,Intermediate Accounting, 3e (Gordon/Raedy/Sannella)
9i 9i 9i
Chapter 1 The Financial Reporting Environment
9i 9i 9i 9i
1.1 Overview of Financial Reporting 9i 9i 9i
1) The financial reporting process generates three basic financial statements
9i 9i 9i 9i 9i 9i 9i 9i
. Answer: FALSE
9i 9 i
Diff:9i1
Objective:9 i 1.19iIFRS/GA
AP:9 i GAAP/IFRS
AACSB:9 i 9 i Application9iof9iknowledge
2) The demand for financial information is based on market participant demand
9i 9i 9i 9i 9i 9i 9i 9i 9i 9i
. Answer: TRUE
9i 9 i
Diff:9i1
Objective:9 i 1.19iIFRS/GA
AP:9 i GAAP/IFRS
AACSB:9 i 9 i Application9iof9iknowledge
3) Managers of economic entities are best considered to be users of financial informatio
9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i
n. Answer: FALSE
9i 9 i
Diff:9i1
Objective:9 i 1.19iIFRS/GA
AP:9 i GAAP/IFRS
AACSB:9 i 9 i Application9iof9iknowledge
4) Managers of economic entities are best considered to be preparers of financial information
9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i
. Answer: TRUE
9i 9 i
Diff:9i1
Objective:9 i 1.19iIFRS/GA
AP:9 i GAAP/IFRS
AACSB:9 i 9 i Application9iof9iknowledge
5) The Securities and Exchange Commission (SEC) regulates financial reporting for publicly trade
9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i
d companies.
9i
Answer: TRUE 9 i 9 i
Diff:9i2
Objective:9 i 1.19iIFRS/GA
AP:9 i GAAP
AACSB:9 i 9 i Application9iof9iknowledge
6) The FASB gives the SEC authority to regulate accounting for publicly traded companies
9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i
. Answer: FALSE
9i 9 i
Diff:9i1
Objective:9 i 1.19iIFRS/GA
AP:9 i GAAP
AACSB:9 i 9 i Application9iof9iknowledge
1
Copyright © 2022 Pearson Education, Inc.
9i 9i 9i 9i 9i
,7) The Public Company Accounting Oversight Board (PCAOB) sets financial accounting standards an
9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i
d oversees the audits of public companies in the United States.
9i 9i 9i 9i 9i 9i 9i 9i 9i 9i
Answer: FALSE 9 i 9 i
Diff:9i1
Objective:9 i 1.19iIFRS/GA
AP:9 i GAAP
AACSB:9 i 9 i Application9iof9iknowledge
8) Financial accounting standards influence the behavior of managers and other internal user
9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i
s. Answer: TRUE
9i 9 i
Diff:9i2
Objective:9 i 1.19iIFRS/GA
AP:9 i GAAP/IFRS
AACSB:9 i 9 i Application9iof9iknowledge
9) Theories and procedures that evolve as a result of lobbying from various groups are examples
9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i
of proactive factors within the legal, economic, political, and social environment.
9i 9i 9i 9i 9i 9i 9i 9i 9i 9i
Answer: FALSE 9 i 9 i
Diff:9i1
Objective:9 i 1.19iIFRS/GA
AP:9 i GAAP/IFRS
AACSB:9 i 9 i Application9iof9iknowledge
10) Financial information includes information that is not governed by rules set forth by the accountin
9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i
g standard-setting bodies.
9i 9i
Answer: TRUE 9 i 9 i
Diff:9i1
Objective:9 i 1.19iIFRS/GA
AP:9 i GAAP/IFRS
AACSB:9 i 9 i Application9iof9iknowledge
11) What is the term that describes the process of identifying, measuring, and communicating financi
9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i
al information about an economic entity to various user groups?
9i 9i 9i 9i 9i 9i 9i 9i 9i
A) financial reporting 9i
B) accounting standard setting 9i 9i
C) financial statement 9i
D) financial accounting 9i
Answer: D
9i 9 i
Diff:9i2
Objective:9 i 1.19iIFRS/GA
AP:9 i GAAP/IFRS
AACSB:9 i 9 i Application9iof9iknowledge
2
Copyright © 2022 Pearson Education, Inc.9i 9i 9i 9i 9i
, 12) Which element of financial accounting involves identifying the individuals who demand financia
9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i
l information?
