,Intermediate Accounting, 3e (Gordon/Raedy/Sannella)
+f +f +f
Chapter 1 The Financial Reporting Environment
+f +f +f +f
1.1 Overview of Financial Reporting +f +f +f
1) The financial reporting process generates three basic financial statements
+f +f +f +f +f +f +f +f
. Answer: FALSE
+f + f
Diff:+f1
Objective:+ f 1.1+fIFRS/GA
AP:+ f GAAP/IFRS
AACSB:+ f + f Application+fof+fknowledge
2) The demand for financial information is based on market participant deman
+f +f +f +f +f +f +f +f +f +f
d. Answer: TRUE
+f + f
Diff:+f1
Objective:+ f 1.1+fIFRS/GA
AP:+ f GAAP/IFRS
AACSB:+ f + f Application+fof+fknowledge
3) Managers of economic entities are best considered to be users of financial informatio
+f +f +f +f +f +f +f +f +f +f +f +f
n. Answer: FALSE
+f + f
Diff:+f1
Objective:+ f 1.1+fIFRS/GA
AP:+ f GAAP/IFRS
AACSB:+ f + f Application+fof+fknowledge
4) Managers of economic entities are best considered to be preparers of financial informatio
+f +f +f +f +f +f +f +f +f +f +f +f
n. Answer: TRUE
+f + f
Diff:+f1
Objective:+ f 1.1+fIFRS/GA
AP:+ f GAAP/IFRS
AACSB:+ f + f Application+fof+fknowledge
5) The Securities and Exchange Commission (SEC) regulates financial reporting for publicly trade
+f +f +f +f +f +f +f +f +f +f +f
d companies.
+f
Answer: TRUE + f + f
Diff:+f2
Objective:+ f 1.1+fIFRS/GA
AP:+ f GAAP
AACSB:+ f + f Application+fof+fknowledge
6) The FASB gives the SEC authority to regulate accounting for publicly traded companie
+f +f +f +f +f +f +f +f +f +f +f +f
s. Answer: FALSE
+f + f
Diff:+f1
Objective:+ f 1.1+fIFRS/GA
AP:+ f GAAP
AACSB:+ f + f Application+fof+fknowledge
1
Copyright © 2022 Pearson Education, Inc.
+f +f +f +f +f
,7) The Public Company Accounting Oversight Board (PCAOB) sets financial accounting standards an
+f +f +f +f +f +f +f +f +f +f +f
d oversees the audits of public companies in the United States.
+f +f +f +f +f +f +f +f +f +f
Answer: FALSE + f + f
Diff:+f1
Objective:+ f 1.1+fIFRS/GA
AP:+ f GAAP
AACSB:+ f + f Application+fof+fknowledge
8) Financial accounting standards influence the behavior of managers and other internal user
+f +f +f +f +f +f +f +f +f +f +f
s. Answer: TRUE
+f + f
Diff:+f2
Objective:+ f 1.1+fIFRS/GA
AP:+ f GAAP/IFRS
AACSB:+ f + f Application+fof+fknowledge
9) Theories and procedures that evolve as a result of lobbying from various groups are examples
+f +f +f +f +f +f +f +f +f +f +f +f +f +f +f
of proactive factors within the legal, economic, political, and social environment.
+f +f +f +f +f +f +f +f +f +f
Answer: FALSE + f + f
Diff:+f1
Objective:+ f 1.1+fIFRS/GA
AP:+ f GAAP/IFRS
AACSB:+ f + f Application+fof+fknowledge
10) Financial information includes information that is not governed by rules set forth by the accounti
+f +f +f +f +f +f +f +f +f +f +f +f +f +f
ng standard-setting bodies.
+f +f
Answer: TRUE + f + f
Diff:+f1
Objective:+ f 1.1+fIFRS/GA
AP:+ f GAAP/IFRS
AACSB:+ f + f Application+fof+fknowledge
11) What is the term that describes the process of identifying, measuring, and communicating financi
+f +f +f +f +f +f +f +f +f +f +f +f +f
al information about an economic entity to various user groups?
+f +f +f +f +f +f +f +f +f
A) financial reporting +f
B) accounting standard setting +f +f
C) financial statement +f
D) financial accounting +f
Answer: D
+f + f
Diff:+f2
Objective:+ f 1.1+fIFRS/GA
AP:+ f GAAP/IFRS
AACSB:+ f + f Application+fof+fknowledge
2
Copyright © 2022 Pearson Education, Inc.
