63 Test Bank for Intermediate Accounting 14th Edition
by Kieso Multiple Choice Questions - Page 1
Which of the following represents a form of communication through
financial reporting but not through financial statements?
1.

a.Balance sheet.

2.

b.President's letter.

3.

c.Income statement.

4.

d.Notes to financial statements.

5.

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

Which of the following is a general limitation of "general purpose
financial statements"?
1.

2.



1.

a.creditors.

2.

b.employees.

3.

c.investors.

4.

d.both creditors and investors.

What is the objective of financial reporting?
1.

a.Provide information that is useful to management in making decisions.

2.

b.Provide information that clearly portray nonfinancial transactions.

3.

4.


c.Both a and b.

4.

d.the company’s ability to generate net income.

What is the purpose of Emerging Issues Task Force?
1.
2.

a.Provide interpretation of existing standards.
b.Provide a consensus on how to account for new and unusual financial
transactions.


3.

c.Provide interpretive guidance.

4.

d.Provide timely guidance on select issues.

All the following are differences between financial and managerial
accounting in how accounting information is used except to
1.

a.plan and control company's operations.


Users of financial reports include all of the following except
1.

a.creditors.

2.

b.government agencies.

3.

c.unions.

4.

d.All of these are users.

Whether a business is successful and thrives is determined by
1.

a.markets.

2.

b.free enterprise.

3.

c.competition.



b.standards and principles are based federal statutes.

3.

c.acceptance requires an affirmative vote of Certified Public Accountants.

4.

d.practices that become accepted for at least a year by all industry members.

Financial statements in the early 2000s provide information related
to
1.

a.nonfinancial measurements.

2.

b.forward-looking data.

3.

c.hard assets (inventory and plant assets).

4.

d.none of these.

The passage of a new FASB Standards Statement requires the

c.Accounting for hard assets.

4.

d.Forward-looking information.

Which of the following organizations has been responsible for
setting U.S. accounting standards?
1.

a.Accounting Principles Board.

2.

b.Committee on Accounting Procedure.

3.

c.Financial Accounting Standards Board.

4.

d.All of the above.

The financial statements most frequently provided include all of the
following except the
1.

a.balance sheet.


1.

a.cash flows are considered less important.


2.

b.it provides a better indication of ability to generate cash flows than the cash
basis.

3.

c.it recognizes revenues when cash is received and expenses when cash is
paid.

4.

d. none of the above.

What is the relationship between the Securities and Exchange
Commission and accounting standard setting in the United States?
1.

2.
3.

4.

a.The SEC requires all companies listed on an exchange to submit their
financial statements to the SEC.

b.business industries, rather than to individual enterprises or an economy as a
whole or to members of society as consumers.

3.

c.individual business enterprises, industries, and an economy as a whole,
rather than to members of society as consumers.

4.

d.an economy as a whole and to members of society as consumers, rather
than to individual enterprises or industries.


The role of the Securities and Exchange Commission in the
formulation of accounting principles can be best described as
1.

a.consistently primary.

2.

b.consistently secondary.

3.

c.sometimes primary and sometimes secondary.

4.



3.

c.both a and b.

4.

d.neither a nor b.

An effective capital allocation process
1.

a.promotes productivity.

2.

b.encourages innovation.

3.

c.provides an efficient market for buying and selling securities.

4.

d.all of these.

Which organization is responsible for issuing Emerging Issues Task
Force Statements?




d.statements of financial accounting concepts.

Why was it believed that accounting standards that were issued by
the Financial Accounting Standards Board would carry more
weight?
1.

a.Smaller membership.

2.

b.FASB board members are well-paid.

3.

c.FASB board members must be CPAs.

4.

d.Due process.

63 Free Test Bank for Intermediate Accounting 14th
Edition by Kieso Multiple Choice Questions - Page 2
Financial accounting standard-setting in the United States
1.

2.

a.can be described as a social process which reflects political actions of

d.FASB.

The Financial Accounting Foundation
1.

a.oversees the operations of the FASB.

2.

b.oversees the operations of the AICPA.

3.

c.provides information to interested parties on financial reporting issues.

