Question 1

The primary professional organization for those accountants working in the industry is the:

Accepted Answer

A)  AAA.
B)  AICPA.
C)  IIA.
D)  IMA.E) All of the above
F) B) and D)

Question 2

The asset/liability approach emphasizes:

Accepted Answer

A)  Whether amounts on the balance sheet meet the definitions of assets and liabilities.
B)  A close relation between the balance sheet and the statement of cash flows.
C)  The distinction between net assets and gross assets.
D)  All of the above are correct.E) C) and D)
F) B) and C)

Question 3

Determining fair value by calculating the present value of future cash flows is a level 1 type of input.

Accepted Answer

A) True 
 B)False

Question 4

The most recent example of the political process at work in standard setting is the heated debate that occurred on the issue of:

Accepted Answer

A)  Pension plan accounting.
B)  Accounting for postretirement benefits other than pensions.
C)  Accounting for business combinations.
D)  Accounting for stock-based compensation.E) A) and B)
F) B) and C)

Question 5

Recognizing expected losses immediately, but deferring expected gains, is an example of:

Accepted Answer

A)  Materiality.
B)  Conservatism.
C)  Cost-effectiveness.
D)  Timeliness.E) A) and B)
F) All of the above

Question 6

Net income equals:

Accepted Answer

A)  Assets minus liabilities.
B)  Revenues minus cost of goods sold.
C)  Revenues minus expenses.
D)  Cash receipts minus cash payments.E) All of the above
F) None of the above

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

When a registrant company submits its annual filing to the SEC, it uses:

Accepted Answer

A)  Form 10-A.
B)  Form 10-K.
C)  Form 10-Q.
D)  Form S-1.E) B) and D)
F) All of the above

Question 9

Surefeet Corporation changed its inventory valuation method. Which characteristic is jeopardized by this change?

Accepted Answer

A)  Comparability.
B)  Representational faithfulness.
C)  Consistency.
D)  Feedback value.E) A) and C)
F) A) and B)

Question 10

The FASB's standard-setting process includes, in the correct order:

Accepted Answer

A)  Exposure draft, research, discussion paper, Accounting Standards Update.
B)  Research, exposure draft, discussion paper, Accounting Standards Update.
C)  Research, discussion paper, exposure draft, Accounting Standards Update.
D)  Discussion paper, research, exposure draft, Accounting Standards Update.E) B) and C)
F) C) and D)

Question 11

List the four financial statements most frequently provided to external users.

Accepted Answer

Balance sheet, Incom...

Question 12

The recognition of which of the following expenses exemplifies the application of the matching principle?

Accepted Answer

A)  President's salary.
B)  Research and development.
C)  Cost of goods sold.
D)  Advertising.E) None of the above
F) A) and B)

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Which of the following groups is not among financial intermediaries?

Accepted Answer

A)  Mutual fund managers.
B)  Financial analysts.
C)  CPAs.
D)  Credit rating organizations.E) A) and B)
F) A) and C)

Question 15

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:

Accepted Answer

A)  Comparability.
B)  Consistency.
C)  Timeliness.
D)  Faithful representation.E) C) and D)
F) A) and C)

Question 16

The FASB's conceptual framework lists relevance and timeliness as the two fundamental qualitative characteristics of decision useful information.

Accepted Answer

A) True 
 B)False

Question 17

Enhancing qualitative characteristics of accounting information include each of the following except:

Accepted Answer

A)  Timeliness.
B)  Materiality.
C)  Comparability.
D)  Verifiability.E) B) and C)
F) A) and B)

Question 18

In the Norwalk Agreement, the FASB and IASB pledged to:

Accepted Answer

A)  Combine their organizations to form the BUSYB.
B)  Make progress on specific MOU projects.
C)  Achieve convergence by the year 2015.
D)  Remove existing differences between their standards.E) All of the above
F) A) and D)

Question 19

Identify or define the following terms: periodicity, monetary unit.

Accepted Answer

Periodicity-The life of a company can be...

Question 20

The possibility that the capital markets' focus on periodic profits may tempt a company's management to bend or even break accounting rules to inflate reported net income is an example of:

Accepted Answer

A)  An ethical dilemma.
B)  An accounting theory issue.
C)  A technical accounting issue.
D)  None of the above is correct.E) B) and C)
F) C) and D)

Exam 1: Environment and Theoretical Structure of Financial Accounting

Recognizing expected losses immediately, but deferring expected gains, is an example of:

Correct AnswerverifiedShow Answer

The possibility that the capital markets' focus on periodic profits may tempt a company's management to bend or even break accounting rules to inflate reported net income is an example of:

Correct AnswerverifiedShow Answer

Determining fair value by calculating the present value of future cash flows is a level 1 type of input.

Correct AnswerverifiedShow Answer

Surefeet Corporation changed its inventory valuation method. Which characteristic is jeopardized by this change?

Correct AnswerverifiedShow Answer

The recognition of which of the following expenses exemplifies the application of the matching principle?

Correct AnswerverifiedShow Answer

The FASB's standard-setting process includes, in the correct order:

Correct AnswerverifiedShow Answer

Enhancing qualitative characteristics of accounting information include each of the following except:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In the Norwalk Agreement, the FASB and IASB pledged to:

Correct AnswerverifiedShow Answer

Identify or define the following terms: periodicity, monetary unit.

Correct AnswerverifiedPeriodicity-The life of a company can be...View AnswerShow Answer

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 AnswerverifiedShow Answer

The most recent example of the political process at work in standard setting is the heated debate that occurred on the issue of:

Correct AnswerverifiedShow Answer

Which of the following groups is not among financial intermediaries?

Correct AnswerverifiedShow Answer

The primary professional organization for those accountants working in the industry is the:

Correct AnswerverifiedShow Answer

List the four financial statements most frequently provided to external users.

Correct AnswerverifiedBalance sheet, Incom...View AnswerShow Answer

The FASB's conceptual framework lists relevance and timeliness as the two fundamental qualitative characteristics of decision useful information.

Correct AnswerverifiedShow Answer

When a registrant company submits its annual filing to the SEC, it uses:

Correct AnswerverifiedShow Answer

Net income equals:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The asset/liability approach emphasizes:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Periodicity-The life of a company can be...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Balance sheet, Incom...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified