,Intermediate Accounting, 3e (Gordon/Raedy/Sannella)
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Chapter 1 The Financial Reporting Environment
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1.1 Overview of Financial Reporting gf gf gf
1) The financial reporting process generates three basic financial statement
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s. Answer: FALSE
gf g f
Diff:gf1
Objective:g f 1.1gfIFRS/GA
AP:g f GAAP/IFRS
AACSB:g f g f Applicationgfofgfknowledge
2) The demand for financial information is based on market participant deman
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d. Answer: TRUE
gf g f
Diff:gf1
Objective:g f 1.1gfIFRS/GA
AP:g f GAAP/IFRS
AACSB:g f g f Applicationgfofgfknowledge
3) Managers of economic entities are best considered to be users of financial informatio
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n. Answer: FALSE
gf g f
Diff:gf1
Objective:g f 1.1gfIFRS/GA
AP:g f GAAP/IFRS
AACSB:g f g f Applicationgfofgfknowledge
4) Managers of economic entities are best considered to be preparers of financial informatio
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n. Answer: TRUE
gf g f
Diff:gf1
Objective:g f 1.1gfIFRS/GA
AP:g f GAAP/IFRS
AACSB:g f g f Applicationgfofgfknowledge
5) The Securities and Exchange Commission (SEC) regulates financial reporting for publicly trad
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ed companies.
gf
Answer: TRUE g f g f
Diff:gf2
Objective:g f 1.1gfIFRS/GA
AP:g f GAAP
AACSB:g f g f Applicationgfofgfknowledge
6) The FASB gives the SEC authority to regulate accounting for publicly traded compani
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es. Answer: FALSE
gf g f
Diff:gf1
Objective:g f 1.1gfIFRS/GA
AP:g f GAAP
AACSB:g f g f Applicationgfofgfknowledge
1
Copyright © 2022 Pearson Education, Inc.
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,7) The Public Company Accounting Oversight Board (PCAOB) sets financial accounting standards a
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nd oversees the audits of public companies in the United States.
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Answer: FALSE g f g f
Diff:gf1
Objective:g f 1.1gfIFRS/GA
AP:g f GAAP
AACSB:g f g f Applicationgfofgfknowledge
8) Financial accounting standards influence the behavior of managers and other internal use
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rs. Answer: TRUE
gf g f
Diff:gf2
Objective:g f 1.1gfIFRS/GA
AP:g f GAAP/IFRS
AACSB:g f g f Applicationgfofgfknowledge
9) Theories and procedures that evolve as a result of lobbying from various groups are examples
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of proactive factors within the legal, economic, political, and social environment.
gf gf gf gf gf gf gf gf gf gf gf
Answer: FALSE g f g f
Diff:gf1
Objective:g f 1.1gfIFRS/GA
AP:g f GAAP/IFRS
AACSB:g f g f Applicationgfofgfknowledge
10) Financial information includes information that is not governed by rules set forth by the accounti
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ng standard-setting bodies.
gf gf
Answer: TRUE g f g f
Diff:gf1
Objective:g f 1.1gfIFRS/GA
AP:g f GAAP/IFRS
AACSB:g f g f Applicationgfofgfknowledge
11) What is the term that describes the process of identifying, measuring, and communicating financ
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ial information about an economic entity to various user groups?
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A) financial reporting gf
B) accounting standard setting gf gf
C) financial statement gf
D) financial accounting gf
Answer: D
gf g f
Diff:gf2
Objective:g f 1.1gfIFRS/GA
AP:g f GAAP/IFRS
AACSB:g f g f Applicationgfofgfknowledge
2
Copyright © 2022 Pearson Education, Inc.
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, 12) Which element of financial accounting involves identifying the individuals who demand financi
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al information?
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A) financial information gf
B) economic entity gf
C) user groups
gf
D) legal, economic, political, and social environmen
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t Answer: C
gf g f
Diff:gf1
Objective:g f 1.1gfIFRS/GA
AP:g f GAAP/IFRS
AACSB:g f g f Applicationgfofgfknowledge
13) Which of the following is not one of the four basic financial statements?
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A) balance sheet gf
B) trial balance
gf
C) cash flows statement
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D) statement of comprehensive income gf gf gf
Answer: B
gf g f
Diff:gf1
Objective:g f 1.1gfIFRS/GA
AP:g f GAAP/IFRS
AACSB:g f g f Applicationgfofgfknowledge
14) Which organization is responsible for promulgating U.S. GAAP?
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A) Financial Accounting Standards Board
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B) Public Company Accounting Oversight Board
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C) International Accounting Standards Board gf gf gf
D) Securities and Exchange Commission gf gf gf
Answer: A
gf g f
Diff:gf1
Objective:g f 1.1gfIFRS/GA
AP:g f GAAP/IFRS
AACSB:g f g f Applicationgfofgfknowledge
15) Which organization is responsible for setting auditing standards and overseeing the audits of pub
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lic companies in the United States?