4.

d.works with the Financial Accounting Standards Advisory Council to provide
informa-tion to interested parties on financial reporting issues.

The following are part of the "due process" system used by the
FASB in the evolution of a typical FASB Statement of Financial
Accounting Standards:1.Exposure Draft; 2.Statement of Financial
Accounting Standards; 3.Preliminary Views. The chronological
order in which these items are released is as follows:
1.

a.1, 2, 3.

2.


What would be an advantage of having all countries adopt and
follow the same accounting standards?
1.

a.Consistency.

2.

b.Comparability.

3.

c.Lower preparation costs.

4.

d.b and c

The American Institute of Certified Public Accountants (AICPA)
continues to be involved in all of the following except
1.

a.developing and enforcing professional ethics.

2.

b.developing auditing standards.

3.

a.ethical requirements.
b.financial statements should be based on generally accepted accounting
principles.
c.advertising to obtained clients.


4.

d.auditing financial statements.

FASB Technical Bulletins
1.

2.

a.are similar to FASB Interpretations in that they establish enforceable
standards under the AICPA's Code of Professional Ethics.
b.are issued monthly by the FASB to deal with current topics.

3.

c.are not expected to have a significant impact on financial reporting in
general and provide guidance when it does not conflict with any broad
fundamental accounting principle.

4.

d.were recently discontinued by the FASB because they dealt with specialized
topics having little impact on financial reporting in general.


c.Interpretations

4.

d.Technical Bulletins

Which of the following pronouncements were issued by the
Accounting Principles Board?
1.

a.Accounting Research Bulletins

2.

b. Opinions

3.

c. Statements of Position


4.

d. Statements of Financial Accounting Concepts

The Financial Accounting Standards Board (FASB) was proposed
by the
1.

a.American Institute of Certified Public Accountants.

d.None of the above.

Which of the following is not a part of generally accepted
accounting principles?
1.

a.FASB Interpretations

2.

b.CAP Accounting Research Bulletins

3.

c.APB Opinions

4.

d.All of these are part of generally accepted accounting principles.

What is the purpose of a FASB Staff Position?
1.
2.

a.Provide interpretation of existing standards.
b.Provide a consensus on how to account for new and unusual financial
transactions.

3.



2.

b.APB

3.

c.FASB.

4.

d.SEC.

The purpose of the International Accounting Standards Board is to
1.

a.issue enforceable standards which regulate the financial accounting and
reporting of multinational corporations.

2.

b.develop a uniform currency in which the financial transactions of companies
through-out the world would be measured.

3.

c.promote uniform accounting standards among countries of the world.

4.


b.Individuals may influence the standards.

3.

c.User groups become active.

4.

d.The FASB delegates its authority to elected officials.

The major distinction between the Financial Accounting Standards
Board (FASB) and its predecessor, the Accounting Principles Board
(APB), is
1.

a.the FASB issues exposure drafts of proposed standards.

2.

b.all members of the FASB are fully remunerated, serve full time, and are
independent of any companies or institutions.

3.

c.all members of the FASB possess extensive experience in financial
reporting.

4.

d.a majority of the members of the FASB are CPAs drawn from public

3.

c.APB Opinions


4.

d.Accounting research studies issued by the AICPA

An organization that has not published accounting standards is the
1.

a.American Institute of Certified Public Accountants.

2.

b.Securities and Exchange Commission.

3.

c.Financial Accounting Standards Board.

4.

d.All of these have published accounting standards.

The purpose of Statements of Financial Accounting Concepts is to
1.

a.establish GAAP.


The Financial Accounting Standards Board
1.

2.
3.

4.

a.has issued a series of pronouncements entitled Statements on Auditing
Standards.
b.was the forerunner of the current Accounting Principles Board.
c.is the arm of the Securities and Exchange Commission responsible for
setting financial accounting standards.
d.is appointed by the Financial Accounting Foundation.

What is "expectation gap"?


1.

a.The difference between what the public thinks the accountant is not doing
and what the accountant knows they don't do.

2.

b.The difference between what the public thinks the accountant is doing and
what Congress says the accountant is doing.

3.