+f +f +f +f +f
, 12) Which element of financial accounting involves identifying the individuals who demand financi
+f +f +f +f +f +f +f +f +f +f +f
al information?
+f
A) financial information +f
B) economic entity +f
C) user groups
+f
D) legal, economic, political, and social environment
+f +f +f +f +f
Answer: C
+f + f
Diff:+f1
Objective:+ f 1.1+fIFRS/GA
AP:+ f GAAP/IFRS
AACSB:+ f + f Application+fof+fknowledge
13) Which of the following is not one of the four basic financial statements?
+f +f +f +f +f +f +f +f +f +f +f +f
A) balance sheet +f
B) trial balance
+f
C) cash flows statement
+f +f
D) statement of comprehensive income+f +f +f
Answer: B
+f + f
Diff:+f1
Objective:+ f 1.1+fIFRS/GA
AP:+ f GAAP/IFRS
AACSB:+ f + f Application+fof+fknowledge
14) Which organization is responsible for promulgating U.S. GAAP?
+f +f +f +f +f +f +f
A) Financial Accounting Standards Board
+f +f +f
B) Public Company Accounting Oversight Board
+f +f +f +f
C) International Accounting Standards Board +f +f +f
D) Securities and Exchange Commission
+f +f +f
Answer: A
+f + f
Diff:+f1
Objective:+ f 1.1+fIFRS/GA
AP:+ f GAAP/IFRS
AACSB:+ f + f Application+fof+fknowledge
15) Which organization is responsible for setting auditing standards and overseeing the audits of publ
+f +f +f +f +f +f +f +f +f +f +f +f +f
ic companies in the United States?
+f +f +f +f +f
A) Financial Accounting Standards Board
+f +f +f
B) Public Company Accounting Oversight Board
+f +f +f +f
C) American Institute of Certified Public Accountants
+f +f +f +f +f
D) Securities and Exchange Commission
+f +f +f
Answer: B
+f + f
Diff:+f1
Objective:+ f 1.1+fIFRS/GA
AP:+ f GAAP
AACSB:+ f + f Application+fof+fknowledge
3
Copyright © 2022 Pearson Education, Inc.
+f +f +f +f +f
+f +f +f
Chapter 1 The Financial Reporting Environment
+f +f +f +f
1.1 Overview of Financial Reporting +f +f +f
1) The financial reporting process generates three basic financial statements
+f +f +f +f +f +f +f +f
. Answer: FALSE
+f + f
Diff:+f1
Objective:+ f 1.1+fIFRS/GA
AP:+ f GAAP/IFRS
AACSB:+ f + f Application+fof+fknowledge
2) The demand for financial information is based on market participant deman
+f +f +f +f +f +f +f +f +f +f
d. Answer: TRUE
+f + f
Diff:+f1
Objective:+ f 1.1+fIFRS/GA
AP:+ f GAAP/IFRS
AACSB:+ f + f Application+fof+fknowledge
3) Managers of economic entities are best considered to be users of financial informatio
+f +f +f +f +f +f +f +f +f +f +f +f
n. Answer: FALSE
+f + f
Diff:+f1
Objective:+ f 1.1+fIFRS/GA
AP:+ f GAAP/IFRS
AACSB:+ f + f Application+fof+fknowledge
4) Managers of economic entities are best considered to be preparers of financial informatio
+f +f +f +f +f +f +f +f +f +f +f +f
n. Answer: TRUE
+f + f
Diff:+f1
Objective:+ f 1.1+fIFRS/GA
AP:+ f GAAP/IFRS
AACSB:+ f + f Application+fof+fknowledge
5) The Securities and Exchange Commission (SEC) regulates financial reporting for publicly trade
+f +f +f +f +f +f +f +f +f +f +f
d companies.
+f
Answer: TRUE + f + f
Diff:+f2
Objective:+ f 1.1+fIFRS/GA
AP:+ f GAAP
AACSB:+ f + f Application+fof+fknowledge
6) The FASB gives the SEC authority to regulate accounting for publicly traded companie
+f +f +f +f +f +f +f +f +f +f +f +f
s. Answer: FALSE
+f + f
Diff:+f1
Objective:+ f 1.1+fIFRS/GA
AP:+ f GAAP
AACSB:+ f + f Application+fof+fknowledge
1
Copyright © 2022 Pearson Education, Inc.
