,Intermediate Accounting, 3e (Gordon/Raedy/Sannella)
!x !x !x
Chapter 1 The Financial Reporting Environment
!x !x !x !x
1.1 Overview of Financial Reporting !x !x !x
1) The financial reporting process generates three basic financial statements
!x !x !x !x !x !x !x !x
. Answer: FALSE
!x ! x
Diff:!x1
Objective:! x 1.1!xIFRS/GA
AP:! x GAAP/IFRS
AACSB:! x ! x Application!xof!xknowledge
2) The demand for financial information is based on market participant demand
!x !x !x !x !x !x !x !x !x !x
. Answer: TRUE
!x ! x
Diff:!x1
Objective:! x 1.1!xIFRS/GA
AP:! x GAAP/IFRS
AACSB:! x ! x Application!xof!xknowledge
3) Managers of economic entities are best considered to be users of financial informatio
!x !x !x !x !x !x !x !x !x !x !x !x
n. Answer: FALSE
!x ! x
Diff:!x1
Objective:! x 1.1!xIFRS/GA
AP:! x GAAP/IFRS
AACSB:! x ! x Application!xof!xknowledge
4) Managers of economic entities are best considered to be preparers of financial informatio
!x !x !x !x !x !x !x !x !x !x !x !x
n. Answer: TRUE
!x ! x
Diff:!x1
Objective:! x 1.1!xIFRS/GA
AP:! x GAAP/IFRS
AACSB:! x ! x Application!xof!xknowledge
5) The Securities and Exchange Commission (SEC) regulates financial reporting for publicly trade
!x !x !x !x !x !x !x !x !x !x !x
d companies.
!x
Answer: TRUE ! x ! x
Diff:!x2
Objective:! x 1.1!xIFRS/GA
AP:! x GAAP
AACSB:! x ! x Application!xof!xknowledge
6) The FASB gives the SEC authority to regulate accounting for publicly traded companie
!x !x !x !x !x !x !x !x !x !x !x !x
s. Answer: FALSE
!x ! x
Diff:!x1
Objective:! x 1.1!xIFRS/GA
AP:! x GAAP
AACSB:! x ! x Application!xof!xknowledge
1
Copyright © 2022 Pearson Education, Inc.
!x !x !x !x !x
,7) The Public Company Accounting Oversight Board (PCAOB) sets financial accounting standards an
!x !x !x !x !x !x !x !x !x !x !x
d oversees the audits of public companies in the United States.
!x !x !x !x !x !x !x !x !x !x
Answer: FALSE ! x ! x
Diff:!x1
Objective:! x 1.1!xIFRS/GA
AP:! x GAAP
AACSB:! x ! x Application!xof!xknowledge
8) Financial accounting standards influence the behavior of managers and other internal user
!x !x !x !x !x !x !x !x !x !x !x
s. Answer: TRUE
!x ! x
Diff:!x2
Objective:! x 1.1!xIFRS/GA
AP:! x GAAP/IFRS
AACSB:! x ! x Application!xof!xknowledge
9) Theories and procedures that evolve as a result of lobbying from various groups are examples
!x !x !x !x !x !x !x !x !x !x !x !x !x !x !x
of proactive factors within the legal, economic, political, and social environment.
!x !x !x !x !x !x !x !x !x !x
Answer: FALSE ! x ! x
Diff:!x1
Objective:! x 1.1!xIFRS/GA
AP:! x GAAP/IFRS
AACSB:! x ! x Application!xof!xknowledge
10) Financial information includes information that is not governed by rules set forth by the accountin
!x !x !x !x !x !x !x !x !x !x !x !x !x !x
g standard-setting bodies.
!x !x
Answer: TRUE ! x ! x
Diff:!x1
Objective:! x 1.1!xIFRS/GA
AP:! x GAAP/IFRS
AACSB:! x ! x Application!xof!xknowledge
11) What is the term that describes the process of identifying, measuring, and communicating financi
!x !x !x !x !x !x !x !x !x !x !x !x !x
al information about an economic entity to various user groups?
!x !x !x !x !x !x !x !x !x
A) financial reporting !x
B) accounting standard setting !x !x
C) financial statement !x
D) financial accounting !x
Answer: D
!x ! x
Diff:!x2
Objective:! x 1.1!xIFRS/GA
AP:! x GAAP/IFRS
AACSB:! x ! x Application!xof!xknowledge
2
Copyright © 2022 Pearson Education, Inc.
