True or False ACC201

1.

1 point

Financial accounting is the process of identifying, measuring, analyzing, and communicating financial information needed by management to plan, evaluate, and control a company’s operations.

True

False

2.

1 point

Financial statements are the principal means through which a company communicates its financial information to those outside it.

True

False

3.

1 point

Users of financial reports provided by a company use that information to make their capital allocation decisions.

True

False

4.

1 point

An effective process of capital allocation promotes productivity and provides an efficient market for buying and selling securities and obtaining and granting credit.

True

False

5.

1 point

The objective of financial reporting is to provide financial information about the reporting entity that is useful to present and potential equity investors, but not to users who are not investors.

True

False

6.

1 point

Investors are interested in financial reporting because it provides information that is useful for making decisions (decision-usefulness approach).

True

False

7.

1 point

Users of financial accounting statements have both coinciding and conflicting needs for information of various types.

True

False

8.

1 point

The Securities and Exchange Commission appointed the Committee on Accounting Procedure.

True

False

9.

1 point

The passage of a new FASB Standards Statement requires the support of five of the seven board members.

True

False

10.

1 point

Financial Accounting Concepts set forth fundamental objectives and concepts that are used in developing future standards of financial accounting and reporting.

True

False

11.

1 point

The AICPA created the Accounting Principles Board in 1959.

True

False

12.

1 point

The FASB’s Codification integrates existing GAAP, and creates new GAAP.

True

False

13.

1 point

The AICPA’s Code of Professional Conduct requires that members prepare financial statements in accordance with generally accepted accounting principles.

True

False

14.

1 point

GAAP is a product of careful logic or empirical findings and are not influenced by political action.

True

False

15.

1 point

The Public Company Accounting Oversight Board has oversight and enforcement authority and establishes auditing and independence standards and rules.

True

False

16.

1 point

The expectations gap is caused by what the public thinks accountants should do and what accountants think they can do.

True

False

17.

1 point

Financial reports in the early 21st century did not provide any information about a company’s soft assets (intangibles).

True

False

18.

1 point

Accounting standards are now less likely to require the recording or disclosure of fair value information.

True

False

19.

1 point

U.S. companies that list overseas are required to use International Financial Reporting Standards, issued by the International Accounting Standards Board.

True

False

20.

1 point

Ethical issues in financial accounting are governed by the AICPA.

True

False

21.

1 point

1. A soundly developed conceptual framework enables the FASB to issue more useful and consistent pronouncements over time.

True

False

22.

1 point

2. A conceptual framework is a coherent system of concepts that flow from an objective.

True

False

23.

1 point

3. The first level of the conceptual framework identifies the recognition, measurement, and disclosure concepts used in establishing accounting standards.

True

False

24.

1 point

4. The IASB has also issued a conceptual framework and the FASB and the IASB have agreed to develop a common conceptual framework.

True

False

25.

1 point

5. Although the FASB has developed a conceptual framework, no Statements of Financial Accounting Concepts have been issued to date.

True

False

26.

1 point

6. The objective of financial reporting is the foundation of the conceptual framework.

True

False

27.

1 point

7. Users of financial statements are assumed to need no knowledge of business and financial accounting matters to understand information contained in financial statements.

True

False

28.

1 point

8. Relevance and faithful representation are the two primary qualities that make accounting information useful for decision making.

True

False

29.

1 point

9. The idea of consistency does not mean that companies cannot switch from one accounting method to another.

True

False

30.

1 point

10. Timeliness and neutrality are two ingredients of relevance.

True

False

31.

1 point

11. Verifiability and predictive value are two ingredients of faithful representation.

True

False

32.

1 point

12. Revenues, gains, and distributions to owners all increase equity.

True

False

33.

1 point

13. Comprehensive income includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.

True

False

34.

1 point

14. The historical cost principle would be of limited usefulness if not for the going concern assumption.

True

False

35.

1 point

15. The economic entity assumption means that economic activity can be identified with a particular legal entity.

True

False

36.

1 point

16. The expense recognition principle states that debits must equal credits in each transaction.

True

False

37.

1 point

17. Revenues are realizable when assets received or held are readily convertible into cash or claims to cash.

True

False

38.

1 point

18. Supplementary information may include details or amounts that present a different perspective from that adopted in the financial statements.

True

False

39.

1 point

19. In order to justify reguiring a particular measurement or disclosure, the benefits to be derived from it must equal the costs associated with it.

True

False

40.

1 point

20. Prudence or conservatism means when in doubt, choose the solution that will be least likely to overstate liabilities or expenses.

True

False