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TEST BANK For Intermediate Accounting, 11th Edition by David Spiceland, Mark Nelson, | Verified Chapters 1 - 21 | Complete Newest Version

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TEST BANK For Intermediate Accounting, 11th Edition by David Spiceland, Mark Nelson, | Verified Chapters 1 - 21 | Complete Newest Version TEST BANK For Intermediate Accounting, 11th Edition by David Spiceland, Mark Nelson, | Verified Chapters 1 - 21 | Complete Newest Version

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  • November 25, 2023
  • 5427
  • 2023/2024
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  • intermediate accounting
  • test bank for intermediate accounting 11th edition
  • test bank for intermediate accounting
  • intermediate accounting 11th edition
  • david spiceland mark nelson wayne thomas jennif

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  • Intermediate Accounting, 11th Edition by Spiceland
  • Intermediate Accounting, 11th Edition by Spiceland

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Test Bank For Intermediate Accounting,
11th Edition
by David Spiceland, Mark Nelson, Wayne Thomas, Jennifer




Version 1 1

,Answer Key

Test name: chapter 1

1)
TERM PHRASE Term number
that matches
the phrase.
1. Predictive va lue Information is useful in 1
projecting cash flows.
2. Relevance Pertinent to the decision at 2
hand.
3. Distribution to Information is available prior 5
owners to the decision.
4. Confirmatory Decrease in equity due to 3
value transfers to owners.
5. Timeliness Information confirms 4
expectations.
2)
TERM PHRASE Term number
that matches
the phrase.
1. Gain Along with relevance, a 5
fundamental decision-specific
quality.
2. Materiality Results if an asset is sold for 1
more than book value.
3. Completeness Contains all information 3
necessary for faithful
representation.
4. Comprehensive The change in equity from 4
income nonowner transactions.




Version 1 2

, 5. Faithful Concerns the decision-making 2
representation impact of both the amount and
nature of an item.
3)
TERM PHRASE Term number
that matches
the phrase.
1. Neutrality Important in analysis between 2
firms.
2. Comparability Accounting information should 1
be unbiased.
3. Consistency The decision to include an 5
amount in the financial
statements.
4. Cost-effectiveness Applying the same accounting 3
practices over time.
5. Recognition Considers the value of using 4
information relative to cost of
providing it.
4)
TERM PHRASE Term number
that matches
the phrase.
1. Monetary unit Implies consensus among 2
assumption different observers.
2. Verifiability Assumes all transactions can be 3
identified with a particular
entity.
3. Economic entity Assumes an entity will continue 4
assumption to operate indefinitely.
4. Going concern Requires reporting the 5
assumption financial life of an entity in
discrete time frames.
5. Periodicity Ignores the possibility of 1
assumption inflation.
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 Occurs when goods or services 3
recognition are transferred to the
customer.
4. Full disclosure Reporting of all information 4
that could affect decisions.
5. Present value Application of GAAP sometimes 2
avoided under this constraint.
6)
TERM PHRASE Term number
that matches
the phrase.
1. Financial Undermines representational 3
Accounting Standards faithfulness by being
Board inconsistent with neutrality.
2. Accounting It established GAAP before the 2
Principles Board FASB.
3. Conservatism Its EITF Issues are GAAP when 1
entered in the Accounting
Standards Codification.
4. American It has the authority to set U.S. 5
Institute of CPAs accounting standards.
(AICPA)
5. Securities and It is the national organization 4
Exchange Commission for CPAs in the United States.
7)
TERM PHRASE Term number
that matches
the phrase.
1. Expenses Net assets. 2
2. Equity Outflows of resources to 1
generate revenues.
3. Distributions to Cash dividends. 3
owners
4. Investments by Claims of creditors against 5
owners the assets of a business.
5. Liabilities Transfers of resources in 4
exchange for common and
preferred stock.



Version 1 4

,8)
TERM PHRASE Term number
that matches
the phrase.
1. Losses Net outflows from peripheral 1
transactions.
2. Assets Increases in equity from the 3
sale of goods and/or services.
3. Revenues Results if an asset is sold for 5
more than book value.
4. Comprehensive All changes in equity except 4
income owner transactions.
5. Gains Probable future economic 2
benefits controlled by an
entity.
9)
TERM PHRASE Term number
that matches
the phrase.
1. SEC Establishes auditing standards in 6
the U.S. for public companies.
2. FASB Primary national organization of 7
accountants working in industry.
3. IASB Sets accounting standards in the 2
United States.
4. AICPA Provides timely responses to 5
financial reporting issues.
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 1
for public companies.
9. APB National organization of certified 4
public accountants.
10. FAF Sets global accounting standards. 3




Version 1 5

,10) These amounts are different because of the differences between cash
and accrual accounting. As opposed to cash flows from operations, net
income includes both revenues and expenses the timing of which differs
from the timing of certain cash receipts and payments. Examples would
be credit sales in which the revenues are recorded before the collection
of cash and cost of goods sold in which the expense often is recorded
later than the cash payment to the supplier for the merchandise.
11)1.Disagree. This is a violation of the historical cost (original
transaction value) principle.
2.Disagree. This is a violation of the economic entity assumption.
3.Disagree. The seller has not satisfied its obligation to deliver goods.
4.Disagree. This is a violation of matching.
5.Agree. The company is conforming to the full disclosure principle.
6.Disagree. This is a violation of the periodicity assumption.
12)Economic entity: All economic events can be identified with a
particular economic entity.
Going concern: In the absence of information to the contrary, it is
anticipated that a business entity will continue to operate indefinitely.
13)Balance sheet, Income statement, Statement of cash flows, Statement
of shareholders' equity.
14) In order to provide consistency, a conceptual framework (a map
clearly defining beliefs or structure) must be provided. This is the
foundation for a strong, logical, and fair system. For example, in
debating accounting for stock-based compensation, the FASB's
conceptual framework explains the rationale for treating stock options as
an expense. By relating the accounting for such compensation to the
purpose of financial statements and their qualitative characteristics, the
FASB can defend its positions without the bias inherent in such
controversial issues.