!x !x !x !x !x
, 12) Which element of financial accounting involves identifying the individuals who demand financia
!x !x !x !x !x !x !x !x !x !x !x
l information?
!x
A) financial information !x
B) economic entity !x
C) user groups
!x
D) legal, economic, political, and social environment
!x !x !x !x !x
Answer: C
!x ! x
Diff:!x1
Objective:! x 1.1!xIFRS/GA
AP:! x GAAP/IFRS
AACSB:! x ! x Application!xof!xknowledge
13) Which of the following is not one of the four basic financial statements?
!x !x !x !x !x !x !x !x !x !x !x !x
A) balance sheet !x
B) trial balance
!x
C) cash flows statement
!x !x
D) statement of comprehensive income
!x !x !x !
Answer: B
x ! x
Diff:!x1
Objective:! x 1.1!xIFRS/GA
AP:! x GAAP/IFRS
AACSB:! x ! x Application!xof!xknowledge
14) Which organization is responsible for promulgating U.S. GAAP?
!x !x !x !x !x !x !x
A) Financial Accounting Standards Board
!x !x !x
B) Public Company Accounting Oversight Board
!x !x !x !x
C) International Accounting Standards Board !x !x !x
D) Securities and Exchange Commission
!x !x !x !
Answer: A
x ! x
Diff:!x1
Objective:! x 1.1!xIFRS/GA
AP:! x GAAP/IFRS
AACSB:! x ! x Application!xof!xknowledge
15) Which organization is responsible for setting auditing standards and overseeing the audits of publi
!x !x !x !x !x !x !x !x !x !x !x !x !x
c companies in the United States?
!x !x !x !x !x
A) Financial Accounting Standards Board
!x !x !x
B) Public Company Accounting Oversight Board
!x !x !x !x
C) American Institute of Certified Public Accountants
!x !x !x !x !x
D) Securities and Exchange Commission
!x !x !x !
Answer: B
x ! x
Diff:!x1
Objective:! x 1.1!xIFRS/GA
AP:! x GAAP
AACSB:! x ! x Application!xof!xknowledge
3
Copyright © 2022 Pearson Education, Inc. !x !x !x !x !x
!x !x !x
Chapter 1 The Financial Reporting Environment
!x !x !x !x
1.1 Overview of Financial Reporting !x !x !x
1) The financial reporting process generates three basic financial statements
!x !x !x !x !x !x !x !x
. Answer: FALSE
!x ! x
Diff:!x1
Objective:! x 1.1!xIFRS/GA
AP:! x GAAP/IFRS
AACSB:! x ! x Application!xof!xknowledge
2) The demand for financial information is based on market participant demand
!x !x !x !x !x !x !x !x !x !x
. Answer: TRUE
!x ! x
Diff:!x1
Objective:! x 1.1!xIFRS/GA
AP:! x GAAP/IFRS
AACSB:! x ! x Application!xof!xknowledge
3) Managers of economic entities are best considered to be users of financial informatio
!x !x !x !x !x !x !x !x !x !x !x !x
n. Answer: FALSE
!x ! x
Diff:!x1
Objective:! x 1.1!xIFRS/GA
AP:! x GAAP/IFRS
AACSB:! x ! x Application!xof!xknowledge
4) Managers of economic entities are best considered to be preparers of financial informatio
!x !x !x !x !x !x !x !x !x !x !x !x
n. Answer: TRUE
!x ! x
Diff:!x1
Objective:! x 1.1!xIFRS/GA
AP:! x GAAP/IFRS
AACSB:! x ! x Application!xof!xknowledge
5) The Securities and Exchange Commission (SEC) regulates financial reporting for publicly trade
!x !x !x !x !x !x !x !x !x !x !x
d companies.
!x
Answer: TRUE ! x ! x
Diff:!x2
Objective:! x 1.1!xIFRS/GA
AP:! x GAAP
AACSB:! x ! x Application!xof!xknowledge
6) The FASB gives the SEC authority to regulate accounting for publicly traded companie
!x !x !x !x !x !x !x !x !x !x !x !x
s. Answer: FALSE
!x ! x
Diff:!x1
Objective:! x 1.1!xIFRS/GA
AP:! x GAAP
AACSB:! x ! x Application!xof!xknowledge
1
Copyright © 2022 Pearson Education, Inc.
