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