TEST BANK FOR Intermediate Accounting 11th edition 2025 release by David Spiceland, Mark Nelson, Wayne Thomas, and Jennifer Winchel ISBN:9781265324360 COMPLETE GUIDE ALL CHAPTERS COVERED A+ GRADE ASSURED!!!!NEW LATEST UPDATE!!!!

,Chapter 1 Environment and Theoretical Structure of zl zl zl zl zl zl




Financial Accounting zl




Question 1–1 zl




Financial accounting is concerned with providing relevant financial information ab zl zl zl zl zl zl zl zl zl




out various kinds of organizations to different types of external users. The primary focus
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of financial accounting is on the financial information provided by profit-
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oriented companies to their present and potential investors and creditors.
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Question 1–2 zl




Resources are efficiently allocated if they are given to enterprises that will use them zl zl zl zl zl zl zl zl zl zl zl zl zl zl




to provide goods and services desired by society and not to enterprises that will waste the
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m. The capital markets are the mechanism that fosters this efficient allocation of resourc
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es.

Question 1–3 zl




Two extremely important variables that must be considered in any investment decisi
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on are the expected rate of return and the uncertainty or risk of that expected return.
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Question 1–4 zl




In the long run, a company will be able to provide investors and creditors with a rate
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of return only if it can generate a profit. That is, it must be able to use the resources provid
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ed to it to generate cash receipts from selling a product or service that exceed the cash disb
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ursements necessary to provide that product or service. zl zl zl zl zl zl zl




Question 1–5 zl




The primary objective of financial accounting is to provide investors and creditors
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with information that will help them make investment and credit decisions.
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Question 1–6 zl




Net operating cash flows are the difference between cash receipts and cash disburse
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ments during a period of time from transactions related to providing goods and services t
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o customers. Net operating cash flows may not be a good indicator of future cash flows be
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cause, by ignoring uncompleted transactions, they may not match the accomplishments a
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nd sacrifices of the period.
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,Question 1–7 zl




GAAP (generally accepted accounting principles) are a dynamic set of both broad a
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nd specific guidelines that a company should follow in measuring and reporting the infor
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mation in their financial statements and related notes. It is important that all companies f
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ollow GAAP so that investors can compare financial information across companies to ma
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ke their resource allocation decisions.
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Question 1–8 zl




In 1934, Congress created the SEC and gave it the job of setting accounting and repo
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rting standards for companies whose securities are publicly traded. The SEC has retained
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the power, but has relied on private sector bodies to create the standards. The current priv
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ate sector body responsible for setting accounting standards is the FASB.
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Question 1–9 zl




Auditors are independent, professional accountants who examine financial stateme
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nts to express an opinion. The opinion reflects the auditors‘ assessment of the statements'
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fairness, which is determined by the extent to which they are prepared in compliance with
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GAAP. The auditor adds credibility to the financial statements, which increases the conf
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idence of capital market participants relying on that information.
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, Question 1–10 zl




Key provisions included in the text are:
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 Creation of the Public Company Accounting Oversight Board zl zl zl zl zl zl zl




 Regulate types of non-audit audit services zl zl zl zl zl




 Require lead audit partner rotation every 5 year zl zl zl zl zl zl zl




 Corporate executive accountability zl zl




 Addresses conflicts of interest for security analysts zl zl zl zl zl zl




 Internal control reporting and auditor opinion about controls
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Question 1–11 zl




New accounting standards, or changes in standards, can have significant differential
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effects on companies, investors and creditors, and other interest groups by causing redistr
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ibution of wealth. There also is the possibility that standards could harm the economy as
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a whole by causing companies to change their behavior.
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Question 1–12 zl




The FASB undertakes a series of elaborate information gathering steps before issuin
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g an accounting standard to determine consensus as to the preferred method of accountin
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g, as well as to anticipate adverse economic consequences.
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Question 1–13 zl




The purpose of the conceptual framework is to guide the Board in developing accou
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nting standards by providing an underlying foundation and basic reasoning on which to c
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onsider merits of alternatives. The framework does not prescribe GAAP.
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