TEST BANK’
Intermediate Accounting, 18th Edition
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by Kieso, Warfield Chapter 1 - 23 Complete
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,Table of Contents
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1’The’Environment’and’Conceptual’Framework’of’Financial’Reporting
2’The’Accounting’Information’System
3’Income’Statement,’Related’Information,’and’Revenue’Recognition
4’Balance’Sheet’and’Statement’of’Cash’Flows
5’Accounting’and’the’Time’Value’of’Money
6’Cash’and’Receivables
7’Valuation’of’Inventories:’A’Cost-Basis’Approach
8’Inventories:’Additional’Valuation’Issues
9’Acquisition’and’Disposition’of’Property,’Plant,’and’Equipment
10’Depreciation,’Impairments,’and’Depletion
11’Intangible’Assets
12’Current’Liabilities’and’Contingencies
13’Long-Term’Liabilities
14’Stockholders’’Equity
15’Dilutive’Securities’and’Earnings’per’Share
16’Investments
17’Revenue’Recognition
18’Accounting’for’Income’Taxes
19’Accounting’for’Pensions’and’Postretirement’Benefits
20’Accounting’for’Leases
21’Accounting’Changes’and’Error’Analysis
22’Statement’of’Cash’Flows
23’Full’Disclosure’in’Financial’Reporting’
, CHAPTER 1 ’
THE ENVIRONMENT AND CONCEPTUAL FRAMEWORK
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OF FINANCIAL REPORTING ’ ’
IFRS’questions’are’available’at’the’end’of’this’chapter.
TRUE-FALSE—Conceptual
1. Financial’statements’are’the’principal’means’through’which’a’company’communicates’its’finan
cial’information’to’those’outside’it.
Ans:’ T,’ LO:’ 1,’ Bloom:’ K,’ Difficulty:’ Easy,’ Min:’ 1,’ AACSB:’ Knowledge,’ AICPA’ BC:’ None,’ AICPA’ AC:’ Reporting,’ AICPA’ PC:’ None,’ IMA:’ Reporting’ &’ C
ontrol:’Financial’Statement’Preparation,’IFRS:’None
2. Users’ of’ financial’ reports’ of’ a’ company’ use’ the’ information’ provided’ by’ these’ reports’ to’mak
e’capital’allocation’decisions.
Ans:’ T,’ LO:’ 1,’ Bloom:’ K,’ Difficulty:’ Easy,’ Min:’ 1,’ AACSB:’ Knowledge,’ AICPA’ BC:’ None,’ AICPA’ AC:’ Reporting,’ AICPA’ PC:’ None,’ IMA:’ Reporting’ &’ C
ontrol:’Financial’Statement’Preparation,’IFRS:’None
3. An’effective’process’of’capital’allocation’provides’an’efficient’market’for’buying’and’selling’secu
rities’and’obtaining’and’granting’credit.
Ans:’ T,’ LO:’ 1,’ Bloom:’ K,’ Difficulty:’ Easy,’ Min:’ 1,’ AACSB:’ Knowledge,’ AICPA’ BC:’ None,’ AICPA’ AC:’ Reporting,’ AICPA’ PC:’ None,’ IMA:’ Reporting’ &’ C
ontrol:’Financial’Statement’Preparation,’IFRS:’None
4. Investors’are’interested’in’financial’reporting’because’it’provides’information’that’is’useful’for’m
aking’decisions.
Ans:’ T,’ LO:’ 1,’ Bloom:’ K,’ Difficulty:’ Easy,’ Min:’ 1,’ AACSB:’ Knowledge,’ AICPA’ BC:’ None,’ AICPA’ AC:’ Reporting,’ AICPA’ PC:’ None,’ IMA:’ Reporting’ &’ C
ontrol:’Financial’Statement’Preparation,’IFRS:’None
5. Users’ of’ financial’ accounting’ statements’ have’ both’ coinciding’ and’ conflicting’ needs’ for’info
rmation’of’various’types.
Ans:’ T,’ LO:’ 1,’ Bloom:’ K,’ Difficulty:’ Easy,’ Min:’ 1,’ AACSB:’ Knowledge,’ AICPA’ BC:’ None,’ AICPA’ AC:’ Reporting,’ AICPA’ PC:’ None,’ IMA:’ Reporting’ &’ C
ontrol:’Financial’Statement’Preparation,’IFRS:’None
6. Although’the’FASB’has’developed’a’conceptual’framework,’no’Statements’of’Financial’Accoun
ting’Concepts’have’been’issued’to’date.
