,Intermediate Accounting, 3e (Gordon/Raedy/Sannella)
y1 y1 y1
Chapter 1 The Financial Reporting Environment
y1 y1 y1 y1
1.1 Overview of Financial Reporting y1 y1 y1
1) The financial reporting process generates three basic financial statemen
y1 y1 y1 y1 y1 y1 y1 y1
ts. Answer: FALSE
y1 y 1
Diff:y11
Objective:y 1 1.1y1IFRS/GA
AP:y 1 GAAP/IFRS
AACSB:y 1 y 1 Applicationy1ofy1knowledge
2) The demand for financial information is based on market participant dema
y1 y1 y1 y1 y1 y1 y1 y1 y1 y1
nd. Answer: TRUE
y1 y 1
Diff:y11
Objective:y 1 1.1y1IFRS/GA
AP:y 1 GAAP/IFRS
AACSB:y 1 y 1 Applicationy1ofy1knowledge
3) Managers of economic entities are best considered to be users of financial informat
y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1
ion. Answer: FALSE
y1 y 1
Diff:y11
Objective:y 1 1.1y1IFRS/GA
AP:y 1 GAAP/IFRS
AACSB:y 1 y 1 Applicationy1ofy1knowledge
4) Managers of economic entities are best considered to be preparers of financial informat
y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1
ion. Answer: TRUE
y1 y 1
Diff:y11
Objective:y 1 1.1y1IFRS/GA
AP:y 1 GAAP/IFRS
AACSB:y 1 y 1 Applicationy1ofy1knowledge
5) The Securities and Exchange Commission (SEC) regulates financial reporting for publicly tra
y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1
ded companies.
y1
Answer: TRUE y 1 y 1
Diff:y12
Objective:y 1 1.1y1IFRS/GA
AP:y 1 GAAP
AACSB:y 1 y 1 Applicationy1ofy1knowledge
6) The FASB gives the SEC authority to regulate accounting for publicly traded compa
y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1
nies. Answer: FALSE
y1 y 1
Diff:y11
Objective:y 1 1.1y1IFRS/GA
AP:y 1 GAAP
AACSB:y 1 y 1 Applicationy1ofy1knowledge
1
Copyright © 2022 Pearson Education, Inc.
,7) The Public Company Accounting Oversight Board (PCAOB) sets financial accounting standards
y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1
and oversees the audits of public companies in the United States.
y1 y1 y1 y1 y1 y1 y1 y1 y1 y1
Answer: FALSE y 1 y 1
Diff:y11
Objective:y 1 1.1y1IFRS/GA
AP:y 1 GAAP
AACSB:y 1 y 1 Applicationy1ofy1knowledge
8) Financial accounting standards influence the behavior of managers and other internal us
y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1
ers. Answer: TRUE
y1 y 1
Diff:y12
Objective:y 1 1.1y1IFRS/GA
AP:y 1 GAAP/IFRS
AACSB:y 1 y 1 Applicationy1ofy1knowledge
9) Theories and procedures that evolve as a result of lobbying from various groups are exampl
y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1
es of proactive factors within the legal, economic, political, and social environment.
y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1
Answer: FALSE y 1 y 1
Diff:y11
Objective:y 1 1.1y1IFRS/GA
AP:y 1 GAAP/IFRS
AACSB:y 1 y 1 Applicationy1ofy1knowledge
10) Financial information includes information that is not governed by rules set forth by the accou
y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1
nting standard-setting bodies.
y1 y1
Answer: TRUE y 1 y 1
Diff:y11
Objective:y 1 1.1y1IFRS/GA
AP:y 1 GAAP/IFRS
AACSB:y 1 y 1 Applicationy1ofy1knowledge
11) What is the term that describes the process of identifying, measuring, and communicating fina
y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1
ncial information about an economic entity to various user groups?
y1 y1 y1 y1 y1 y1 y1 y1 y1
A) financial reporting y1
B) accounting standard setting y1 y1
C) financial statement y1
D) financial accounting y1
Answer: D
y1 y 1
Diff:y12
Objective:y 1 1.1y1IFRS/GA
AP:y 1 GAAP/IFRS
AACSB:y 1 y 1 Applicationy1ofy1knowledge
2
Copyright © 2022 Pearson Education, Inc.