+f +f +f +f +f
,7) The Public Company Accounting Oversight Board (PCAOB) sets financial accounting standards an
+f +f +f +f +f +f +f +f +f +f +f
d oversees the audits of public companies in the United States.
+f +f +f +f +f +f +f +f +f +f
Answer: FALSE + f + f
Diff:+f1
Objective:+ f 1.1+fIFRS/GA
AP:+ f GAAP
AACSB:+ f + f Application+fof+fknowledge
8) Financial accounting standards influence the behavior of managers and other internal user
+f +f +f +f +f +f +f +f +f +f +f
s. Answer: TRUE
+f + f
Diff:+f2
Objective:+ f 1.1+fIFRS/GA
AP:+ f GAAP/IFRS
AACSB:+ f + f Application+fof+fknowledge
9) Theories and procedures that evolve as a result of lobbying from various groups are examples
+f +f +f +f +f +f +f +f +f +f +f +f +f +f +f
of proactive factors within the legal, economic, political, and social environment.
+f +f +f +f +f +f +f +f +f +f
Answer: FALSE + f + f
Diff:+f1
Objective:+ f 1.1+fIFRS/GA
AP:+ f GAAP/IFRS
AACSB:+ f + f Application+fof+fknowledge
10) Financial information includes information that is not governed by rules set forth by the accounti
+f +f +f +f +f +f +f +f +f +f +f +f +f +f
ng standard-setting bodies.
+f +f
Answer: TRUE + f + f
Diff:+f1
Objective:+ f 1.1+fIFRS/GA
AP:+ f GAAP/IFRS
AACSB:+ f + f Application+fof+fknowledge
11) What is the term that describes the process of identifying, measuring, and communicating financi
+f +f +f +f +f +f +f +f +f +f +f +f +f
al information about an economic entity to various user groups?
+f +f +f +f +f +f +f +f +f
A) financial reporting +f
B) accounting standard setting +f +f
C) financial statement +f
D) financial accounting +f
Answer: D
+f + f
Diff:+f2
Objective:+ f 1.1+fIFRS/GA
AP:+ f GAAP/IFRS
AACSB:+ f + f Application+fof+fknowledge
2
Copyright © 2022 Pearson Education, Inc.
+f +f +f +f +f
, 12) Which element of financial accounting involves identifying the individuals who demand financi
+f +f +f +f +f +f +f +f +f +f +f
al information?
+f
A) financial information +f
B) economic entity +f
C) user groups
+f
D) legal, economic, political, and social environment
+f +f +f +f +f
Answer: C
+f + f
Diff:+f1
Objective:+ f 1.1+fIFRS/GA
AP:+ f GAAP/IFRS
AACSB:+ f + f Application+fof+fknowledge
13) Which of the following is not one of the four basic financial statements?
+f +f +f +f +f +f +f +f +f +f +f +f
A) balance sheet +f
B) trial balance
+f
C) cash flows statement
+f +f
D) statement of comprehensive income+f +f +f
Answer: B
+f + f
Diff:+f1
Objective:+ f 1.1+fIFRS/GA
AP:+ f GAAP/IFRS
AACSB:+ f + f Application+fof+fknowledge
14) Which organization is responsible for promulgating U.S. GAAP?
+f +f +f +f +f +f +f
A) Financial Accounting Standards Board
+f +f +f
B) Public Company Accounting Oversight Board
+f +f +f +f
C) International Accounting Standards Board +f +f +f
D) Securities and Exchange Commission
+f +f +f
Answer: A
+f + f
Diff:+f1
Objective:+ f 1.1+fIFRS/GA
AP:+ f GAAP/IFRS
AACSB:+ f + f Application+fof+fknowledge
15) Which organization is responsible for setting auditing standards and overseeing the audits of publ
+f +f +f +f +f +f +f +f +f +f +f +f +f
ic companies in the United States?
+f +f +f +f +f
A) Financial Accounting Standards Board
+f +f +f
B) Public Company Accounting Oversight Board
+f +f +f +f
C) American Institute of Certified Public Accountants
+f +f +f +f +f
D) Securities and Exchange Commission
+f +f +f
Answer: B
+f + f
Diff:+f1
Objective:+ f 1.1+fIFRS/GA
AP:+ f GAAP
AACSB:+ f + f Application+fof+fknowledge
3
Copyright © 2022 Pearson Education, Inc.
+f +f +f +f +f
