,Intermediate Accounting, 3e (Gordon/Raedy/Sannella)
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Chapter 1 The Financial Reporting Environment
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1.1 Overview of Financial Reporting TV TV TV
1) The financial reporting process generates three basic financial statem
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ents. Answer: FALSE
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Diff:TV1
Objective:T V 1.1TVIFRS/GA
AP:T V GAAP/IFRS
AACSB:T V T V ApplicationTVofTVknowledge
2) The demand for financial information is based on market participant de
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mand. Answer: TRUE
TV T V
Diff:TV1
Objective:T V 1.1TVIFRS/GA
AP:T V GAAP/IFRS
AACSB:T V T V ApplicationTVofTVknowledge
3) Managers of economic entities are best considered to be users of financial infor
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mation. Answer: FALSE
TV T V
Diff:TV1
Objective:T V 1.1TVIFRS/GA
AP:T V GAAP/IFRS
AACSB:T V T V ApplicationTVofTVknowledge
4) Managers of economic entities are best considered to be preparers of financial infor
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mation. Answer: TRUE
TV T V
Diff:TV1
Objective:T V 1.1TVIFRS/GA
AP:T V GAAP/IFRS
AACSB:T V T V ApplicationTVofTVknowledge
5) The Securities and Exchange Commission (SEC) regulates financial reporting for publicly
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traded companies.
TV
Answer: TRUE T V T V
Diff:TV2
Objective:T V 1.1TVIFRS/GA
AP:T V GAAP
AACSB:T V T V ApplicationTVofTVknowledge
6) The FASB gives the SEC authority to regulate accounting for publicly traded com
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panies. Answer: FALSE
TV T V
Diff:TV1
Objective:T V 1.1TVIFRS/GA
AP:T V GAAP
AACSB:T V T V ApplicationTVofTVknowledge
1
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nc.
,7) The Public Company Accounting Oversight Board (PCAOB) sets financial accounting standar
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ds and oversees the audits of public companies in the United States.
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Answer: FALSE
T V T V
Diff:TV1
Objective:T V 1.1TVIFRS/GA
AP:T V GAAP
AACSB:T V T V ApplicationTVofTVknowledge
8) Financial accounting standards influence the behavior of managers and other internal
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users. Answer: TRUE
V TV T V
Diff:TV2
Objective:T V 1.1TVIFRS/GA
AP:T V GAAP/IFRS
AACSB:T V T V ApplicationTVofTVknowledge
9) Theories and procedures that evolve as a result of lobbying from various groups are exa
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mples of proactive factors within the legal, economic, political, and social environment.
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Answer: FALSE
T V T V
Diff:TV1
Objective:T V 1.1TVIFRS/GA
AP:T V GAAP/IFRS
AACSB:T V T V ApplicationTVofTVknowledge
10) Financial information includes information that is not governed by rules set forth by the acc
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ounting standard-setting bodies.
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Answer: TRUE
T V T V
Diff:TV1
Objective:T V 1.1TVIFRS/GA
AP:T V GAAP/IFRS
AACSB:T V T V ApplicationTVofTVknowledge
11) What is the term that describes the process of identifying, measuring, and communicating fi
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nancial information about an economic entity to various user groups?
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A) financial reporting TV
B) accounting standard setting TV TV
C) financial statement TV
D) financial accountin TV
g Answer: D
TV T V
Diff:TV2
Objective:T V 1.1TVIFRS/GA
AP:T V GAAP/IFRS
AACSB:T V T V ApplicationTVofTVknowledge
2
Copyright © 2022 Pearson Education, I
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nc.
, 12) Which element of financial accounting involves identifying the individuals who demand fi
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nancial information?
TV
A) financial information TV
B) economic entity TV
C) user groups TV
D) legal, economic, political, and social environm
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ent Answer: C
TV T V
Diff:TV1
Objective:T V 1.1TVIFRS/GA
AP:T V GAAP/IFRS
AACSB:T V T V ApplicationTVofTVknowledge
13) Which of the following is not one of the four basic financial statements?