, 12) Which element of financial accounting involves identifying the individuals who demand finan
y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1
cial information?
y1
A) financial information y1
B) economic entity y1
C) user groups y1
D) legal, economic, political, and social environme
y1 y1 y1 y1 y1
nt Answer: C
y1 y 1
Diff:y11
Objective:y 1 1.1y1IFRS/GA
AP:y 1 GAAP/IFRS
AACSB:y 1 y 1 Applicationy1ofy1knowledge
13) Which of the following is not one of the four basic financial statements?
y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1
A) balance sheet y1
B) trial balance y1
C) cash flows statement
y1 y1
D) statement of comprehensive incom y1 y1 y1
e Answer: B
y1 y 1
Diff:y11
Objective:y 1 1.1y1IFRS/GA
AP:y 1 GAAP/IFRS
AACSB:y 1 y 1 Applicationy1ofy1knowledge
14) Which organization is responsible for promulgating U.S. GAAP?
y1 y1 y1 y1 y1 y1 y1
A) Financial Accounting Standards Boardy1 y1 y1
B) Public Company Accounting Oversight Board
y1 y1 y1 y1
C) International Accounting Standards Board y1 y1 y1
D) Securities and Exchange Commissio y1 y1 y1
n Answer: A
y1 y 1
Diff:y11
Objective:y 1 1.1y1IFRS/GA
AP:y 1 GAAP/IFRS
AACSB:y 1 y 1 Applicationy1ofy1knowledge
15) Which organization is responsible for setting auditing standards and overseeing the audits of p
y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1
ublic companies in the United States?
y1 y1 y1 y1 y1
A) Financial Accounting Standards Boardy1 y1 y1
B) Public Company Accounting Oversight Board
y1 y1 y1 y1
C) American Institute of Certified Public Accountants
y1 y1 y1 y1 y1
D) Securities and Exchange Commissio y1 y1 y1
n Answer: B
y1 y 1
Diff:y11
Objective:y 1 1.1y1IFRS/GA
AP:y 1 GAAP
AACSB:y 1 y 1 Applicationy1ofy1knowledge
3
Copyright © 2022 Pearson Education, Inc.
y1 y1 y1
Chapter 1 The Financial Reporting Environment
y1 y1 y1 y1
1.1 Overview of Financial Reporting y1 y1 y1
1) The financial reporting process generates three basic financial statemen
y1 y1 y1 y1 y1 y1 y1 y1
ts. Answer: FALSE
y1 y 1
Diff:y11
Objective:y 1 1.1y1IFRS/GA
AP:y 1 GAAP/IFRS
AACSB:y 1 y 1 Applicationy1ofy1knowledge
2) The demand for financial information is based on market participant dema
y1 y1 y1 y1 y1 y1 y1 y1 y1 y1
nd. Answer: TRUE
y1 y 1
Diff:y11
Objective:y 1 1.1y1IFRS/GA
AP:y 1 GAAP/IFRS
AACSB:y 1 y 1 Applicationy1ofy1knowledge
3) Managers of economic entities are best considered to be users of financial informat
y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1
ion. Answer: FALSE
y1 y 1
Diff:y11
Objective:y 1 1.1y1IFRS/GA
AP:y 1 GAAP/IFRS
AACSB:y 1 y 1 Applicationy1ofy1knowledge
4) Managers of economic entities are best considered to be preparers of financial informat
y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1
ion. Answer: TRUE
y1 y 1
Diff:y11
Objective:y 1 1.1y1IFRS/GA
AP:y 1 GAAP/IFRS
AACSB:y 1 y 1 Applicationy1ofy1knowledge
5) The Securities and Exchange Commission (SEC) regulates financial reporting for publicly tra
y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1
ded companies.
y1
Answer: TRUE y 1 y 1
Diff:y12
Objective:y 1 1.1y1IFRS/GA
AP:y 1 GAAP
AACSB:y 1 y 1 Applicationy1ofy1knowledge
6) The FASB gives the SEC authority to regulate accounting for publicly traded compa
y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1
nies. Answer: FALSE
y1 y 1
Diff:y11
Objective:y 1 1.1y1IFRS/GA
AP:y 1 GAAP
AACSB:y 1 y 1 Applicationy1ofy1knowledge
1
Copyright © 2022 Pearson Education, Inc.