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A) Financial Accounting Standards Board
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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 Commission gf gf gf
Answer: B
gf g f
Diff:gf1
Objective:g f 1.1gfIFRS/GA
AP:g f GAAP
AACSB:g f g f Applicationgfofgfknowledge
3
Copyright © 2022 Pearson Education, Inc.
gf gf gf gf gf
gf gf gf
Chapter 1 The Financial Reporting Environment
gf gf gf gf
1.1 Overview of Financial Reporting gf gf gf
1) The financial reporting process generates three basic financial statement
gf gf gf gf gf gf gf gf
s. Answer: FALSE
gf g f
Diff:gf1
Objective:g f 1.1gfIFRS/GA
AP:g f GAAP/IFRS
AACSB:g f g f Applicationgfofgfknowledge
2) The demand for financial information is based on market participant deman
gf gf gf gf gf gf gf gf gf gf
d. Answer: TRUE
gf g f
Diff:gf1
Objective:g f 1.1gfIFRS/GA
AP:g f GAAP/IFRS
AACSB:g f g f Applicationgfofgfknowledge
3) Managers of economic entities are best considered to be users of financial informatio
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n. Answer: FALSE
gf g f
Diff:gf1
Objective:g f 1.1gfIFRS/GA
AP:g f GAAP/IFRS
AACSB:g f g f Applicationgfofgfknowledge
4) Managers of economic entities are best considered to be preparers of financial informatio
gf gf gf gf gf gf gf gf gf gf gf gf
n. Answer: TRUE
gf g f
Diff:gf1
Objective:g f 1.1gfIFRS/GA
AP:g f GAAP/IFRS
AACSB:g f g f Applicationgfofgfknowledge
5) The Securities and Exchange Commission (SEC) regulates financial reporting for publicly trad
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ed companies.
gf
Answer: TRUE g f g f
Diff:gf2
Objective:g f 1.1gfIFRS/GA
AP:g f GAAP
AACSB:g f g f Applicationgfofgfknowledge
6) The FASB gives the SEC authority to regulate accounting for publicly traded compani
gf gf gf gf gf gf gf gf gf gf gf gf
es. Answer: FALSE
gf g f
Diff:gf1
Objective:g f 1.1gfIFRS/GA
AP:g f GAAP
AACSB:g f g f Applicationgfofgfknowledge
1
Copyright © 2022 Pearson Education, Inc.
gf gf gf gf gf
,7) The Public Company Accounting Oversight Board (PCAOB) sets financial accounting standards a
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nd oversees the audits of public companies in the United States.
gf gf gf gf gf gf gf gf gf gf
Answer: FALSE g f g f
Diff:gf1
Objective:g f 1.1gfIFRS/GA
AP:g f GAAP
AACSB:g f g f Applicationgfofgfknowledge
8) Financial accounting standards influence the behavior of managers and other internal use
gf gf gf gf gf gf gf gf gf gf gf
rs. Answer: TRUE
gf g f
Diff:gf2
Objective:g f 1.1gfIFRS/GA
AP:g f GAAP/IFRS
AACSB:g f g f Applicationgfofgfknowledge
9) Theories and procedures that evolve as a result of lobbying from various groups are examples
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of proactive factors within the legal, economic, political, and social environment.
gf gf gf gf gf gf gf gf gf gf gf
Answer: FALSE g f g f
Diff:gf1
Objective:g f 1.1gfIFRS/GA
AP:g f GAAP/IFRS
AACSB:g f g f Applicationgfofgfknowledge
10) Financial information includes information that is not governed by rules set forth by the accounti
gf gf gf gf gf gf gf gf gf gf gf gf gf gf
ng standard-setting bodies.
gf gf
Answer: TRUE g f g f
Diff:gf1
Objective:g f 1.1gfIFRS/GA
AP:g f GAAP/IFRS
AACSB:g f g f Applicationgfofgfknowledge
11) What is the term that describes the process of identifying, measuring, and communicating financ
gf gf gf gf gf gf gf gf gf gf gf gf gf
ial information about an economic entity to various user groups?
gf gf gf gf gf gf gf gf gf
A) financial reporting gf
B) accounting standard setting gf gf
C) financial statement gf
D) financial accounting gf
Answer: D
gf g f
Diff:gf2
Objective:g f 1.1gfIFRS/GA
AP:g f GAAP/IFRS
AACSB:g f g f Applicationgfofgfknowledge
2
Copyright © 2022 Pearson Education, Inc.
gf gf gf gf gf
, 12) Which element of financial accounting involves identifying the individuals who demand financi
gf gf gf gf gf gf gf gf gf gf gf
al information?
gf
A) financial information gf
B) economic entity gf
C) user groups
gf
D) legal, economic, political, and social environmen
gf gf gf gf gf
t Answer: C
gf g f
Diff:gf1
Objective:g f 1.1gfIFRS/GA
AP:g f GAAP/IFRS
AACSB:g f g f Applicationgfofgfknowledge
13) Which of the following is not one of the four basic financial statements?
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A) balance sheet gf
B) trial balance
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C) cash flows statement
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D) statement of comprehensive income gf gf gf
Answer: B
gf g f
Diff:gf1
Objective:g f 1.1gfIFRS/GA
AP:g f GAAP/IFRS
AACSB:g f g f Applicationgfofgfknowledge
14) Which organization is responsible for promulgating U.S. GAAP?
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A) Financial Accounting Standards Board
gf gf gf
B) Public Company Accounting Oversight Board
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C) International Accounting Standards Board gf gf gf
D) Securities and Exchange Commission gf gf gf
Answer: A
gf g f
Diff:gf1
Objective:g f 1.1gfIFRS/GA
AP:g f GAAP/IFRS
AACSB:g f g f Applicationgfofgfknowledge
15) Which organization is responsible for setting auditing standards and overseeing the audits of pub
gf gf gf gf gf gf gf gf gf gf gf gf gf
lic companies in the United States?
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A) Financial Accounting Standards Board
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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 Commission gf gf gf
Answer: B
gf g f
Diff:gf1
Objective:g f 1.1gfIFRS/GA
AP:g f GAAP
AACSB:g f g f Applicationgfofgfknowledge
3
Copyright © 2022 Pearson Education, Inc.
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