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A) balance sheet TV
B) trial balance
TV
C) cash flows statement
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D) statement of comprehensive incom
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e Answer: B
TV T V
Diff:TV1
Objective:T V 1.1TVIFRS/GA
AP:T V GAAP/IFRS
AACSB:T V T V ApplicationTVofTVknowledge
14) Which organization is responsible for promulgating U.S. GAAP?
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A) Financial Accounting Standards Board
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B) Public Company Accounting Oversight Board
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C) International Accounting Standards Board
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D) Securities and Exchange Commissio
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n Answer: A
TV T V
Diff:TV1
Objective:T V 1.1TVIFRS/GA
AP:T V GAAP/IFRS
AACSB:T V T V ApplicationTVofTVknowledge
15) Which organization is responsible for setting auditing standards and overseeing the audits of
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public companies in the United States?
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A) Financial Accounting Standards Board
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B) Public Company Accounting Oversight Board
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C) American Institute of Certified Public Accountants
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D) Securities and Exchange Commissio
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n Answer: B
TV T V
Diff:TV1
Objective:T V 1.1TVIFRS/GA
AP:T V GAAP
AACSB:T V T V ApplicationTVofTVknowledge
3
Copyright © 2022 Pearson Education, I
TV TV TV TV TV
nc.
TV TV TV
Chapter 1 The Financial Reporting Environment
TV TV TV TV
1.1 Overview of Financial Reporting TV TV TV
1) The financial reporting process generates three basic financial statem
TV TV TV TV TV TV TV TV
ents. Answer: FALSE
TV T V
Diff:TV1
Objective:T V 1.1TVIFRS/GA
AP:T V GAAP/IFRS
AACSB:T V T V ApplicationTVofTVknowledge
2) The demand for financial information is based on market participant de
TV TV TV TV TV TV TV TV TV TV
mand. Answer: TRUE
TV T V
Diff:TV1
Objective:T V 1.1TVIFRS/GA
AP:T V GAAP/IFRS
AACSB:T V T V ApplicationTVofTVknowledge
3) Managers of economic entities are best considered to be users of financial infor
TV TV TV TV TV TV TV TV TV TV TV TV
mation. Answer: FALSE
TV T V
Diff:TV1
Objective:T V 1.1TVIFRS/GA
AP:T V GAAP/IFRS
AACSB:T V T V ApplicationTVofTVknowledge
4) Managers of economic entities are best considered to be preparers of financial infor
TV TV TV TV TV TV TV TV TV TV TV TV
mation. Answer: TRUE
TV T V
Diff:TV1
Objective:T V 1.1TVIFRS/GA
AP:T V GAAP/IFRS
AACSB:T V T V ApplicationTVofTVknowledge
5) The Securities and Exchange Commission (SEC) regulates financial reporting for publicly
TV TV TV TV TV TV TV TV TV TV TV
traded companies.
TV
Answer: TRUE T V T V
Diff:TV2
Objective:T V 1.1TVIFRS/GA
AP:T V GAAP
AACSB:T V T V ApplicationTVofTVknowledge
6) The FASB gives the SEC authority to regulate accounting for publicly traded com
TV TV TV TV TV TV TV TV TV TV TV TV
panies. Answer: FALSE
TV T V
Diff:TV1
Objective:T V 1.1TVIFRS/GA
AP:T V GAAP
AACSB:T V T V ApplicationTVofTVknowledge
1
Copyright © 2022 Pearson Education, I
TV TV TV TV TV
nc.
,7) The Public Company Accounting Oversight Board (PCAOB) sets financial accounting standar
TV TV TV TV TV TV TV TV TV TV
ds and oversees the audits of public companies in the United States.
