,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/GA
AP:/ = GAAP/IFRS
AACSB:/ = / = Application/=of/=knowledge
2) The demand for financial information is based on market participant deman
/= /= /= /= /= /= /= /= /= /=
d. Answer: TRUE
/= / =
Diff:/=1
Objective:/ = 1.1/=IFRS/GA
AP:/ = GAAP/IFRS
AACSB:/ = / = Application/=of/=knowledge
3) Managers of economic entities are best considered to be users of financial informatio
/= /= /= /= /= /= /= /= /= /= /= /=
n. Answer: FALSE
/= / =
Diff:/=1
Objective:/ = 1.1/=IFRS/GA
AP:/ = GAAP/IFRS
AACSB:/ = / = Application/=of/=knowledge
4) Managers of economic entities are best considered to be preparers of financial informatio
/= /= /= /= /= /= /= /= /= /= /= /=
n. Answer: TRUE
/= / =
Diff:/=1
Objective:/ = 1.1/=IFRS/GA
AP:/ = GAAP/IFRS
AACSB:/ = / = Application/=of/=knowledge
5) The Securities and Exchange Commission (SEC) regulates financial reporting for publicly trade
/= /= /= /= /= /= /= /= /= /= /=
d companies.
/=
Answer: TRUE / = / =
Diff:/=2
Objective:/ = 1.1/=IFRS/GA
AP:/ = GAAP
AACSB:/ = / = Application/=of/=knowledge
6) The FASB gives the SEC authority to regulate accounting for publicly traded companie
/= /= /= /= /= /= /= /= /= /= /= /=
s. Answer: FALSE
/= / =
Diff:/=1
Objective:/ = 1.1/=IFRS/GA
AP:/ = GAAP
AACSB:/ = / = Application/=of/=knowledge
1
Copyright © 2022 Pearson Education, Inc.
/= /= /= /= /=
,7) The Public Company Accounting Oversight Board (PCAOB) sets financial accounting standards an
/= /= /= /= /= /= /= /= /= /= /=
d oversees the audits of public companies in the United States.
/= /= /= /= /= /= /= /= /= /=
Answer: FALSE / = / =
Diff:/=1
Objective:/ = 1.1/=IFRS/GA
AP:/ = GAAP
AACSB:/ = / = Application/=of/=knowledge
8) Financial accounting standards influence the behavior of managers and other internal user
/= /= /= /= /= /= /= /= /= /= /=
s. Answer: TRUE
/= / =
Diff:/=2
Objective:/ = 1.1/=IFRS/GA
AP:/ = 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/GA
AP:/ = GAAP/IFRS
AACSB:/ = / = Application/=of/=knowledge
10) Financial information includes information that is not governed by rules set forth by the accounti
/= /= /= /= /= /= /= /= /= /= /= /= /= /=
ng standard-setting bodies.
/= /=
Answer: TRUE / = / =
Diff:/=1
Objective:/ = 1.1/=IFRS/GA
AP:/ = GAAP/IFRS
AACSB:/ = / = Application/=of/=knowledge
11) What is the term that describes the process of identifying, measuring, and communicating financi
/= /= /= /= /= /= /= /= /= /= /= /= /=
al 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/GA
AP:/ = GAAP/IFRS
AACSB:/ = / = Application/=of/=knowledge
2
Copyright © 2022 Pearson Education, Inc.
