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Test Bank For Intermediate Accounting 9th Edition By Spiceland £24.49   Add to cart
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Test Bank For Intermediate Accounting 9th Edition By Spiceland

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Chapter 3 The Balance Sheet and Financial Disclosures True/False Questions 1. The balance sheet reports a company's financial position at a point in time. Answer: True Level of Learning: 1 Easy Learning Objective: 03-01 Topic Area: Balance sheet–Usefulness-Limits-Elements Blooms: Remember ...

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  • September 26, 2023
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  • 2022/2023
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,Chapter 1 Environment and Theoretical Structure of Financial Accounting


True/False Questions

1. The primary function of financial accounting is to provide relevant financial information to
parties external to business enterprises.

Answer: True
Level of Learning: 1 Easy
Learning Objective: 01-01
Topic Area: Environment of financial accounting and reporting
Blooms: Remember
AACSB: Reflective thinking
AICPA: BB Critical Thinking


2. Accrual accounting attempts to measure revenues and expenses that occurred during
accounting periods so they equal net operating cash flow.

Answer: False
Level of Learning: 1 Easy
Learning Objective: 01-02
Topic Area: Cash versus accrual accounting
Blooms: Understand
AACSB: Reflective thinking
AICPA: FN Measurement


3. The FASB is currently the public-sector organization responsible for setting accounting
standards in the United States.

Answer: False
Level of Learning: 1 Easy
Learning Objective: 01-03
Topic Area: Development of accounting and reporting standards
Blooms: Remember
AACSB: Reflective thinking
AICPA: BB Legal


4. The FASB’s due process invites various interested parties to indicate their opinions about
whether financial accounting standards should be changed.

Answer: True
Level of Learning: 1 Easy
Learning Objective: 01-04
Topic Area: GAAP―Standard-setting process
Blooms: Remember
AACSB: Reflective thinking
AICPA: BB Legal


5. Accounting for stock-based compensation is an area in which the FASB has received little
political interference.

1–1

,Chapter 1 Environment and Theoretical Structure of Financial Accounting

Answer: False
Level of Learning: 1 Easy
Learning Objective: 01-04
Topic Area: GAAP―Standard-setting process
Blooms: Remember
AACSB: Reflective thinking
AICPA: BB Legal


6. The Public Reform and Investor Protection Act of 2002 (Sarbanes-Oxley) changed the entity
responsible for setting auditing standards in the United States.

Answer: True
Level of Learning: 1 Easy
Learning Objective: 01-05
Topic Area: Encouraging high-quality financial reporting
Blooms: Remember
AACSB: Reflective thinking
AICPA: BB Legal


7. A rules-based approach to standard-setting stresses professional judgment as opposed to
following a list of rules.

Answer: False
Level of Learning: 1 Easy
Learning Objective: 01-05
Topic Area: Encouraging high-quality financial reporting
Blooms: Remember
AACSB: Reflective thinking
AICPA: BB Critical Thinking


8. Under federal securities laws, the SEC has the authority to set accounting standards in the
United States.

Answer: True
Level of Learning: 1 Easy
Learning Objective: 01-03
Topic Area: Development of accounting and reporting standards
Blooms: Remember
AACSB: Reflective thinking
AICPA: BB Legal


9. The primary responsibility for properly applying GAAP when communicating with investors
and creditors through financial statements lies with a firm's auditors.

Answer: False
Level of Learning: 1 Easy
Learning Objective: 01-05
Topic Area: Encouraging high-quality financial reporting

1–2

, Chapter 1 Environment and Theoretical Structure of Financial Accounting

Blooms: Remember
AACSB: Reflective thinking
AICPA: BB Critical Thinking


10. Auditors play an important role in the resource allocation process by adding credibility to
financial statements.

Answer: True
Level of Learning: 1 Easy
Learning Objective: 01-05
Topic Area: Encouraging high-quality financial reporting
Blooms: Understand
AACSB: Reflective thinking
AICPA: BB Critical Thinking


11. The purpose of the conceptual framework is to provide a structure and framework for a
consistent set of GAAP.

Answer: True
Level of Learning: 1 Easy
Learning Objective: 01-06
Topic Area: Conceptual framework―Purpose
Blooms: Remember
AACSB: Reflective thinking
AICPA: BB Critical Thinking


12. In the United States the conceptual framework indicates GAAP when a more specific
accounting standard does not apply.

Answer: False
Level of Learning: 1 Easy
Learning Objective: 01-06
Topic Area: Conceptual framework―Purpose
Blooms: Remember
AACSB: Reflective thinking
AICPA: BB Critical Thinking


13. Materiality can be affected by the dollar amount of an item, the nature of the item, or both.

Answer: True
Level of Learning: 1 Easy
Learning Objective: 01-07
Topic Area: Concepts―Qualitative characteristics
Blooms: Remember
AACSB: Reflective thinking
AICPA: BB Critical Thinking
AICPA: FN Measurement



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