This site is 100% ad supported. Please add an exception to adblock for this site.

Ch 1 Financial Accounting & Accounting Standards

Terms

undefined, object
copy deck
Financial accounting is the process of identifying, measuring, analyzing, and communicating financial information needed by management to plan, evaluate, and control an organization’s operations.
FALSE
Financial statements are the principal means through which financial information is communicated to those outside an enterprise.
TRUE
Users of the financial information provided by a company use that information to make capital allocation decisions.
TRUE
An effective process of capital allocation promotes productivity and provides an efficient market for buying and selling securities and obtaining and granting credit.
TRUE
Financial reports in the early 21st century did not provide any information about a company’s soft assets.



FALSE
Accounting standards are now less likely to require the recording or disclosure of fair value information due to its inherent subjectivity.
FALSE
While objectives for financial reporting exist on an informal basis, no formal objectives have been adopted
FALSE
One weakness of accrual accounting is that it does not provide a good indication of the enterprise's present and continuing ability to generate favorable cash flows.
FALSE
Some generally accepted accounting principles have simply been accepted as appropriate because of their universal application rather than due to the action of an authoritative accounting rule-making body.
TRUE
Users of financial accounting statements have both coinciding and conflicting needs for information of various types.
TRUE
The Securities and Exchange Commission appointed the Committee on Accounting Procedure.
FALSE
The passage of a new FASB Standards Statement requires the support of five of the seven board members.
FALSE
Financial Accounting Concepts set forth fundamental objectives and concepts that are used in developing future standards of financial accounting and reporting.
TRUE
The AICPA created the Accounting Principles Board in 1959.
TRUE
FASB Technical Bulletins are more authoritative than FASB Standards and Interpretations.
FALSE
The AICPA’s Code of Professional Conduct requires that members prepare financial statements in accordance with generally accepted accounting principles.
TRUE
Accounting standards are a product of careful logic or empirical findings and are not influenced by political action.
FALSE
Currently, both U.S. GAAP and the International Financial Reporting Standards are acceptable for international use.
TRUE
The expectations gap is caused by what the public thinks accountants should be doing and what accountants think they can do.
TRUE
Ethical issues in financial accounting are governed by the AICPA.
FALSE
All those who serve on the FASB must be certified accountants.
FALSE
General-purpose financial statements are the product of:
financial accounting
Users of financial reports include all of the following except:
All of these are users (creditors, government agencies, unions).

The financial statements most frequently provided include all of the following except the
statement of retained earnings
The information provided by financial reporting pertains to:
individual business enterprises, rather than to industries or an economy as a whole or to members of society as consumers.
The following are differences between financial and managerial accounting in how accounting information is used to:
plan and control company's operations.

decide whether to invest in the company.

evaluate borrowing capacity to determine the extent of a loan to grant.





Which of the following represents a form of communication through financial reporting but not through financial statements?
The President's letter.
The process of identifying, measuring, analyzing, and communicating financial information needed by management to plan, evaluate, and control an organization’s operations is called:
managerial accounting.
How does accounting help the capital allocation process attract investment capital?
Provides timely, relevant information.
Whether a business is successful and thrives is determined by:
markets, free enterprise, competition.

An effective capital allocation process:
promotes productivity, encourages innovation, provides an efficient market for buying and selling securities.

Financial statements in the early 2000s provide information related to:
hard assets (inventory and plant assets).
Which of the following is not a major challenge facing the accounting profession?
Accounting for hard assets.
What is a major objective of financial reporting?
Provide information that is useful to assess the amounts, timing, and uncertainty of perspective cash receipts.
Which of the following statements is not an objective of financial reporting?
Provide information on the liquidation value of an enterprise
Accrual accounting is used because:
it provides a better indication of ability to generate cash flows than the cash basis.
One objective of financial reporting is to provide:
information that is useful in assessing cash flow prospects.
Accounting principles are "generally accepted" only when:
An authoritative accounting rule-making body has established it in an official pro-nouncement.

It has been accepted as appropriate because of its universal application.

A common set of accounting standards and procedures are called:
generally accepted accounting principles.
Which of the following is a general limitation of "general purpose financial statements"?
General purpose financial statements may not be the most informative for a specific enterprise.
What is the relationship between the Securities and Exchange Commission and accounting standard setting in the United States?
The SEC has a mandate to establish accounting standards for enterprises under its jurisdiction.
What is due process in the context of standard setting at the FASB?
FASB operates in full view of the public.

Public hearings are held on proposed accounting standards.

Interested parties can make their views known.





Which of the following organizations has been responsible for setting U.S. accounting standards?
Accounting Principles Board.

Committee on Accounting Procedure.

Financial Accounting Standards Board.





