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