Intermediate Accounting Chapter 1 Quiz
Members should act in a way that will serve the public interest, honor the public trust, and
demonstrate commitment to professionalism." This is the Public Interest Principle of the AICPA's
Code of Professional Conduct.
A. true
B. false - ANS-A. true
\A potential issue facing the convergence project is that many companies have entered into
contracts based upon US GAAP financial reporting; many of these contracts will have to be
renegotiated using IFRS which potentially could cause some companies more harm than good
A. true
B. false - ANS-A. true
\After formulating a strategic plan, a company will engage in what three types of activities?
A. financing, investing, and operating
B. operating, planning, and financing
C. planning, operating, and selling
D. investing, operating, and selling - ANS-A. financing, investing, and operating
\As a potential equity investor, what information about a company would you be LEAST
interested in prior to making an investment decision?
A. what are the employee benefits and compensation packages?
B. whether they have positive cash flows?
C. what differentiates the from their competition?
D. whether they are generating a profit? - ANS-A. what are the employee benefits and
compensation packages
\Auditors face ethical issues because
A. auditors may not discover insider trading
B. GAAP does not permit fraud
C. auditors may express an opinion that may impact employees of a company
D. GAAP permits various standards to be used to produce profits - ANS-C. auditors may
express an opinion that may impact employees of a company
\Beginning in 1938 and extending to the present, which is the correct sequence of accounting
rule-making bodies?
A. CAP-FASB-APB
B. APB-CAP-FASB
C. FASB-APB-CAP
D. CAP-APB-FASB - ANS-D. CAP-APB-FASB
\Certain U.S. accounting standards have been, and will be, amended to aid in the international
convergence process. The process of changing these standards usually involves
A. acceptance of the change by the International Revenue Service
B. a short deliberation followed by a cote of the U.S. Congress
C. rejecting all existing standards and developing an entirely new concept
, D. selecting the best standards between existing U.S. and international standards - ANS-D.
selecting the best standards between existing U.S. and international standards
\Creditors' information needs to revolve around all of the following decisions, except
A. maintaining a credit relationship
B. not extending credit
C. investing in credit instruments
D. extending credit - ANS-C. investing in credit instruments
\FASB's Emerging Issues Task Force assists and advises the FASB by identifying and
addressing timely but more narrow and specific standard setting issues
A. true
B. false - ANS-A. true
\For foreign companies that issue securities in the United States to raise capital, the SEC
A. accepts all financial statements that use IFRS
B. accepts financial statements from foreign companies that use English-language IFRS without
exception
C. requires these companies to file form 20-F which reconciles certain amounts reported in their
financial statements with US GAAP
D. accepts only financial statements that are fully stated under US GAAP - ANS-B. accepts
financial statements from foreign companies that use English-language IFRS without exception
\Notes to financial statements provide
A. management's discussions about plans for the future
B. comparative financial information with the previous year
C. the report of the independent auditors
D. discussions that further explain items shown in the financial statements - ANS-D. discussions
that further explain items shown in the financial statements
\Prior to 2009, which of the following types of FASB pronouncements carried the highest
authority within GAAP by establishing the methods and procedures required on specific
accounting issues?
A. staff positions
B. statements of financial accounting concepts
C. statements of financial accounting standards
D. technical bulletins - ANS-C. statements of financial accounting standards
\The accounting equations is
A. Assets - Liabilities = Shareholders' equity
B. Assets = Liabilities - Shareholders' Equity
C. Assets + Liabilities = Shareholders' Equity
D. Assets + Shareholders' Equity = Liabilities - ANS-A. Assets - Liabilities = Shareholders'
Equity
\The agreement in 2002 by the FASB and IASB to develop high quality, compatible accounting
standards that could be used by both domestic and cross-border financial reporting was called
the
A. Financial Accounting Standards Board Global agreement
B. International Accounting Standards agreement
C. Norwalk agreement
Members should act in a way that will serve the public interest, honor the public trust, and
demonstrate commitment to professionalism." This is the Public Interest Principle of the AICPA's
Code of Professional Conduct.
A. true
B. false - ANS-A. true
\A potential issue facing the convergence project is that many companies have entered into
contracts based upon US GAAP financial reporting; many of these contracts will have to be
renegotiated using IFRS which potentially could cause some companies more harm than good
A. true
B. false - ANS-A. true
\After formulating a strategic plan, a company will engage in what three types of activities?
A. financing, investing, and operating
B. operating, planning, and financing
C. planning, operating, and selling
D. investing, operating, and selling - ANS-A. financing, investing, and operating
\As a potential equity investor, what information about a company would you be LEAST
interested in prior to making an investment decision?
A. what are the employee benefits and compensation packages?
B. whether they have positive cash flows?
C. what differentiates the from their competition?
D. whether they are generating a profit? - ANS-A. what are the employee benefits and
compensation packages
\Auditors face ethical issues because
A. auditors may not discover insider trading
B. GAAP does not permit fraud
C. auditors may express an opinion that may impact employees of a company
D. GAAP permits various standards to be used to produce profits - ANS-C. auditors may
express an opinion that may impact employees of a company
\Beginning in 1938 and extending to the present, which is the correct sequence of accounting
rule-making bodies?
A. CAP-FASB-APB
B. APB-CAP-FASB
C. FASB-APB-CAP
D. CAP-APB-FASB - ANS-D. CAP-APB-FASB
\Certain U.S. accounting standards have been, and will be, amended to aid in the international
convergence process. The process of changing these standards usually involves
A. acceptance of the change by the International Revenue Service
B. a short deliberation followed by a cote of the U.S. Congress
C. rejecting all existing standards and developing an entirely new concept
, D. selecting the best standards between existing U.S. and international standards - ANS-D.
selecting the best standards between existing U.S. and international standards
\Creditors' information needs to revolve around all of the following decisions, except
A. maintaining a credit relationship
B. not extending credit
C. investing in credit instruments
D. extending credit - ANS-C. investing in credit instruments
\FASB's Emerging Issues Task Force assists and advises the FASB by identifying and
addressing timely but more narrow and specific standard setting issues
A. true
B. false - ANS-A. true
\For foreign companies that issue securities in the United States to raise capital, the SEC
A. accepts all financial statements that use IFRS
B. accepts financial statements from foreign companies that use English-language IFRS without
exception
C. requires these companies to file form 20-F which reconciles certain amounts reported in their
financial statements with US GAAP
D. accepts only financial statements that are fully stated under US GAAP - ANS-B. accepts
financial statements from foreign companies that use English-language IFRS without exception
\Notes to financial statements provide
A. management's discussions about plans for the future
B. comparative financial information with the previous year
C. the report of the independent auditors
D. discussions that further explain items shown in the financial statements - ANS-D. discussions
that further explain items shown in the financial statements
\Prior to 2009, which of the following types of FASB pronouncements carried the highest
authority within GAAP by establishing the methods and procedures required on specific
accounting issues?
A. staff positions
B. statements of financial accounting concepts
C. statements of financial accounting standards
D. technical bulletins - ANS-C. statements of financial accounting standards
\The accounting equations is
A. Assets - Liabilities = Shareholders' equity
B. Assets = Liabilities - Shareholders' Equity
C. Assets + Liabilities = Shareholders' Equity
D. Assets + Shareholders' Equity = Liabilities - ANS-A. Assets - Liabilities = Shareholders'
Equity
\The agreement in 2002 by the FASB and IASB to develop high quality, compatible accounting
standards that could be used by both domestic and cross-border financial reporting was called
the
A. Financial Accounting Standards Board Global agreement
B. International Accounting Standards agreement
C. Norwalk agreement
