ANALYZED INTERMEDIATE
ACCOUNTING CHAPTER 1-4
The statement of retained earnings is one of the financial statements most frequently provided by public
companies. - CORRECT ANSWER -True. The financial statements most frequently provided by public
companies include the balance sheet, the statement of cash flows, and the statement of stockholder's
equity.
Capital allocation is the process of determining how and at what cost money is allocated among
competing interests. - CORRECT ANSWER -True. Capital allocation is the process of determining how and
at what cost money is allocated among competing interests.
Which of the following generally provides a better indication of an enterprise's present and continuing
ability to generate favorable cash flows? - CORRECT ANSWER -Accrual basis accounting.
Accounting principles are "generally accepted" only when: - CORRECT ANSWER -Authoritative accounting
rule-making body has established it in an official pronouncement or over time it has been accepted as
appropriate because of its universal application.
The role of the Securities and Exchange Commission in the formulation of accounting principles can be
best described as: - CORRECT ANSWER -Having sometimes primary and sometimes secondary roles in
the formulation of accounting principles.
Which of the following was established by the federal government to help develop and standardize
financial information presented to stockholders? - CORRECT ANSWER -As a result of the call for greater
regulation after the stock market crash of 1929, the federal government established the SEC to help
develop and standardize financial information for stockholders.
The first step taken in the establishment of a typical FASB statement is: - CORRECT ANSWER -A topic is
identified and placed on the board's agenda.
, Financial mAccounting mConcepts mare ma mmajor mtype mof mpronouncement missued mby mthe mFASB. m-
mCORRECT mANSWER m-Financial mAccounting mConcepts mare mone mof mthe mtwo mmajor mtypes mof
mpronouncements missued mby mthe mFASB. m
m
Which mof mthe mfollowing mpublications mis mnot mconsidered ma mGAAP mdocument? m- mCORRECT mANSWER m-
The maccounting mresearch mstudies missued mby mthe mAICPA. m
m
Generally maccepted maccounting mprinciples: m- mCORRECT mANSWER m-Include mdetailed mpractices mand
mprocedures mas mwell mas mbroad mguidelines mof mgeneral mapplication. m
Are minfluenced mby mpronouncements mof mthe mSEC mand mIRS. m
Change mover mtime mas mthe mnature mof mthe mbusiness menvironment mchanges. m
m
Politics mplay mno mrole min mestablishing mGAAP. m- mCORRECT mANSWER m-GAAP mis mpart mof mthe mreal mworld,
mand mit mcannot mescape mpolitics mand mpolitical mpressures. m
m
All mlisted mcompanies min mthe mEuropean mUnion muse mIFRS. m- mCORRECT mANSWER m-Over m115 mcountries
mincluding mthose min mthe mEuropean mUnion muse mIFRS. m
m
From mthe mfour mstatements mthat mfollow, mwhich mare mtrue? m
1. Technical mcompetence mis mnot menough mwhen mencountering methical mdecisions. m
2. The mpressures m"to mbend mthe mrules," m"to mplay mthe mgame," m"to mjust mignore mit" mcan mbe mconsiderable.
m
3. Time, mjob, mclient, mpersonal, mand mpeer mpressures mdo mnot mcomplicate mthe mprocess mof methical
msensitivity mand mselection mamong malternatives. m
4. The mdecision mmay mbe measier mbecause mthere mis mno mcomprehensive methical msystem mto mprovide
mguidelines. m- mCORRECT mANSWER m-1 mand m2 mare mtrue, m3 mand m4 mare mfalse, mpressures mcomplicate
methics mas mdoes mthe mlack mof mguidelines. m
International mFinancial mReporting mStandards m(IFRS) mare missued mby mthe: m- mCORRECT mANSWER m-
International mFinancial mReporting mStandards m(IFRS). m
m
True mor mFalse: mIFRS mis mmore m"rule-based" min mits mapproach mto mstandards mthan mU.S. mGAAP. m- mCORRECT
m
ACCOUNTING CHAPTER 1-4
The statement of retained earnings is one of the financial statements most frequently provided by public
companies. - CORRECT ANSWER -True. The financial statements most frequently provided by public
companies include the balance sheet, the statement of cash flows, and the statement of stockholder's
equity.