/= /= /= /= /=
, 12) Which element of financial accounting involves identifying the individuals who demand financi
/= /= /= /= /= /= /= /= /= /= /=
al 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/GA
AP:/ = 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/GA
AP:/ = 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/GA
AP:/ = GAAP/IFRS
AACSB:/ = / = Application/=of/=knowledge
15) Which organization is responsible for setting auditing standards and overseeing the audits of publ
/= /= /= /= /= /= /= /= /= /= /= /= /=
ic 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/GA
AP:/ = GAAP
AACSB:/ = / = Application/=of/=knowledge
3
Copyright © 2022 Pearson Education, Inc./= /= /= /= /=
/= /= /=
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/GA
AP:/ = GAAP/IFRS
AACSB:/ = / = Application/=of/=knowledge
2) The demand for financial information is based on market participant deman
/= /= /= /= /= /= /= /= /= /=
d. Answer: TRUE
/= / =
Diff:/=1
Objective:/ = 1.1/=IFRS/GA
AP:/ = GAAP/IFRS
AACSB:/ = / = Application/=of/=knowledge
3) Managers of economic entities are best considered to be users of financial informatio
/= /= /= /= /= /= /= /= /= /= /= /=
n. Answer: FALSE
/= / =
Diff:/=1
Objective:/ = 1.1/=IFRS/GA
AP:/ = GAAP/IFRS
AACSB:/ = / = Application/=of/=knowledge
4) Managers of economic entities are best considered to be preparers of financial informatio
/= /= /= /= /= /= /= /= /= /= /= /=
n. Answer: TRUE
/= / =
Diff:/=1
Objective:/ = 1.1/=IFRS/GA
AP:/ = GAAP/IFRS
AACSB:/ = / = Application/=of/=knowledge
5) The Securities and Exchange Commission (SEC) regulates financial reporting for publicly trade
/= /= /= /= /= /= /= /= /= /= /=
d companies.
/=
Answer: TRUE / = / =
Diff:/=2
Objective:/ = 1.1/=IFRS/GA
AP:/ = GAAP
AACSB:/ = / = Application/=of/=knowledge
6) The FASB gives the SEC authority to regulate accounting for publicly traded companie
/= /= /= /= /= /= /= /= /= /= /= /=
s. Answer: FALSE
/= / =
Diff:/=1
Objective:/ = 1.1/=IFRS/GA
AP:/ = GAAP
AACSB:/ = / = Application/=of/=knowledge
1
Copyright © 2022 Pearson Education, Inc.
/= /= /= /= /=
,7) The Public Company Accounting Oversight Board (PCAOB) sets financial accounting standards an
/= /= /= /= /= /= /= /= /= /= /=
d oversees the audits of public companies in the United States.
/= /= /= /= /= /= /= /= /= /=
Answer: FALSE / = / =
Diff:/=1
Objective:/ = 1.1/=IFRS/GA
AP:/ = GAAP
AACSB:/ = / = Application/=of/=knowledge
8) Financial accounting standards influence the behavior of managers and other internal user
/= /= /= /= /= /= /= /= /= /= /=
s. Answer: TRUE
/= / =
Diff:/=2
Objective:/ = 1.1/=IFRS/GA
AP:/ = 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/GA
AP:/ = GAAP/IFRS
AACSB:/ = / = Application/=of/=knowledge
10) Financial information includes information that is not governed by rules set forth by the accounti
/= /= /= /= /= /= /= /= /= /= /= /= /= /=
ng standard-setting bodies.
/= /=
Answer: TRUE / = / =
Diff:/=1
Objective:/ = 1.1/=IFRS/GA
AP:/ = GAAP/IFRS
AACSB:/ = / = Application/=of/=knowledge
11) What is the term that describes the process of identifying, measuring, and communicating financi
/= /= /= /= /= /= /= /= /= /= /= /= /=
al 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/GA
AP:/ = GAAP/IFRS
AACSB:/ = / = Application/=of/=knowledge
2
Copyright © 2022 Pearson Education, Inc.
/= /= /= /= /=
, 12) Which element of financial accounting involves identifying the individuals who demand financi
/= /= /= /= /= /= /= /= /= /= /=
al 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/GA
AP:/ = 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/GA
AP:/ = 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/GA
AP:/ = GAAP/IFRS
AACSB:/ = / = Application/=of/=knowledge
15) Which organization is responsible for setting auditing standards and overseeing the audits of publ
/= /= /= /= /= /= /= /= /= /= /= /= /=
ic 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/GA
AP:/ = GAAP
AACSB:/ = / = Application/=of/=knowledge
3
Copyright © 2022 Pearson Education, Inc./= /= /= /= /=