TV TV TV TV TV TV TV TV TV TV TV
Answer: FALSE
T V T V
Diff:TV1
Objective:T V 1.1TVIFRS/GA
AP:T V GAAP
AACSB:T V T V ApplicationTVofTVknowledge
8) Financial accounting standards influence the behavior of managers and other internal
TV TV TV TV TV TV TV TV TV TV T
users. Answer: TRUE
V TV T V
Diff:TV2
Objective:T V 1.1TVIFRS/GA
AP:T V GAAP/IFRS
AACSB:T V T V ApplicationTVofTVknowledge
9) Theories and procedures that evolve as a result of lobbying from various groups are exa
TV TV TV TV TV TV TV TV TV TV TV TV TV TV
mples of proactive factors within the legal, economic, political, and social environment.
TV TV TV TV TV TV TV TV TV TV TV
Answer: FALSE
T V T V
Diff:TV1
Objective:T V 1.1TVIFRS/GA
AP:T V GAAP/IFRS
AACSB:T V T V ApplicationTVofTVknowledge
10) Financial information includes information that is not governed by rules set forth by the acc
TV TV TV TV TV TV TV TV TV TV TV TV TV TV
ounting standard-setting bodies.
TV TV
Answer: TRUE
T V T V
Diff:TV1
Objective:T V 1.1TVIFRS/GA
AP:T V GAAP/IFRS
AACSB:T V T V ApplicationTVofTVknowledge
11) What is the term that describes the process of identifying, measuring, and communicating fi
TV TV TV TV TV TV TV TV TV TV TV TV TV
nancial information about an economic entity to various user groups?
TV TV TV TV TV TV TV TV TV
A) financial reporting TV
B) accounting standard setting TV TV
C) financial statement TV
D) financial accountin TV
g Answer: D
TV T V
Diff:TV2
Objective:T V 1.1TVIFRS/GA
AP:T V GAAP/IFRS
AACSB:T V T V ApplicationTVofTVknowledge
2
Copyright © 2022 Pearson Education, I
TV TV TV TV TV
nc.
, 12) Which element of financial accounting involves identifying the individuals who demand fi
TV TV TV TV TV TV TV TV TV TV TV
nancial information?
TV
A) financial information TV
B) economic entity TV
C) user groups TV
D) legal, economic, political, and social environm
TV TV TV TV TV
ent Answer: C
TV T V
Diff:TV1
Objective:T V 1.1TVIFRS/GA
AP:T V GAAP/IFRS
AACSB:T V T V ApplicationTVofTVknowledge
13) Which of the following is not one of the four basic financial statements?
TV TV TV TV TV TV TV TV TV TV TV TV
A) balance sheet TV
B) trial balance
TV
C) cash flows statement
TV TV
D) statement of comprehensive incom
TV TV TV
e Answer: B
TV T V
Diff:TV1
Objective:T V 1.1TVIFRS/GA
AP:T V GAAP/IFRS
AACSB:T V T V ApplicationTVofTVknowledge
14) Which organization is responsible for promulgating U.S. GAAP?
TV TV TV TV TV TV TV
A) Financial Accounting Standards Board
TV TV TV
B) Public Company Accounting Oversight Board
TV TV TV TV
C) International Accounting Standards Board
TV TV TV
D) Securities and Exchange Commissio
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n Answer: A
TV T V
Diff:TV1
Objective:T V 1.1TVIFRS/GA
AP:T V GAAP/IFRS
AACSB:T V T V ApplicationTVofTVknowledge
15) Which organization is responsible for setting auditing standards and overseeing the audits of
TV TV TV TV TV TV TV TV TV TV TV TV
public companies in the United States?
TV TV TV TV TV TV
A) Financial Accounting Standards Board
TV TV TV
B) Public Company Accounting Oversight Board
TV TV TV TV
C) American Institute of Certified Public Accountants
TV TV TV TV TV
D) Securities and Exchange Commissio
TV TV TV
n Answer: B
TV T V
Diff:TV1
Objective:T V 1.1TVIFRS/GA
AP:T V GAAP
AACSB:T V T V ApplicationTVofTVknowledge
3
Copyright © 2022 Pearson Education, I
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nc.