Capital allocation is the process of determining how and at what cost money is allocated among
competing interests. - CORRECT ANSWER -True. Capital allocation is the process of determining how and
at what cost money is allocated among competing interests.
Which of the following generally provides a better indication of an enterprise's present and continuing
ability to generate favorable cash flows? - CORRECT ANSWER -Accrual basis accounting.
Accounting principles are "generally accepted" only when: - CORRECT ANSWER -Authoritative accounting
rule-making body has established it in an official pronouncement or over time it has been accepted as
appropriate because of its universal application.
The role of the Securities and Exchange Commission in the formulation of accounting principles can be
best described as: - CORRECT ANSWER -Having sometimes primary and sometimes secondary roles in
the formulation of accounting principles.
Which of the following was established by the federal government to help develop and standardize
financial information presented to stockholders? - CORRECT ANSWER -As a result of the call for greater
regulation after the stock market crash of 1929, the federal government established the SEC to help
develop and standardize financial information for stockholders.
The first step taken in the establishment of a typical FASB statement is: - CORRECT ANSWER -A topic is
identified and placed on the board's agenda.
, Financial mAccounting mConcepts mare ma mmajor mtype mof mpronouncement missued mby mthe mFASB. m-
mCORRECT mANSWER m-Financial mAccounting mConcepts mare mone mof mthe mtwo mmajor mtypes mof
mpronouncements missued mby mthe mFASB. m
m
Which mof mthe mfollowing mpublications mis mnot mconsidered ma mGAAP mdocument? m- mCORRECT mANSWER m-
The maccounting mresearch mstudies missued mby mthe mAICPA. m
m
Generally maccepted maccounting mprinciples: m- mCORRECT mANSWER m-Include mdetailed mpractices mand
mprocedures mas mwell mas mbroad mguidelines mof mgeneral mapplication. m
Are minfluenced mby mpronouncements mof mthe mSEC mand mIRS. m
Change mover mtime mas mthe mnature mof mthe mbusiness menvironment mchanges. m
m
Politics mplay mno mrole min mestablishing mGAAP. m- mCORRECT mANSWER m-GAAP mis mpart mof mthe mreal mworld,
mand mit mcannot mescape mpolitics mand mpolitical mpressures. m
m
All mlisted mcompanies min mthe mEuropean mUnion muse mIFRS. m- mCORRECT mANSWER m-Over m115 mcountries
mincluding mthose min mthe mEuropean mUnion muse mIFRS. m
m
From mthe mfour mstatements mthat mfollow, mwhich mare mtrue? m
1. Technical mcompetence mis mnot menough mwhen mencountering methical mdecisions. m
2. The mpressures m"to mbend mthe mrules," m"to mplay mthe mgame," m"to mjust mignore mit" mcan mbe mconsiderable.
m
3. Time, mjob, mclient, mpersonal, mand mpeer mpressures mdo mnot mcomplicate mthe mprocess mof methical
msensitivity mand mselection mamong malternatives. m
4. The mdecision mmay mbe measier mbecause mthere mis mno mcomprehensive methical msystem mto mprovide
mguidelines. m- mCORRECT mANSWER m-1 mand m2 mare mtrue, m3 mand m4 mare mfalse, mpressures mcomplicate
methics mas mdoes mthe mlack mof mguidelines. m
International mFinancial mReporting mStandards m(IFRS) mare missued mby mthe: m- mCORRECT mANSWER m-
International mFinancial mReporting mStandards m(IFRS). m
m
True mor mFalse: mIFRS mis mmore m"rule-based" min mits mapproach mto mstandards mthan mU.S. mGAAP. m- mCORRECT
m
