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).
d.   none of these.

  32.     Which of the following is not a major challenge facing the accounting profession?
a.   Nonfinancial measurements.
b.   Timeliness.
c.   Accounting for hard assets.
d.   Forward-looking information.

  33.     What is the objective of financial reporting?
a.   Provide information that is useful to management in making decisions.
b.   Provide information that clearly portray nonfinancial transactions.
c.   Provide information about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors.
d.   Provide information that excludes claims to the resources.

  34.     Primary users for general-purpose financial statements include
a.   creditors.
b.   employees.
c.   investors.
d.   both creditors and investors.

  35.     When making decisions, investors are interested in assessing

a.   the company’s ability to generate net cash inflows.

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