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Intermediate Accounting 2nd Edition Hanlon Test Bank
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Intermediate Accounting 2nd Edition Hanlon Test Bank downloaded instantly This PDF is printed This test bank is just what you need to get through your classes when you are pressed for time and you need to cover the material in a hurry. It’s also perfect for improving scores, as this resourceful s...

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  • October 3, 2022
  • 1003
  • 2022/2023
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  • Intermediate Accounting 2nd Edition Hanlon
  • Intermediate Accounting 2nd Edition Hanlon

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I n t e r m e d i a t e A c c o u n t i n g 2 n d E d i t i o n H a n l o n T e s t B a n k
T e s t B a n k
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D o w n l o a d I m m e d i a t e l y A f t e r T h e P u r c h a s e © Cam bridge Business Publishers, 2020 1-1 Intermediate Accounting, 2nd Edition Chapter 1 Accounting Environment and the Conceptual Framework Learning Objectives – Coverage by question Multiple Choice Exercises & Problems LO 1-1 – Describe the objective of general purpose reporting. 1-4 LO 1-2 – Identify key organizations that determine GAAP and the factors that drive high-quality reporting. 5-8 LO 1-3 –Describe the qualitative characteristics of, and the constraint on, useful financial information. 9-13 LO 1-4 – Explain financial statement elements in the FASB conceptual framework. 14-18 LO 1-5 – Describe the four key accounting assumptions. 19-24 LO 1-6 – Describe the four key accounting principles. 25-30 © Cambridge Business Publishers, 2020 Test Bank, Chapter 1 1-2 Chapter 1 : Accounting Environment and the Conceptual Framework Multiple Choice Topic: Describe the objective of general purpose financial reporting LO: 1 1. General purpose financial reports A) Are designed to show the value of the reporting entity to investors and creditors. B) Are designed for use by a variety of users, both internal and external to the reporting entity. C) Reflect financial information of the reporting entity and its owners. D) Both A and C are true. E) None of these are true . Answer: E Rationale: General purpose financial reports are specifically not designed to show the value of the reporting entity, nor are they designed with internal users of financial information in mind. Also, they only supply financial information about the report ing entity separate and apart from the owners. Hence , the cor rect answer is E. Topic: Describe the objective of general purpose financial reporting LO: 1 2. General purpose financial statements A) Are used only by external users who are not investors or creditors of the reporting entity. B) Serve the needs of investors, creditors, and other external decision makers other than investors and creditors of the reporting entity. C) Are used by creditors mainly to assess the growth of the earnings of the reporting entity. D) Both A and B are true. E) Both B and C are true. Answer: B Rationale: General purpose financial statements are designed to help investors and creditors make decisions about capital allocation and are used to creditors mainly to assess the capacity of the company to repay debt and interest , not to assess earnings growth. However, B is correct: because there are many economic decision makers beyond investors and creditors, the needs of these other users are taken into account in t he reporting in general purpose financial statements. © Cam bridge Business Publishers, 2020 1-3 Intermediate Accounting, 2nd Edition Topic: Describe the objective of general purpose financial reporting LO: 1 3. General purpose financial reporting A) Benefits society by helping decision makers make better resource allocation decisions, thus improving the overall economy. B) Is unique because only accrual -based financial information is used, therefore maximizing the reporting on the economic status of the company. C) Include the issuance of four main financial statements and notes that provide additional information to financial statement users. D) Both A and B are true . E) Both A and C are true . Answer: E Rationale: B is incorrect because general purpose financial reporting provides both accrual and cash -
based finan cial information for use by external users. A is correct because improved resource allocation (which should result from informed decision -makers) is, in fact, the invisible hand in our capitalistic economy. C is correct as well; financial statements are not considered complete without accompanying notes. Topic: Describe the objective of general purpose financial reporting LO: 1 4. Management accounting A) Is governed by generally accepted accountin g principles as well as accrual accounting. B) Provides internal management reports, available to investors and creditors . C) Serves the information needs of internal management of a company to help them make decisions and assess results. D) Both A and C are true. E) Bothe A and B are true. Answer: C Rationale: A is incorrect because managerial accounting is not bound by GAAP nor accrual accounting (exclusively). B is incorrect because most internal management reports are not available to investors and creditors. C is correct; the form and use of management accounting is determined by the information needs of internal management. Topic: Identify key organizations that determine GAAP and the factors that drive high -quality reporting. LO: 2 5. Generally accepted accounting principles A) Were exclusively established by a designated rule -making body, such as the Financial Accounting Standards Board. B) Have mostly been developed in the private sector through the efforts of the American Institute of Certified Public Accounts and the Financial Accounting Standards Board. C) Is not a concern of the Securities and Exchange Commission. D) Both A and B are true. E) Both B and C are true. Answer: B Rationale: A is incorrect; some GAAP has achieved general acceptance through practice. C is incorrect; the SEC has both regulatory and enforcement powers over financial accounting (i.e. GAAP). B is correct, the SEC, although having regulatory and enforcement powers over standards setting, largely allows the FASB to set G AAP.

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