9i
A) financial information 9i
B) economic entity 9i
C) user groups
9i
D) legal, economic, political, and social environment
9i 9i 9i 9i 9i
Answer: C
9i 9 i
Diff:9i1
Objective:9 i 1.19iIFRS/GA
AP:9 i GAAP/IFRS
AACSB:9 i 9 i Application9iof9iknowledge
13) Which of the following is not one of the four basic financial statements?
9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i
A) balance sheet 9i
B) trial balance
9i
C) cash flows statement
9i 9i
D) statement of comprehensive income9i 9i 9i
Answer: B
9i 9 i
Diff:9i1
Objective:9 i 1.19iIFRS/GA
AP:9 i GAAP/IFRS
AACSB:9 i 9 i Application9iof9iknowledge
14) Which organization is responsible for promulgating U.S. GAAP?
9i 9i 9i 9i 9i 9i 9i
A) Financial Accounting Standards Board
9i 9i 9i
B) Public Company Accounting Oversight Board
9i 9i 9i 9i
C) International Accounting Standards Board 9i 9i 9i
D) Securities and Exchange Commission
9i 9i 9i
Answer: A
9i 9 i
Diff:9i1
Objective:9 i 1.19iIFRS/GA
AP:9 i GAAP/IFRS
AACSB:9 i 9 i Application9iof9iknowledge
15) Which organization is responsible for setting auditing standards and overseeing the audits of publi
9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i
c companies in the United States?
9i 9i 9i 9i 9i
A) Financial Accounting Standards Board
9i 9i 9i
B) Public Company Accounting Oversight Board
9i 9i 9i 9i
C) American Institute of Certified Public Accountants
9i 9i 9i 9i 9i
D) Securities and Exchange Commission
9i 9i 9i
Answer: B
9i 9 i
Diff:9i1
Objective:9 i 1.19iIFRS/GA
AP:9 i GAAP
AACSB:9 i 9 i Application9iof9iknowledge
3
Copyright © 2022 Pearson Education, Inc. 9i 9i 9i 9i 9i
9i 9i 9i
Chapter 1 The Financial Reporting Environment
9i 9i 9i 9i
1.1 Overview of Financial Reporting 9i 9i 9i
1) The financial reporting process generates three basic financial statements
9i 9i 9i 9i 9i 9i 9i 9i
. Answer: FALSE
9i 9 i
Diff:9i1
Objective:9 i 1.19iIFRS/GA
AP:9 i GAAP/IFRS
AACSB:9 i 9 i Application9iof9iknowledge
2) The demand for financial information is based on market participant demand
9i 9i 9i 9i 9i 9i 9i 9i 9i 9i
. Answer: TRUE
9i 9 i
Diff:9i1
Objective:9 i 1.19iIFRS/GA
AP:9 i GAAP/IFRS
AACSB:9 i 9 i Application9iof9iknowledge
3) Managers of economic entities are best considered to be users of financial informatio
9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i
n. Answer: FALSE
9i 9 i
Diff:9i1
Objective:9 i 1.19iIFRS/GA
AP:9 i GAAP/IFRS
AACSB:9 i 9 i Application9iof9iknowledge
4) Managers of economic entities are best considered to be preparers of financial information
9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i
. Answer: TRUE
9i 9 i
Diff:9i1
Objective:9 i 1.19iIFRS/GA
AP:9 i GAAP/IFRS
AACSB:9 i 9 i Application9iof9iknowledge
5) The Securities and Exchange Commission (SEC) regulates financial reporting for publicly trade
9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i
d companies.
9i
Answer: TRUE 9 i 9 i
Diff:9i2
Objective:9 i 1.19iIFRS/GA
AP:9 i GAAP
AACSB:9 i 9 i Application9iof9iknowledge
6) The FASB gives the SEC authority to regulate accounting for publicly traded companies
9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i
. Answer: FALSE
9i 9 i
Diff:9i1
Objective:9 i 1.19iIFRS/GA
AP:9 i GAAP
AACSB:9 i 9 i Application9iof9iknowledge
1
Copyright © 2022 Pearson Education, Inc.
