Intermediate Accounting UPDATED
ACTUAL Questions and CORRECT
Answers
Internal users of accounting information - CORRECT ANSWER- ✔✔...
external users of accounting information - CORRECT ANSWER- ✔✔Investors, creditors,
employees, labor unions, customers, suppliers, government regulatory agencies, financial
intermediaries
financial accounting - CORRECT ANSWER- ✔✔Provides relevant financial information to
various external users.
managerial accounting - CORRECT ANSWER- ✔✔deals with the concepts and methods
used to provide information to an organization's internal users
GAAP - CORRECT ANSWER- ✔✔set of both broad and specific guidelines that companies
should follow when measuring and reporting the information in their financial statements and
related notes
SEC - CORRECT ANSWER- ✔✔responsible for setting accounting and reporting standards
for companies whose securities are publicly traded
FASB - CORRECT ANSWER- ✔✔the current private sector body that has been delegated
the task of setting accounting standards.
IASB - CORRECT ANSWER- ✔✔objectives are to develop a single set of high-quality
understandable global accounting standards, to promote the use of those standards, and to
bring about the convergence of national accounting standards and international accounting
standards
IFRS - CORRECT ANSWER- ✔✔developed by the IASB and used by more than 100
countries
, SOX - CORRECT ANSWER- ✔✔law provides for the regulation of the key players in the
financial reporting process
Initial market transactions - CORRECT ANSWER- ✔✔involves issuance of stocks and
bonds by the corporation
Secondary market transactions - CORRECT ANSWER- ✔✔involves the transfer of stocks
and bonds between individuals and institutions
Maltec Corporation has started placing its quarterly financial statements on its web page,
thereby reducing by 10 days the time to get information to investors and creditors. The
qualitative concept improved is: - CORRECT ANSWER- ✔✔Timeliness
Timeliness - CORRECT ANSWER- ✔✔information that is available to users early enough to
allow its use in the decision process
Consistency - CORRECT ANSWER- ✔✔permits valid comparisons between different
periods
Faithful representation - CORRECT ANSWER- ✔✔exists when there is agreement between
a measure or description and the phenomenon it purports to represent
Comparability - CORRECT ANSWER- ✔✔the ability to help users see similarities and
differences among events and conditions
Astro Turf Company recognizes an expense, cost of goods sold, in the period the product is
manufactured. - CORRECT ANSWER- ✔✔The matching principle
Cloud Drug Company owns a patent that it purchased three years ago for $2 million. The
controller recently revalued the patent to its approximate market value of $8 million. -
CORRECT ANSWER- ✔✔The historical cost (original transaction value) principle
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