Accounting 311 chapter 1

True or False? 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
True or False? Users of financial reports of a company use the information provided by these reports to make their capital allocation decisions.True
True or False? An effective process of capital allocation promotes productivity and provides an efficient market for buying and selling securities and obtaining and gaining creditTrue
True or False? The objective of financial reporting is to report the plans made by a company to improve the productivity of its employeesFalse
True or False? Users of financial accounting statements have both coinciding and conflicting needs for information of various typesTrue
True or False? Statements of Financial Accounting Concepts set fourth fundamental objectives and concepts that are used by the FASB in developing future standards of financial accounting and reporting.True
True or False? The FASB Codification creates a new set of GAAPFalse
True or False? The AICPA’s Code of professional conduct requires that members prepare financial statements in accordance with the GAAPTrue
General-purpose financial statements are a product of…Financial Accounting
The information provided by financial reporting pertains to…Individual business enterprises, rather than to industrie,s or an economy as a whole, or to members of society as consumers
All the following are ways in which accounting information is used by Financial accounting except too…plan and control a company’s operations
Which of the following represents a form of communication through financial reporting but NOT through Financial StatementsPresidents Letter
The process of identifying, measuring, analyzing, and communicating financial information needed by management to plan, evaluate, and control an organization’s operations is called…Managerial Accounting
How does accounting help the capital allocation process attract investment capital?By providing timely, relevant information.`
Financial statements in the early 2000s provide information related tohard assets (inventory and plant assets)
What is the objective of financial reporting?Provide information about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors.
Which of the following will be of interest to investors in decision-making?Both assessing the company’s ability to generate net cash inflows and assessing management’s ability to protect and enhance the capital provider’s investments.
Which perspective is adopted as a part of the objective of general-purpose financial reporting?An entity perspective
A common set of accounting standards and procedures is calledgenerally accepted accounting principles.
Which of the following is a general limitation of “general purpose financial statements”?General purpose financial statements may not be the most informative for a specific enterprise.
What is the relationship between the Securities and Exchange Commission and accounting standard setting in the United States?The SEC has a mandate to establish accounting standards for enterprises under its jurisdiction.
What is not due process in the context of standard setting at the FASB?No public hearings are held on proposed accounting standards
A characteristic of generally accepted accounting principles includes:a common set of standards and principles.
Characteristics of generally accepted accounting principles include all of the following excepteach principle is approved by the SEC.
Why was it believed that accounting standards that were issued by the Financial Accounting Standards Board would carry more weight?The FASB follows due process.
What is the purpose of Emerging Issues Task Force?Provide implementation guidance within the Codification framework to reduce diversity in practice on a timely basi
Each of the following are true of the Securities and Exchange Commission except thatthe FASB relies on the SEC to develop accounting standards.
The body that has the power to prescribe the accounting practices and standards to be employed by companies that fall under its jurisdiction is theSEC.
Companies that are listed on a stock exchange are required to submit their financial statements to theSEC.
Which of the following is true of the Financial Accounting Standards Board?The members of the FASB are appointed by the Financial Accounting Foundation.
The Financial Accounting Foundationoversees the operations of the FASB.
The Financial Accounting Standards Board employs a “due process” system whichenables interested parties to express their views on issues under consideration.
The purpose of the Emerging Issues Task Force is toprovide implementation guidance within the Codification framework to reduce diversity in practice on a timely basis.
The American Institute of Certified Public Accountants (AICPA) continues to be involved in all of the following exceptdeveloping auditing standards for public companies.
Which of the following organizations has not been instrumental in the development of financial accounting standards in the United States?IASB
The purpose of Statements of Financial Accounting Concepts is toform a conceptual framework for solving existing and emerging problems.
Members of the Financial Accounting Standards Board areindependent of any other organization.
Which of the following is not true of generally accepted accounting principles?GAAP does not have substantial authoritative support
The most significant current source of generally accepted accounting principles is theFASB.
Which of the following is a source of pressure that may influence the accounting standard setting process?All of these answers are correct — Congress, Lobbyists, CPA Firms
What is a possible danger if politics plays too big a role in accounting standard setting?Accounting standards that are not truly generally accepted.
What is not a reason that accounting standards may differ across countries?Language
Which of the following is a requirement for an accounting principle to be called “generally accepted”?An authoritative accounting rule-making body has established it or it has been accepted because of its universal application.