Ans:’F,’LO:’1,’Bloom:’K,’Difficulty:’Moderate,’Min:’1,’AACSB:’Knowledge,’AICPA’BC:’None,’AICPA’AC:’Reporting,’AICPA’PC:’None,’IMA:’Reporting’&’ Co
ntrol:’Financial’Statement’Analysis,’IFRS:’None
7. The’passage’of’a’new’FASB’Accounting’Standards’Update’requires’the’support’of’five’of’ the’se
ven’board’members.
Ans:’ F,’ LO:’ 1,’ Bloom:’ K,’ Difficulty:’ Easy,’ Min:’ 1,’ AACSB:’ Knowledge,’ AICPA’ BC:’ None,’ AICPA’ AC:’ Reporting,’ AICPA’ PC:’ None,’ IMA:’ Reporting’ &’ C
ontrol:’Financial’Statement’Preparation,’IFRS:’None
8. Statements’of’Financial’Accounting’Concepts’set’forth’fundamental’objectives’and’ concepts’th
at’are’used’by’the’FASB’in’developing’future’standards’of’financial’accounting’and’reporting.
Ans:’ T,’ LO:’ 1,’ Bloom:’ K,’ Difficulty:’ Easy,’ Min:’ 1,’ AACSB:’ Knowledge,’ AICPA’ BC:’ None,’ AICPA’ AC:’ Reporting,’ AICPA’ PC:’ None,’ IMA:’ Reporting’ &’ C
ontrol:’Financial’Statement’Analysis,’IFRS:’None
9. The’FASB’s’Codification’creates’a’new’set’of’GAAP.
Ans:’ F,’ LO:’ 1,’ Bloom:’ K,’ Difficulty:’ Easy,’ Min:’ 1,’ AACSB:’ Knowledge,’ AICPA’ BC:’ None,’ AICPA’ AC:’ Reporting,’ AICPA’ PC:’ None,’ IMA:’ Reporting’ &’ C
ontrol:’Financial’Statement’Analysis,’IFRS:’None
, 10. The’objective’of’financial’reporting’is’to’report’the’plans’made’by’a’company’to’improve’the’prod
uctivity’of’its’employees.
Ans:’ F,’ LO:’ 1,’ Bloom:’ K,’ Difficulty:’ Easy,’ Min:’ 1,’ AACSB:’ Knowledge,’ AICPA’ BC:’ None,’ AICPA’ AC:’ Reporting,’ AICPA’ PC:’ None,’ IMA:’ Reporting’ &’ Cont
rol:’Financial’Statement’Preparation,’IFRS:’None
11. A’ soundly’ developed’ conceptual’ framework’ enables’ the’ FASB’ to’ issue’ more’ useful’ and’con
sistent’pronouncements’over’time.
Ans:’ T,’ LO:’ 2,’ Bloom:’ K,’ Difficulty:’ Easy,’ Min:’ 1,’ AACSB:’ Knowledge,’ AICPA’ BC:’ None,’ AICPA’ AC:’ Reporting,’ AICPA’ PC:’ None,’ IMA:’ Reporting’ &’ Cont
rol:’Financial’Statement’Analysis,’IFRS:’None
12. A’conceptual’framework’is’a’coherent’system’of’concepts’that’flow’from’an’objective.
Ans:’ T,’ LO:’ 2,’ Bloom:’ K,’ Difficulty:’ Easy,’ Min:’ 1,’ AACSB:’ Knowledge,’ AICPA’ BC:’ None,’ AICPA’ AC:’ Reporting,’ AICPA’ PC:’ None,’ IMA:’ Reporting’ &’ Cont
rol:’Financial’Statement’Analysis,’IFRS:’None
13. The’ first’ level’ of’ the’ conceptual’ framework’ identifies’ the’ recognition,’ measurement,’ and’dis
closure’concepts’used’in’establishing’accounting’standards.