Why did the AICPA create the Accounting Principles Board?
The previous standard setting organization did not provide a structured set of accounting principles.
Which organization was responsible for issuing Accounting Research Bulletins?
Committee on Accounting Procedure.
A characteristic of generally accepted accounting principles include the following:
common set of standards and principles.
Characteristics of generally accepted accounting principles include all of the following except:
each principle is approved by the SEC.
Why was it believed that accounting standards that were issued by the Financial Accounting Standards Board would carry more weight?
Due process.
The passage of a new FASB Standards Statement requires the support of:
four Board members.
What is the purpose of Emerging Issues Task Force?
Provide a consensus on how to account for new and unusual financial transactions.
Which organization is responsible for issuing Emerging Issues Task Force Statements?
FASB
The role of the Securities and Exchange Commission in the formulation of accounting principles can be best described as:
sometimes primary and sometimes secondary.
The body that has the power to prescribe the accounting practices and standards to be employed by companies that fall under its jurisdiction is the:
SEC
Companies that are listed on a stock exchange are required to submit their financial statements to the:
SEC
The Financial Accounting Standards Board (FASB) was proposed by the:
Special Study Group on establishment of Accounting Principles (Wheat Committee).
The Financial Accounting Standards Board:
is appointed by the Financial Accounting Foundation.
The Financial Accounting Foundation:
oversees the operations of the FASB.
The major distinction between the Financial Accounting Standards Board (FASB) and its predecessor, the Accounting Principles Board (APB), is:
all members of the FASB are fully remunerated, serve full time, and are independent of any companies or institutions.
The Financial Accounting Standards Board employs a "due process" system which:
enables interested parties to express their views on issues under consideration.
Which of the following is not a publication of the FASB?
Accounting Research Bulletins
FASB Technical Bulletins:
are not expected to have a significant impact on financial reporting in general and provide guidance when it does not conflict with any broad fundamental accounting principle.
The purpose of the Emerging Issues Task Force is to:
issue statements which reflect a consensus on how to account for new and unusual financial transactions that need to be resolved quickly.
The American Institute of Certified Public Accountants (AICPA) continues to be involved in all of the following except:
developing auditing standards.
Which of the following pronouncements were issued by the Accounting Principles Board?
Opinions
Which of the following organizations has not been instrumental in the development of financial accounting standards in the United States?
IASB
An organization that has not published accounting standards is the:
All of these have published accounting standards

(American Institute of Certified Public Accountants.
Securities and Exchange Commission.
Financial Accounting Standards Board.)
All of these have published accounting standards.






The purpose of Statements of Financial Accounting Concepts is to:
form a conceptual framework for solving existing and emerging problems.
Members of the Financial Accounting Standards Board are:
independent of any other organization.
The following published documents are part of the "due process" system used by the FASB in the evolution of a typical FASB Statement of Financial Accounting Standards:
1. Exposure Draft
2. Statement of Financial Accounting Standards
3. Preliminar
3, 1, 2
Generally accepted accounting principles:
include detailed practices and procedures as well as broad guidelines of general application.

are influenced by pronouncements of the SEC and IRS.

change over time as the nature of the business environment changes.





The most significant current source of generally accepted accounting principles is the:
FASB
Which of the following is part of generally accepted accounting principles?
FASB Interpretations, CAP Accounting Research Bulletins, APB Opinions

Which of the following publications does not qualify as a statement of generally accepted accounting principles?
Accounting research studies issued by the AICPA
Rule 203 of the Code of Professional Conduct address:
financial statements should be based on generally accepted accounting principles.
What is the purpose of a FASB Staff Position?
Provide interpretive guidance.
Which of the following is not considered a component of generally accepted accounting principles?
Articles published in CPA journals.
Financial accounting standard-setting in the United States:
can be described as a social process which reflects political actions of various interested user groups as well as a product of research and logic.
The purpose of the International Accounting Standards Board is to:
promote uniform accounting standards among countries of the world.
What is a source of pressure that may influence the accounting standard setting process?
Congress, Lobbyist, CPA firms.

What is a possible danger if politics plays too big a role in accounting standard setting?
Accounting standards that are not truly generally accepted.
What is "expectation gap"?
The difference between what the public thinks the accountant is doing and what the accountant thinks they can do.
What is not a reason that accounting standards may differ across countries?
Language
What would be an advantage of having all countries adopt and follow the same accounting standards?
Comparability, Lower preparation costs.

Which of the following is an ethical concern of accountants?
Earnings manipulation.
What is the purpose of information presented in notes to the financial statements?
To provide disclosure required by generally accepted accounting principles.
Which of the following accounting pronouncements is the most authoritative?
AICPA Accounting Principles Board Opinion
An effective process of capital allocation is critical to a healthy economy, which:
- promote productivity.
- encourages innovation.
- provides an efficien and liquid market for buying and selling securities.

Challenges facing financial accounting include the following, except:
financial measurments.
All of the following are objectives of financial reporting, except to provide information:
about the management and the major shareholders of the enterprise.
Which of the following organizations has not been instrumental in the developement of financial accouting standards?
IMA
Standards and Intrepretations are issued by the:
FASB
The first step taken in the establishment of a typical FASB statement is:
topics are identified and placed on the board's agenda.
The most authoritative source of GAAP among the following is FASB:
Interpretations
International standards accounting is established by the:
IASB
Which of the following generally provides a better indication of an enterprise's present and continuing ability to generate favorable cash flows?
Accrual basis accouting.
Which of the following non-government organization is responsible for issuing financial accounting standards for buisness organizations?
FASB
Which of the following is not a significant difference between the FASB and its predecessor, the APB?
Larger membership.
Which of the following organization is not part of the current standard-setting structure?
Financial accounting council.
Which of the following documents is not issued durring the due process system that results in a new pronouncement?
Staff position.
The financial accouting board is consist of how many board members?
seven
The organization whose purpose is to reach concensus on how to account for new and unusual financial transactions that have potential for creating differing financial reporting practices is the:
EITF
Which of the following pronouncements is less authoritative than the others?
FASB staff positions.
Intertnational financial reporting standards are issued by the:
IASB
The Sarbane's Oxley Act does all of the following except:
Transfers final authority for GAAP to the PCAOB.

Deck Info

104

only4sparky@yahoo.com

permalink