Version 1 1 Full Test Bank For Intermediate Accounting, 11th Edition Answer Key Test name: chapter 1 1)
TERM PHRASE Term number that matches the phrase. 1. Predictive value Information is useful in projecting cash flows. 1 2. Relevance Pertinent to the decision at hand. 2 3. Distribution to owners Information is available prior to the decision. 5 4. Confirmatory value Decrease in equity due to transfers to owners. 3 5. Timeliness Information confirms expectations. 4 2)
TERM PHRASE Term number that matches the phrase. 1. Gain Along with relevance, a fundamental decision -specific quality. 5 2. Materiality Results if an asset is sold for more than book value. 1 3. Completeness Contains all information necessary for faithful representation. 3 4. Comprehensive income The change in equity from nonowner transactions. 4 Version 1 2 5. Faithful representation Concerns the decision -making impact of both the amount and nature of an item. 2 3)
TERM PHRASE Term number that matches the phrase. 1. Neutrality Important in analysis between firms. 2 2. Comparability Accounting information should be unbiased. 1 3. Consistency The decision to include an amount in the financial statements. 5 4. Cost-effectiveness Applying the same accounting practices over time. 3 5. Recognition Considers the value of using information relative to cost of providing it. 4 4)
TERM PHRASE Term number that matches the phrase. 1. Monetary unit assumption Implies consensus among different observers. 2 2. Verifiability Assumes all transactions can be identified with a particular entity. 3 3. Economic entity assumption Assumes an entity will continue to operate indefinitely. 4 4. Going concern assumption Requires reporting the financial life of an entity in discrete time frames. 5 5. Periodicity assumpti on Ignores the possibility of inflation. 1 5)
TERM PHRASE Term number that matches the phrase. 1. Historical cost Basis of measurement for fixed 1 Version 1 3 assets. 2. Materiality Discounts future cash flows. 5 3. Revenue recognition Occurs when goods or service s are transferred to the customer. 3 4. Full disclosure Reporting of all information that could affect decisions. 4 5. Present value Application of GAAP sometimes avoided under this constraint. 2 6)
TERM PHRASE Term number that matches the phrase. 1. Financial Accounting Standards Board Undermines representational faithfulness by being inconsistent with neutrality. 3 2. Accounting Principles Board It established GAAP before the FASB. 2 3. Conservatism Its EITF Issues are GAAP when entered in the Accou nting Standards Codification. 1 4. American Institute of CPAs (AICPA) It has the authority to set U.S. accounting standards. 5 5. Securities and Exchange Commission It is the national organization for CPAs in the United States. 4 7)
TERM PHRASE Term num ber that matches the phrase. 1. Expenses Net assets. 2 2. Equity Outflows of resources to generate revenues. 1 3. Distributions to owners Cash dividends. 3 4. Investments by owners Claims of creditors against the assets of a business. 5 5. Liabilities Transfers of resources in exchange for common and preferred stock. 4 Version 1 4 8)
TERM PHRASE Term number that matches the phrase. 1. Losses Net outflows from peripheral transactions. 1 2. Assets Increases in equity from the sale of goods and/or services. 3 3. Revenues Results if an asset is sold for more than book value. 5 4. Comprehensive income All changes in equity except owner transactions. 4 5. Gains Probable future economic benefits controlled by an entity. 2 9)
TERM PHRASE Term number that matches the phrase. 1. SEC Establishes auditing standards in the U.S. for public companies. 6 2. FASB Primary national organization of accountants working in industry. 7 3. IASB Sets accounting standards in the United States. 2 4. AICPA Provides timely responses to financial reporting issues. 5 5. EITF The FASB's parent organization. 10 6. PCAOB Advises the FASB. 8 7. IMA FASB's predecessor. 9 8. FASAC Regulates the financial reporting for public companies. 1 9. APB National organization of certified public a ccountants. 4 10. FAF Sets global accounting standards. 3
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