Ans:’ F,’ LO:’ 2,’ Bloom:’ K,’ Difficulty:’ Easy,’ Min:’ 1,’ AACSB:’ Knowledge,’ AICPA’ BC:’ None,’ AICPA’ AC:’ Reporting,’ AICPA’ PC:’ None,’ IMA:’ Reporting’ &’ Cont
rol:’Financial’Statement’Analysis,’IFRS:’None
14. The’objective’of’financial’reporting’serves’as’the’foundation’of’the’conceptual’framework.
Ans:’ T,’ LO:’ 2,’ Bloom:’ K,’ Difficulty:’ Easy,’ Min:’ 1,’ AACSB:’ Knowledge,’ AICPA’ BC:’ None,’ AICPA’ AC:’ Reporting,’ AICPA’ PC:’ None,’ IMA:’ Reporting’ &’ Cont
rol:’Financial’Statement’Analysis,’IFRS:’None
15. Users’of’financial’statements’are’assumed’to’need’no’knowledge’of’business’and’financial’acc
ounting’matters’to’understand’the’information’contained’in’financial’statements.
Ans:’ F,’ LO:’ 2,’ Bloom:’ K,’ Difficulty:’ Easy,’ Min:’ 1,’ AACSB:’ Knowledge,’ AICPA’ BC:’ None,’ AICPA’ AC:’ Reporting,’ AICPA’ PC:’ None,’ IMA:’ Reporting’ &’ Cont
rol:’Financial’Statement’Analysis,’IFRS:’None
16. Relevance’ and’ faithful’ representation’ are’ the’ two’ fundamental’ qualities’ that’ make’acco
unting’information’useful’for’decision-making.
Ans:’ T,’ LO:’ 2,’ Bloom:’ K,’ Difficulty:’ Easy,’ Min:’ 1,’ AACSB:’ Knowledge,’ AICPA’ BC:’ None,’ AICPA’ AC:’ Reporting,’ AICPA’ PC:’ None,’ IMA:’ Reporting’ &’ Cont
rol:’Financial’Statement’Analysis,’IFRS:’None
17. The’idea’of’consistency’does’not’mean’that’companies’cannot’switch’from’one’accounting’met
hod’to’another.
Ans:’T,’LO:’2,’Bloom:’C,’Difficulty:’Moderate,’Min:’1,’AACSB:’Knowledge,’AICPA’BC:’None,’AICPA’AC:’Reporting,’AICPA’PC:’None,’IMA:’Reporting’&’ Contr
ol:’Financial’Statement’Analysis,’IFRS:’None
18. Timeliness’and’neutrality’are’two’ingredients’of’relevance.
Ans:’ F,’ LO:’ 2,’ Bloom:’ K,’ Difficulty:’ Easy,’ Min:’ 1,’ AACSB:’ Knowledge,’ AICPA’ BC:’ None,’ AICPA’ AC:’ Reporting,’ AICPA’ PC:’ None,’ IMA:’ Reporting’ &’ Cont
rol:’Financial’Statement’Analysis,’IFRS:’None
19. Verifiability’and’predictive’value’are’two’ingredients’of’faithful’representation.
Ans:’ F,’ LO:’ 2,’ Bloom:’ K,’ Difficulty:’ Easy,’ Min:’ 1,’ AACSB:’ Knowledge,’ AICPA’ BC:’ None,’ AICPA’ AC:’ Reporting,’ AICPA’ PC:’ None,’ IMA:’ Reporting’ &’ Cont
rol:’Financial’Statement’Analysis,’IFRS:’None
20. Revenues,’gains,’and’distributions’to’owners’all’increase’equity.
Ans:’ F,’ LO:’ 2,’ Bloom:’ C,’ Difficulty:’ Moderate,’ Min:’ 1,’ AACSB:’ Knowledge,’ AICPA’ BC:’ None,’ AICPA’ AC:’ Measurement’ Analysis’ and’ Interpretation,’ AIC
PA’PC:’None,’IMA:’Reporting’&’Control:’Financial’Statement’Analysis,’IFRS:’None
21. Comprehensive’ income’ includes’ all’ changes’ in’ equity’ during’ a’ period’ except’ those’res
ulting’from’investments’by’owners’and’distributions’to’owners.
Ans:’T,’LO:’2,’Bloom:’K,’Difficulty:’Easy,’Min:’1,’AACSB:’Knowledge,’AICPA’BC:’None,’AICPA’AC:’Measurement’Analysis’and’Interpretation,’AICPA’ PC:’
None,’IMA:’Reporting’&’Control:’Financial’Statement’Analysis,’IFRS:’None
