective:m j 1.1mjIFRS/GA
AP:m j GAAP/IFRS
AACSB:m j m j Applicationmjofmjknowledge
10) Financial information includes information that is not governed by rules set forth by the accou
mj mj mj mj mj mj mj mj mj mj mj mj mj mj
nting standard-setting bodies.
mj mj
Answer: TRUE m j m j
Diff:mj1
Objective:m j 1.1mjIFRS/GA
AP:m j GAAP/IFRS
AACSB:m j m j Applicationmjofmjknowledge
11) What is the term that describes the process of identifying, measuring, and communicating fina
mj mj mj mj mj mj mj mj mj mj mj mj mj
ncial information about an economic entity to various user groups?
mj mj mj mj mj mj mj mj mj
A) financial reporting mj
B) accounting standard setting mj mj
C) financial statement mj
D) financial accountin mj
g Answer: D
mj m j
Diff:mj2
Objective:m j 1.1mjIFRS/GA
AP:m j GAAP/IFRS
AACSB:m j m j Applicationmjofmjknowledge
2
Copyright © 2022 Pearson Education, In
mj mj mj mj mj
c.
, 12) Which element of financial accounting involves identifying the individuals who demand fina
mj mj mj mj mj mj mj mj mj mj mj
ncial information?
mj
A) financial information mj
B) economic entity mj
C) user groups
mj
D) legal, economic, political, and social environme
mj mj mj mj mj
nt Answer: C
mj m j
Diff:mj1
Objective:m j 1.1mjIFRS/GA
AP:m j GAAP/IFRS
AACSB:m j m j Applicationmjofmjknowledge
13) Which of the following is not one of the four basic financial statements?
mj mj mj mj mj mj mj mj mj mj mj mj
A) balance sheet mj
B) trial balance
mj
C) cash flows statement
mj mj
D) statement of comprehensive incommj mj mj
e Answer: B
mj m j
Diff:mj1
Objective:m j 1.1mjIFRS/GA
AP:m j GAAP/IFRS
AACSB:m j m j Applicationmjofmjknowledge
14) Which organization is responsible for promulgating U.S. GAAP?
mj mj mj mj mj mj mj
A) Financial Accounting Standards Board
mj mj mj
B) Public Company Accounting Oversight Board
mj mj mj mj
C) International Accounting Standards Board mj mj mj
D) Securities and Exchange Commissio
mj mj mj
n Answer: A
mj m j
Diff:mj1
Objective:m j 1.1mjIFRS/GA
AP:m j GAAP/IFRS
AACSB:m j m j Applicationmjofmjknowledge
15) Which organization is responsible for setting auditing standards and overseeing the audits of p
mj mj mj mj mj mj mj mj mj mj mj mj mj
ublic companies in the United States?
mj mj mj mj mj
A) Financial Accounting Standards Board
mj mj mj
B) Public Company Accounting Oversight Board
mj mj mj mj
C) American Institute of Certified Public Accountants
mj mj mj mj mj
D) Securities and Exchange Commissio
mj mj mj
n Answer: B
mj m j
Diff:mj1
Objective:m j 1.1mjIFRS/GA
AP:m j GAAP
AACSB:m j m j Applicationmjofmjknowledge
3
Copyright © 2022 Pearson Education, In
mj mj mj mj mj
c.