9i 9i 9i 9i 9i
,7) The Public Company Accounting Oversight Board (PCAOB) sets financial accounting standards an
9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i
d oversees the audits of public companies in the United States.
9i 9i 9i 9i 9i 9i 9i 9i 9i 9i
Answer: FALSE 9 i 9 i
Diff:9i1
Objective:9 i 1.19iIFRS/GA
AP:9 i GAAP
AACSB:9 i 9 i Application9iof9iknowledge
8) Financial accounting standards influence the behavior of managers and other internal user
9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i
s. Answer: TRUE
9i 9 i
Diff:9i2
Objective:9 i 1.19iIFRS/GA
AP:9 i GAAP/IFRS
AACSB:9 i 9 i Application9iof9iknowledge
9) Theories and procedures that evolve as a result of lobbying from various groups are examples
9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i
of proactive factors within the legal, economic, political, and social environment.
9i 9i 9i 9i 9i 9i 9i 9i 9i 9i
Answer: FALSE 9 i 9 i
Diff:9i1
Objective:9 i 1.19iIFRS/GA
AP:9 i GAAP/IFRS
AACSB:9 i 9 i Application9iof9iknowledge
10) Financial information includes information that is not governed by rules set forth by the accountin
9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i
g standard-setting bodies.
9i 9i
Answer: TRUE 9 i 9 i
Diff:9i1
Objective:9 i 1.19iIFRS/GA
AP:9 i GAAP/IFRS
AACSB:9 i 9 i Application9iof9iknowledge
11) What is the term that describes the process of identifying, measuring, and communicating financi
9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i
al information about an economic entity to various user groups?
9i 9i 9i 9i 9i 9i 9i 9i 9i
A) financial reporting 9i
B) accounting standard setting 9i 9i
C) financial statement 9i
D) financial accounting 9i
Answer: D
9i 9 i
Diff:9i2
Objective:9 i 1.19iIFRS/GA
AP:9 i GAAP/IFRS
AACSB:9 i 9 i Application9iof9iknowledge
2
Copyright © 2022 Pearson Education, Inc.9i 9i 9i 9i 9i
, 12) Which element of financial accounting involves identifying the individuals who demand financia
9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i
l information?
9i
A) financial information 9i
B) economic entity 9i
C) user groups
9i
D) legal, economic, political, and social environment
9i 9i 9i 9i 9i
Answer: C
9i 9 i
Diff:9i1
Objective:9 i 1.19iIFRS/GA
AP:9 i GAAP/IFRS
AACSB:9 i 9 i Application9iof9iknowledge
13) Which of the following is not one of the four basic financial statements?
9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i
A) balance sheet 9i
B) trial balance
9i
C) cash flows statement
9i 9i
D) statement of comprehensive income9i 9i 9i
Answer: B
9i 9 i
Diff:9i1
Objective:9 i 1.19iIFRS/GA
AP:9 i GAAP/IFRS
AACSB:9 i 9 i Application9iof9iknowledge
14) Which organization is responsible for promulgating U.S. GAAP?
9i 9i 9i 9i 9i 9i 9i
A) Financial Accounting Standards Board
9i 9i 9i
B) Public Company Accounting Oversight Board
9i 9i 9i 9i
C) International Accounting Standards Board 9i 9i 9i
D) Securities and Exchange Commission
9i 9i 9i
Answer: A
9i 9 i
Diff:9i1
Objective:9 i 1.19iIFRS/GA
AP:9 i GAAP/IFRS
AACSB:9 i 9 i Application9iof9iknowledge
15) Which organization is responsible for setting auditing standards and overseeing the audits of publi
9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i 9i
c companies in the United States?
9i 9i 9i 9i 9i
A) Financial Accounting Standards Board
9i 9i 9i
B) Public Company Accounting Oversight Board
9i 9i 9i 9i
C) American Institute of Certified Public Accountants
9i 9i 9i 9i 9i
D) Securities and Exchange Commission
9i 9i 9i
Answer: B
9i 9 i
Diff:9i1
Objective:9 i 1.19iIFRS/GA
AP:9 i GAAP
AACSB:9 i 9 i Application9iof9iknowledge
3
Copyright © 2022 Pearson Education, Inc. 9i 9i 9i 9i 9i
