ACC 303 Week 2 Quiz – Strayer NEW
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Chapter 1
FINANCIAL ACCOUNTING AND ACCOUNTING STANDARDS
IFRS questions are available at the end of this chapter.
TRUE-FALSE—Conceptual
1. 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.
2. Financial
statements are the principal means through which a company communicates its
financial information to those outside it.
3. Users
of financial reports provided by a company use that information to make their
capital allocation decisions.
4. An
effective process of capital allocation promotes productivity and provides an
efficient market for buying and selling securities and obtaining and granting
credit.
5. 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.
6. Investors
are interested in financial reporting because it provides information that is
useful for making decisions (decision-usefulness approach).
7. Users
of financial accounting statements have both coinciding and conflicting needs
for information of various types.
8. The
Securities and Exchange Commission appointed the Committee on Accounting
Procedure.
9. The
passage of a new FASB Standards Statement requires the support of five of the
seven board members.
10. Financial
Accounting Concepts set forth fundamental objectives and concepts that are used
in developing future standards of financial accounting and reporting.
11. The
AICPA created the Accounting Principles Board in 1959.
12. The
FASB’s Codification integrates existing GAAP, and creates new GAAP.
13. The
AICPA’s Code of Professional Conduct requires that members prepare financial
statements in accordance with generally accepted accounting principles.
14. GAAP
is a product of careful logic or empirical findings and are not influenced by
political action.
15. The
Public Company Accounting Oversight Board has oversight and enforcement
authority and establishes auditing and independence standards and rules.
16. The
expectations gap is caused by what the public thinks accountants should do and
what accountants think they can do.
17. Financial
reports in the early 21st century did not provide any information about a
company’s soft assets (intangibles).
18. Accounting
standards are now less likely to require the recording or disclosure of fair
value information.
19. U.S.
companies that list overseas are required to use International Financial
Reporting Standards, issued by the International Accounting Standards Board.
20. Ethical
issues in financial accounting are governed by the AICPA.
True-False Answers—Conceptual
MULTIPLE CHOICE—Conceptual
21. General-purpose
financial statements are the product of
a. financial accounting.
b. managerial accounting.
c. both financial and managerial accounting.
d. neither financial nor managerial accounting.
22. Users of financial reports include all of the following except
a. creditors.
b. government agencies.
c. unions.
d. All of these are users.
23. The financial statements most frequently provided include all of
the following except the
a. balance sheet.
b. income statement.
c. statement of cash flows.
d. statement of retained earnings.
24. The information provided by financial reporting pertains to
a. individual business enterprises, rather than
to industries or an economy as a whole or to members of society as consumers.
b. business industries, rather than to
individual enterprises or an economy as a whole or to members of society as
consumers.
c. individual business enterprises, industries,
and an economy as a whole, rather than to members of society as consumers.
d. an economy as a whole and to members of
society as consumers, rather than to individual enterprises or industries.
25. All
the following are differences between financial and managerial accounting in
how accounting information is used except to
a. plan and control company's operations.
b. decide whether to invest in the company.
c. evaluate borrowing capacity to determine the
extent of a loan to grant.
d. All the above.
26. Which
of the following represents a form of communication through financial reporting
but not through financial statements?
a. Balance sheet.
b. President's letter.
c. Income statement.
d. Notes to financial statements.
P27. The
process of identifying, measuring, analyzing, and communicating financial
information needed by management to plan, evaluate, and control an
organization’s operations is called
a. financial accounting.
b. managerial accounting.
c. tax accounting.
d. auditing.
28. How does accounting help the capital allocation process attract
investment capital?
a. Provides timely, relevant information.
b. Encourages
innovation.
c. Promotes productivity.
d. a and b above.
29. Whether a business is successful and thrives is determined by
a. markets.
b. free enterprise.
c. competition.
d. all of these.
30. An effective capital allocation process
a. promotes productivity.
b. encourages innovation.
c. provides an efficient market for buying and
selling securities.
d. all of these.
31. Financial statements in the early 2000s provide information
related to
a. nonfinancial measurements.
b. forward-looking data.
c. hard assets (inventory and plant assets).
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