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INTERMEDIATE ACCOUNTING EXAM 1 (CH.1-3) QUESTIONS WITH COMPLETE ANSWERS
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INTERMEDIATE ACCOUNTING EXAM 1 (CH.1-3) QUESTIONS WITH COMPLETE ANSWERS
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INTERMEDIATE ACCOUNTING EXAM 1(CH.1-3) QUESTIONS WITH COMPLETE
ANSWERS
The information provided by financial reporting pertains to - Answer-individual business
enterprises, rather than to industries or an economy as a whole or to members of
society as consumers.
a requirement for an accounting principle to be called "generally accepted"? - Answer-
An authoritative accounting rule-making body has established it or it has been accepted
because of its universal application.
What is not due process in the context of standard setting at the FASB? - Answer-No
public hearings are held on proposed accounting standards
Characteristics of generally accepted accounting principles include all of the following
except - Answer-each principle is approved by the SEC.
ach of the following are true of the Securities and Exchange Commission except that -
Answer-the FASB relies on the SEC to develop accounting standards.
erican Institute of Certified Public Accountants (AICPA) continues to be involved in all of
the following except - Answer-developing auditing standards for public companies.
Which of the following is not true of generally accepted accounting principles? - Answer-
GAAP does not have substantial authoritative support.
Financial accounting standard-setting in the United States - Answer-can be described
as a social process which reflects political actions of various interested user groups as
well as a product of research and logic.
The purpose of the International Accounting Standards Board is to - Answer-promote
uniform accounting standards among countries of the world.
What is a possible danger if politics plays too big a role in accounting standard setting?
- Answer-Accounting standards that are not truly generally accepted.
What would be an advantage of having all countries adopt and follow the same
accounting standards? - Answer-Comparability and lower preparation costs.
3 purposes of financial reporting environment - Answer-identification, measurement
about economic entities, and communication
, what is gaap - Answer-Generally Accepted Accounting Principles
what is the role of the codification for gaap - Answer-a one stop shop for comprehensive
accounting guidance
major problems with the financial reporting environment - Answer-GAAP in the political
environment, evoking issue of fair value, and the expectations gap
hich of the following is not a benefit associated with the FASB Conceptual Framework
Project? - Answer-Business entities will need far less assistance from accountants
because the financial reporting process will be quite easy to apply.
The objective of general-purpose financial reporting is? - Answer-to provide financial
information about the reporting entity that is useful to present and potential equity
investors, lenders, and other creditors in making decisions in their capacity as capital
providers
Financial information exhibits the characteristic of consistency when - Answer-a
company applies the same accounting treatment to similar events, from period to
period.
Proponents of historical cost ordinarily maintain that in comparison with all other
valuation alternatives for general purpose financial reporting, statements prepared using
historical costs are more - Answer-verifiable
The measurement principle includes the - Answer-historical cost principle and the fair
value principle.
The accounting principle of expense recognition is best demonstrated by - Answer-
matching effort (expense) with accomplishment (revenue).
Which of the following serves as the justification for the periodic recording of
depreciation expense? - Answer-Systematic and rational allocation of cost over the
periods benefited.
Application of the full disclosure principle - Answer-is demonstrated by the use of
supplementary information explaining the effects of financing arrangements.
Which of the following is an argument against using historical cost in accounting? -
Answer-Fair values are more relevant.
Which of the following is a component of the revenue recognition principle? - Answer-
Recognition occurs when the performance obligation is satisfied.
Which accounting assumption or principle is being violated if a company is a party to
major litigation that it may lose and decides not to include the information in the financial
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