Version 1 6

,15) The Securities and Exchange Commission is a federal agency that
has the authority to set accounting standards. However, the SEC has
always relied on a private-sector body, such as the current FASB, to
accomplish that task.
16) The Emerging Issues Task Force (EITF) acts as a filter for the FASB.
It includes 15 individuals from public accounting and private industry
along with a representative from the FASB and an SEC observer. The
task force focuses on emerging issues and attempts to reach a consensus,
speeding up the standard-setting process.
17) Changes in GAAP can have significant differential effects on
companies, investors, creditors, and other interest groups. The FASB
must gauge the economic consequences of a change in accounting
standards. The process by which financial accounting standards are
created includes public comment and sometimes hearings. Ultimately, a
vote must be taken to pass a proposed change in GAAP. Accounting for
stock-based compensations (options) and postretirement health care
benefits are examples where accounting practices have been affected by
political influences on GAAP.
18) The Act requires the regulation of auditors and the types of services
they furnish to clients, increases accountability of corporate executives,
addresses conflicts of interest for auditors and securities analysts, and
requires that companies document and report on the adequacy of their
internal controls. It also requires auditors to express an opinion on
management's assessment of internal controls, and the auditors must also
express their own opinion on company internal controls.
19) Outside auditors add credibility to financial statements, increasing
the confidence of capital market participants who rely on financial
statements in making investment and credit decisions and
recommendations.



Version 1 7

,20) Starting in 2019, audit reports include descriptions of Critical audit
matters (CAMs), including discussion of how the CAM was addressed
in the audit.
21) Materiality—Information is material if it can have an effect on a
decision made by a user. Thus, materiality is an aspect of relevance. If
an item is not material, GAAP need not be followed. For example, if a
large corporation purchased a water cooler for one of its common areas
for $120, the amount could be expensed rather than recorded as an asset
even though the cooler will be useful for several years. Materiality is a
judgment call. Materiality is concerned with both the dollar amount of
an item and/or the nature of an item. It would probably be material if
Microsoft received $1,000,000 in bribes from a Chinese company for its
technology. A $1,000,000 write-off of old equipment would probably be
immaterial for Microsoft.
22) Relevance and Faithful Representation. Relevance requires that
information have predictive and confirmatory value, and that it be
material. Faithful representation requires that there is agreement between
a measure and a real-world phenomenon that the measure is supposed to
represent. It requires that the information be complete, neutral, and free
from error.
23) If a country experiences severe inflation, this would violate the
assumption that dollar amounts are constantly valued. This would limit
the usefulness of adding numbers in financial statements, because (for
instance) costs at different times are not comparable without adjusting
for changes in purchasing power.
24) Periodicity—The life of a company can be divided into artificial
periods to provide timely information to external users.
Monetary unit—In the United States, financial statement elements
should be measured in terms of the U.S. dollar. It assumes that the value
of a dollar is stable over time.


Version 1 8

,25) Historical cost—A measurement attribute under which asset and
liability measurements are based on the amount given or received in an
exchange transaction.
26) Fair value is defined as the price that would be received to sell assets
or paid to transfer a liability in an orderly transaction between market
participants at the measurement date.
27) Historically, financial accounting relied on transaction amounts
(historical cost) as the fundamental measurement approach for reporting
assets and liabilities. As markets have matured, it is more relevant and
feasible to report some assets and liabilities at their fair values,
particularly if such items have a ready market that is active.
28) a.Historical cost: the amount given or received in an exchange
transaction.
b.Net realizable value: the net amount of cash into which an asset is
expected to be converted in the ordinary course of business.
c.Current cost: the cost that would be incurred to purchase or reproduce
an asset.
d.Present value: the sum of future cash flows discounted for the time
value of money.
e.Fair value: the price that would be received to sell assets or transfer
liabilities in an orderly market transaction.




Version 1 9

, 29) a.Quoted market prices in active markets for identical assets or
liabilities.
b.Inputs other than quoted prices that are observable for the asset or
liability. These inputs include quoted prices for similar assets or
liabilities in active or inactive markets and inputs that are derived
principally from or corroborated by observable related market data.
c.Unobservable inputs that reflect the entity's own assumptions about the
assumptions market participants would use in pricing the asset or
liability developed based on the best information available in the
circumstances.
30) Under the revenue/expense approach, we emphasize principles for
recognizing revenues and expenses, with some assets and liabilities
recognized as necessary to make the balance sheet reconcile with the
income statement. Much of our accounting for revenues and expenses
follows this revenue/expense approach.
Under the asset/liability approach, on the other hand, we first recognize
and measure the assets and liabilities that exist at a balance sheet date
and, secondly, recognize and measure the revenues, expenses, gains, and
losses needed to account for the changes in these assets and liabilities
from the previous measurement date. Therefore, we should try to
recognize and measure assets and liabilities appropriately, and as a result
will also capture their inflows and outflows in a manner that provides
relevant and representationally faithful information about revenues and
expenses.




Version 1 10

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