,7) The Public Company Accounting Oversight Board (PCAOB) sets financial accounting standards
y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1
and oversees the audits of public companies in the United States.
y1 y1 y1 y1 y1 y1 y1 y1 y1 y1
Answer: FALSE y 1 y 1
Diff:y11
Objective:y 1 1.1y1IFRS/GA
AP:y 1 GAAP
AACSB:y 1 y 1 Applicationy1ofy1knowledge
8) Financial accounting standards influence the behavior of managers and other internal us
y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1
ers. Answer: TRUE
y1 y 1
Diff:y12
Objective:y 1 1.1y1IFRS/GA
AP:y 1 GAAP/IFRS
AACSB:y 1 y 1 Applicationy1ofy1knowledge
9) Theories and procedures that evolve as a result of lobbying from various groups are exampl
y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1
es of proactive factors within the legal, economic, political, and social environment.
y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1
Answer: FALSE y 1 y 1
Diff:y11
Objective:y 1 1.1y1IFRS/GA
AP:y 1 GAAP/IFRS
AACSB:y 1 y 1 Applicationy1ofy1knowledge
10) Financial information includes information that is not governed by rules set forth by the accou
y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1
nting standard-setting bodies.
y1 y1
Answer: TRUE y 1 y 1
Diff:y11
Objective:y 1 1.1y1IFRS/GA
AP:y 1 GAAP/IFRS
AACSB:y 1 y 1 Applicationy1ofy1knowledge
11) What is the term that describes the process of identifying, measuring, and communicating fina
y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1
ncial information about an economic entity to various user groups?
y1 y1 y1 y1 y1 y1 y1 y1 y1
A) financial reporting y1
B) accounting standard setting y1 y1
C) financial statement y1
D) financial accounting y1
Answer: D
y1 y 1
Diff:y12
Objective:y 1 1.1y1IFRS/GA
AP:y 1 GAAP/IFRS
AACSB:y 1 y 1 Applicationy1ofy1knowledge
2
Copyright © 2022 Pearson Education, Inc.
, 12) Which element of financial accounting involves identifying the individuals who demand finan
y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1
cial information?
y1
A) financial information y1
B) economic entity y1
C) user groups y1
D) legal, economic, political, and social environme
y1 y1 y1 y1 y1
nt Answer: C
y1 y 1
Diff:y11
Objective:y 1 1.1y1IFRS/GA
AP:y 1 GAAP/IFRS
AACSB:y 1 y 1 Applicationy1ofy1knowledge
13) Which of the following is not one of the four basic financial statements?
y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1
A) balance sheet y1
B) trial balance y1
C) cash flows statement
y1 y1
D) statement of comprehensive incom y1 y1 y1
e Answer: B
y1 y 1
Diff:y11
Objective:y 1 1.1y1IFRS/GA
AP:y 1 GAAP/IFRS
AACSB:y 1 y 1 Applicationy1ofy1knowledge
14) Which organization is responsible for promulgating U.S. GAAP?
y1 y1 y1 y1 y1 y1 y1
A) Financial Accounting Standards Boardy1 y1 y1
B) Public Company Accounting Oversight Board
y1 y1 y1 y1
C) International Accounting Standards Board y1 y1 y1
D) Securities and Exchange Commissio y1 y1 y1
n Answer: A
y1 y 1
Diff:y11
Objective:y 1 1.1y1IFRS/GA
AP:y 1 GAAP/IFRS
AACSB:y 1 y 1 Applicationy1ofy1knowledge
15) Which organization is responsible for setting auditing standards and overseeing the audits of p
y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1 y1
ublic companies in the United States?
y1 y1 y1 y1 y1
A) Financial Accounting Standards Boardy1 y1 y1
B) Public Company Accounting Oversight Board
y1 y1 y1 y1
C) American Institute of Certified Public Accountants
y1 y1 y1 y1 y1
D) Securities and Exchange Commissio y1 y1 y1
n Answer: B
y1 y 1
Diff:y11
Objective:y 1 1.1y1IFRS/GA
AP:y 1 GAAP
AACSB:y 1 y 1 Applicationy1ofy1knowledge
3
Copyright © 2022 Pearson Education, Inc.
