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