Version 1 1 Test Bank For Intermediate Accounting, 11th Edition by David Spiceland, Mark Nelson, Wayne Thomas, Jennifer Chapter 1 -21 Answers Are At the End of Each Chapter Chapter 1 Student name:__________ 1) Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct number code for the term. TERM PHRASE Term number that matches the phrase. 1. Predictive value Information is useful in projecting cash flows. ____ 2. Relevance Pertinent to the decision at hand. ____ 3. Distribution to owners Information is available prior to the decision. ____ 4. Confirmatory value Decrease in equity due to transfers to owners. ____ 5. Timeliness Information confirms expectations. ____ Question Details Topic : Conceptual framework --Purpose Difficulty : 2 Medium Topic : Concepts --Qualitative characteristics Topic : Concepts --Elements of financial statements Topic : GAAP --Underlying assumptions Learning Objective : 01 -06 Explain the purpose of the conceptual framework. Learning Objec tive : 01 -08 Describe the four basic assumptions underlying GAAP. Bloom's : Understand AACSB : Reflective Thinking AICPA : FN Measurement AICPA : BB Critical Thinking Accessibility : Keyboard Navigation Accessibility : Screen Reader Compatible Type : Stati c Learning Objective : 01 -07 Identify the objective and qualitative characteristics of financial report Gradable : manual Version 1 2 2) Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct number code for the term. TERM PHRASE Term number that matches the phrase. 1. Gain Along with relevance, a fundamental decision -specific quality. ____ 2. Materiality Results if an asset is sold for more than book value. ____ 3. Completeness Contains all information necessary for faithful representation. ____ 4. Comprehensive income The change in equity from nonowner transactions. ____ 5. Faithful representation Concerns the decision -making impact of both the amount and nature of an item. ____ Question Details Topic : Conceptual framework --Purpose Difficulty : 2 Medium Topic : Concepts --Qualitative characteristics Topic : Concepts --Elements of financial statements Learning Objective : 01 -06 Explain the p urpose of the conceptual framework. Bloom's : Understand AACSB : Reflective Thinking AICPA : FN Measurement AICPA : BB Critical Thinking Accessibility : Keyboard Navigation Accessibility : Screen Reader Compatible Type : Static Learning Objective : 01 -07 Identify the objective and qualitative characteristics of financial report Gradable : manual 3) Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct numb er code for the term. TERM PHRASE Term number that matches the phrase. 1. Neutrality Important in analysis between ____ Version 1 3 firms. 2. Comparability Accounting information should be unbiased. ____ 3. Consistency The decision to include an amount in the financial statements. ____ 4. Cost-effectiveness Applying the same accounting practices over time. ____ 5. Recognition Considers the value of using information relative to cost of providing it. ____ Question Details Topic : Conceptual framework --Purpose Difficulty : 2 Medium Topic : Concepts --Qualitative characteristics Learning Objective : 01 -06 Explain the purpose of the conceptual framework. Bloom's : Understand AACSB : Reflective Thinking AICPA : FN Measurement AICPA : BB Critical T hinking Accessibility : Keyboard Navigation Accessibility : Screen Reader Compatible Type : Static Learning Objective : 01 -07 Identify the objective and qualitative characteristics of financial report Topic : Concepts --Recognition -Measurement -Disclosure Learning Objective : 01 -09 Describe the recognition, measurement, and disclosure concepts that guide Gradable : manual 4) Listed below are five terms are followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the correct number code for the term. TERM PHRASE Term number that matches the phrase. 1. Monetary unit assumption Implies consensus among different observers. ____ 2. Verifiability Assumes all transactions can be identified with a particular entity. ____ 3. Economic entity Assumes an entity will continue ____ Version 1 4 assumption to operate indefinitely. 4. Going concern assumption Requires reporting the financial life of an entity in discrete time frames. ____ 5. Periodicity assumption Ignores the possibility of inflation. ____ Question Details Difficulty : 2 Medium Topic : Concepts --Qualitative characteristics Topic : GAAP --Underlying assumptions Learning Objective : 01 -08 Describe the four basic assumptions underlying GAAP. Bloom's : Understand AACSB : Reflective Thinking AICPA : FN Measurement AICPA : BB Critical Thinking Accessibility : Keyboard Navigation Accessibility : Screen Reader Compatible Type : Static Learning Objective : 01 -07 Identify the objective and qual itative characteristics of financial report Gradable : manual 5) Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct number code for the term. TERM PHRASE Term number that matches the phrase. 1. Historical cost Basis of measurement for fixed assets. ____ 2. Materiality Discounts future cash flows. ____ 3. Revenue recognition Occurs when goods or services are transferred to the customer. ____ 4. Full disclosure Reporting of all information that could affect decisions. ____ 5. Present value Application of GAAP sometimes avoided under this constraint. ____ Version 1 5 Question Details Topic : Conceptual framework --Purpose Difficulty : 2 Medium Topic : Concepts --Qualitative characteristics Learning Objective : 01 -06 Explain the purpose of the conceptual framework. Bloom's : Understand AACSB : Reflective Thinking AICPA : FN Measurement AICPA : BB Critical Thinking Accessibility : Keyboard Navigation Accessibility : Screen Reader Compatible Type : Static Learning Objective : 01 -07 Identify the objective and qualitative characteristics of financial report Topic : Concepts --Recognition -Measurement -Disclosure Learning Objective : 01 -09 Describe the recog nition, measurement, and disclosure concepts that guide Gradable : manual 6) Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct number code for the te rm. TERM PHRASE Term number that matches the phrase. 1. Financial Accounting Standards Board Undermines representational faithfulness by being inconsistent with neutrality. ____ 2. Accounting Principles Board It established GAAP before the FASB. ____ 3. Conservatism Its EITF Issues are GAAP when entered in the Accounting Standards Codification. ____ 4. American Institute of CPAs (AICPA) It has the authority to set U.S. accounting standards. ____ 5. Securities and Exchange Commission It is the national organization for CPAs in the United States. ____ Version 1 6 Question Details Difficulty : 2 Medium Topic : Concepts --Qualitative characteristics Bloom's : Understand AACSB : Reflective Thinking AICPA : BB Critical Thinking Accessibility : Keyboard Navigation Accessibility : Screen Reader Compatible Type : Static Learning Objective : 01 -07 Identify the objective and qualitative characteristics of financial report Topic : Development of accounting and reporting standards Topic : Encouraging h igh-quality financial reporting Learning Objective : 01 -03 Define generally accepted accounting principles (GAAP) and discuss the his Learning Objective : 01 -05 Explain factors that encourage high -quality financial reporting. AICPA : BB Legal Gradable : ma nual 7) Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct number code for the term. TERM PHRASE Term number that matches the phrase. 1. Expenses Net assets. ____ 2. Equity Outflows of resources to generate revenues. ____ 3. Distributions to owners Cash dividends. ____ 4. Investments by owners Claims of creditors against the assets of a business. ____ 5. Liabilities Transfers of resources in exchange for common and preferred stock. ____ Question Details Topic : Concepts --Elements of financial statements AACSB : Reflective Thinking AICPA : FN Measurement AICPA : BB Critical Thinking Accessibility : Keyboard Navigation Accessib ility : Screen Reader Compatible Type : Static Learning Objective : 01 -07 Identify the objective and qualitative characteristics of financial report Difficulty : 1 Easy Bloom's : Remember Gradable : manual
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