!x !x !x !x !x
,7) The Public Company Accounting Oversight Board (PCAOB) sets financial accounting standards an
!x !x !x !x !x !x !x !x !x !x !x
d oversees the audits of public companies in the United States.
!x !x !x !x !x !x !x !x !x !x
Answer: FALSE ! x ! x
Diff:!x1
Objective:! x 1.1!xIFRS/GA
AP:! x GAAP
AACSB:! x ! x Application!xof!xknowledge
8) Financial accounting standards influence the behavior of managers and other internal user
!x !x !x !x !x !x !x !x !x !x !x
s. Answer: TRUE
!x ! x
Diff:!x2
Objective:! x 1.1!xIFRS/GA
AP:! x GAAP/IFRS
AACSB:! x ! x Application!xof!xknowledge
9) Theories and procedures that evolve as a result of lobbying from various groups are examples
!x !x !x !x !x !x !x !x !x !x !x !x !x !x !x
of proactive factors within the legal, economic, political, and social environment.
!x !x !x !x !x !x !x !x !x !x
Answer: FALSE ! x ! x
Diff:!x1
Objective:! x 1.1!xIFRS/GA
AP:! x GAAP/IFRS
AACSB:! x ! x Application!xof!xknowledge
10) Financial information includes information that is not governed by rules set forth by the accountin
!x !x !x !x !x !x !x !x !x !x !x !x !x !x
g standard-setting bodies.
!x !x
Answer: TRUE ! x ! x
Diff:!x1
Objective:! x 1.1!xIFRS/GA
AP:! x GAAP/IFRS
AACSB:! x ! x Application!xof!xknowledge
11) What is the term that describes the process of identifying, measuring, and communicating financi
!x !x !x !x !x !x !x !x !x !x !x !x !x
al information about an economic entity to various user groups?
!x !x !x !x !x !x !x !x !x
A) financial reporting !x
B) accounting standard setting !x !x
C) financial statement !x
D) financial accounting !x
Answer: D
!x ! x
Diff:!x2
Objective:! x 1.1!xIFRS/GA
AP:! x GAAP/IFRS
AACSB:! x ! x Application!xof!xknowledge
2
Copyright © 2022 Pearson Education, Inc.
!x !x !x !x !x
, 12) Which element of financial accounting involves identifying the individuals who demand financia
!x !x !x !x !x !x !x !x !x !x !x
l information?
!x
A) financial information !x
B) economic entity !x
C) user groups
!x
D) legal, economic, political, and social environment
!x !x !x !x !x
Answer: C
!x ! x
Diff:!x1
Objective:! x 1.1!xIFRS/GA
AP:! x GAAP/IFRS
AACSB:! x ! x Application!xof!xknowledge
13) Which of the following is not one of the four basic financial statements?
!x !x !x !x !x !x !x !x !x !x !x !x
A) balance sheet !x
B) trial balance
!x
C) cash flows statement
!x !x
D) statement of comprehensive income
!x !x !x !
Answer: B
x ! x
Diff:!x1
Objective:! x 1.1!xIFRS/GA
AP:! x GAAP/IFRS
AACSB:! x ! x Application!xof!xknowledge
14) Which organization is responsible for promulgating U.S. GAAP?
!x !x !x !x !x !x !x
A) Financial Accounting Standards Board
!x !x !x
B) Public Company Accounting Oversight Board
!x !x !x !x
C) International Accounting Standards Board !x !x !x
D) Securities and Exchange Commission
!x !x !x !
Answer: A
x ! x
Diff:!x1
Objective:! x 1.1!xIFRS/GA
AP:! x GAAP/IFRS
AACSB:! x ! x Application!xof!xknowledge
15) Which organization is responsible for setting auditing standards and overseeing the audits of publi
!x !x !x !x !x !x !x !x !x !x !x !x !x
c companies in the United States?
!x !x !x !x !x
A) Financial Accounting Standards Board
!x !x !x
B) Public Company Accounting Oversight Board
!x !x !x !x
C) American Institute of Certified Public Accountants
!x !x !x !x !x
D) Securities and Exchange Commission
!x !x !x !
Answer: B
x ! x
Diff:!x1
Objective:! x 1.1!xIFRS/GA
AP:! x GAAP
AACSB:! x ! x Application!xof!xknowledge
3
Copyright © 2022 Pearson Education, Inc. !x !x !x !x !x
