Question 1

The passage of a new FASB Standards Statement requires the support of five of the seven board members.

Accepted Answer

A) True 
 B)False

Question 2

General-purpose financial statements are the product of

Accepted Answer

A)  financial accounting.
B)  managerial accounting.
C)  both financial and managerial accounting.
D)  neither financial nor managerial accounting.

Question 3

An effective capital allocation process

Accepted Answer

A)  promotes productivity.
B)  encourages innovation.
C)  provides an efficient market for buying and selling securities.
D)  all of these. D

Question 4

Users of financial reports include all of the following except

Accepted Answer

A)  creditors.
B)  government agencies.
C)  unions.
D)  All of these are users.

Question 5

A common set of accounting standards and procedures are called

Accepted Answer

A)  financial accounting standards.
B)  generally accepted accounting principles.
C)  objectives of financial reporting.
D)  statements of financial accounting concepts.

Question 6

The role of the Securities and Exchange Commission in the formulation of accounting principles can be best described as

Accepted Answer

A)  consistently primary.
B)  consistently secondary.
C)  sometimes primary and sometimes secondary.
D)  non-existent.

Question 7

The most significant current source of generally accepted accounting principles is the

Accepted Answer

A)  AICPA.
B)  SEC.
C)  APB.
D)  FASB.

Question 8

Financial accounting standard-setting in the United States

Accepted Answer

A)  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.
B)  is based solely on research and empirical findings.
C)  is a legalistic process based on rules promulgated by governmental agencies.
D)  is democratic in the sense that a majority of accountants must agree with a standard before it becomes enforceable.

Question 9

Accounting standards are a product of careful logic or empirical findings and are not influenced by political action.

Accepted Answer

A) True 
 B)False

Question 10

The Financial Accounting Foundation

Accepted Answer

A)  oversees the operations of the FASB.
B)  oversees the operations of the AICPA.
C)  provides information to interested parties on financial reporting issues.
D)  works with the Financial Accounting Standards Advisory Council to provide informa-tion to interested parties on financial reporting issues.

Question 11

Which of the following statements is not an objective of financial reporting?

Accepted Answer

A)  Provide information that is useful in investment and credit decisions.
B)  Provide information about enterprise resources, claims to those resources, and changes to them.
C)  Provide information on the liquidation value of an enterprise.
D)  Provide information that is useful in assessing cash flow prospects.

Question 12

The expectations gap is caused by what the public thinks accountants should be doing and what accountants think they can do.

Accepted Answer

A) True 
 B)False

Question 13

Users of the financial information provided by a company use that information to make capital allocation decisions.

Accepted Answer

A) True 
 B)False

Question 14

Generally accepted accounting principles

Accepted Answer

A)  include detailed practices and procedures as well as broad guidelines of general application.
B)  are influenced by pronouncements of the SEC and IRS.
C)  change over time as the nature of the business environment changes.
D)  all of these.

Question 15

Which of the following publications does not qualify as a statement of generally accepted accounting principles?

Accepted Answer

A)  Statements of financial standards issued by the FASB
B)  Accounting interpretations issued by the FASB
C)  APB Opinions
D)  Accounting research studies issued by the AICPA

Question 16

The most authoritative category of generally accepted accounting principles includes all of the following except

Accepted Answer

A)  Accounting Research Bulletins.
B)  APB Opinions.
C)  FASB Standards.
D)  FASB Technical Bulletins.

Question 17

An organization that has not published accounting standards is the

Accepted Answer

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

Question 18

The Securities and Exchange Commission appointed the Committee on Accounting Procedure.

Accepted Answer

A) True 
 B)False  False

Question 19

The information provided by financial reporting pertains to

Accepted Answer

A)  individual business enterprises, rather than to industries or an economy as a whole or to members of society as consumers.
B)  business industries, rather than to individual enterprises or an economy as a whole or to members of society as consumers.
C)  individual business enterprises, industries, and an economy as a whole, rather than to members of society as consumers.
D)  an economy as a whole and to members of society as consumers, rather than to individual enterprises or industries. A

Question 20

The Financial Accounting Standards Board (FASB)  was proposed by the

Accepted Answer

A)  American Institute of Certified Public Accountants.
B)  Accounting Principles Board.
C)  Study Group on the Objectives of Financial Statements.
D)  Special Study Group on establishment of Accounting Principles (Wheat Committee) .

Exam 1: Financial Accounting and Accounting Standards

The passage of a new FASB Standards Statement requires the support of five of the seven board members.

Correct AnswerverifiedShow Answer

General-purpose financial statements are the product of

Correct AnswerverifiedShow Answer

An effective capital allocation process

Correct AnswerverifiedD

Users of financial reports include all of the following except

Correct AnswerverifiedShow Answer

A common set of accounting standards and procedures are called

Correct AnswerverifiedShow Answer

The role of the Securities and Exchange Commission in the formulation of accounting principles can be best described as

Correct AnswerverifiedShow Answer

The most significant current source of generally accepted accounting principles is the

Correct AnswerverifiedShow Answer

Financial accounting standard-setting in the United States

Correct AnswerverifiedShow Answer

Accounting standards are a product of careful logic or empirical findings and are not influenced by political action.

Correct AnswerverifiedShow Answer

The Financial Accounting Foundation

Correct AnswerverifiedShow Answer

Which of the following statements is not an objective of financial reporting?

Correct AnswerverifiedShow Answer

The expectations gap is caused by what the public thinks accountants should be doing and what accountants think they can do.

Correct AnswerverifiedShow Answer

Users of the financial information provided by a company use that information to make capital allocation decisions.

Correct AnswerverifiedShow Answer

Generally accepted accounting principles

Correct AnswerverifiedShow Answer

Which of the following publications does not qualify as a statement of generally accepted accounting principles?

Correct AnswerverifiedShow Answer

The most authoritative category of generally accepted accounting principles includes all of the following except

Correct AnswerverifiedShow Answer

An organization that has not published accounting standards is the

Correct AnswerverifiedShow Answer

The Securities and Exchange Commission appointed the Committee on Accounting Procedure.

Correct AnswerverifiedFalse

The information provided by financial reporting pertains to

Correct AnswerverifiedA

The Financial Accounting Standards Board (FASB) was proposed by the

Correct AnswerverifiedShow Answer

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D

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False

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A

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