Test Bank for Intermediate Accounting, 3rd Edition by Elizabeth A.
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Gordon
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✅
Intermediate Accounting, 3e (Gordon/Raedy/Sannella)
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All Chapters
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Chapter 1 The Financial Reporting Environment
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1.1 Overview of Financial Reporting hh hh hh
1) The financial reporting process generates three basic financial
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statements.Answer: FALSE
hh h hh
Diff: hh1
Objective: hh hh hh1.1
hhIFRS/GAAP:
h h GAAP/IFRS
AACSB: h h Application hhof hhknowledge
2) The demand for financial information is based on market participant
hh hh hh hh hh hh hh hh hh
demand.Answer: TRUE
hh h hh
Diff: hh1
Objective: hh hh hh1.1
hhIFRS/GAAP:
h h GAAP/IFRS
AACSB: h h Application hhof hhknowledge
3) Managers of economic entities are best considered to be users of financial
hh hh hh hh hh hh hh hh hh hh hh
information.Answer: FALSE
hh h hh
Diff: hh1
Objective: hh hh hh1.1
hhIFRS/GAAP:
h h GAAP/IFRS
AACSB: h h Application hhof hhknowledge
4) Managers of economic entities are best considered to be preparers of financial
hh hh hh hh hh hh hh hh hh hh hh
information.Answer: TRUE
hh h hh
Diff: hh1
Objective: hh hh hh1.1
hhIFRS/GAAP:
h h GAAP/IFRS
AACSB: h h Application hhof hhknowledge
5) The Securities and Exchange Commission (SEC) regulates financial reporting for publicly
hh hh hh hh hh hh hh hh hh hh
tradedcompanies.
hh h
Answer: TRUE h h
Diff: hh2
Objective: hh1.1
hhIFRS/GAAP: h h GAAP
AACSB: h h Application hhof hhknowledge
6) The FASB gives the SEC authority to regulate accounting for publicly traded
hh hh hh hh hh hh hh hh hh hh hh
companies.Answer: FALSE
hh h hh
Diff: hh1
Objective: hh1.1
hhIFRS/GAAP: h h GAAP
1
,AACSB: h h Application hhof hhknowledge
2
,7) The Public Company Accounting Oversight Board (PCAOB) sets financial accounting
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standards andoversees the audits of public companies in the United States.
hh hh h hh hh hh hh hh hh hh hh hh
Answer: FALSE
h h
Diff: hh1
Objective: hh1.1
hhIFRS/GAAP: h h GAAP
AACSB: h h Application hhof hhknowledge
8) Financial accounting standards influence the behavior of managers and other
hh hh hh hh hh hh hh hh hh
internal users.Answer: TRUE
hh hh h hh
Diff: hh2
Objective: hh hh hh1.1
hhIFRS/GAAP:
h h GAAP/IFRS
AACSB: h h Application hhof hhknowledge
9) Theories and procedures that evolve as a result of lobbying from various groups are
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examples ofproactive factors within the legal, economic, political, and social environment.
hh hh h hh hh hh hh hh hh hh hh hh
Answer: FALSE
h h
Diff: hh1
Objective: hh hh hh1.1
hhIFRS/GAAP:
h h GAAP/IFRS
AACSB: h h Application hhof hhknowledge
10) Financial information includes information that is not governed by rules set forth by the
hh hh hh hh hh hh hh hh hh hh hh hh hh
accountingstandard-setting bodies.
hh h hh
Answer: TRUE
h h
Diff: hh1
Objective: hh hh hh1.1
hhIFRS/GAAP:
h h GAAP/IFRS
AACSB: h h Application hhof hhknowledge
11) What is the term that describes the process of identifying, measuring, and communicating
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financialinformation about an economic entity to various user groups?
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A) financial reportinghh
B) accounting standard setting
hh hh
C) financial statementhh
D) financial
accountingAnswer:
hh h
hhD
Diff: hh2
Objective: hh hh hh1.1
hhIFRS/GAAP:
h h GAAP/IFRS
AACSB: h h Application hhof hhknowledge
3
, 12) Which element of financial accounting involves identifying the individuals who demand
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financialinformation?
hh h
A) financial information hh
B) economic entity hh
C) user groups
hh
D) legal, economic, political, and social
hh hh hh hh
environmentAnswer: C
hh h hh
Diff: hh1
Objective: hh hh hh1.1
hhIFRS/GAAP:
h h GAAP/IFRS
AACSB: h h Application hhof hhknowledge
13) Which of the following is not one of the four basic financial statements?
hh hh hh hh hh hh hh hh hh hh hh hh
A) balance sheet hh
B) trial balance
hh
C) cash flows statement
hh hh
D) statement of comprehensive hh hh
incomeAnswer: B
hh h hh
Diff: hh1
Objective: hh hh hh1.1
hhIFRS/GAAP:
h h GAAP/IFRS
AACSB: h h Application hhof hhknowledge
14) Which organization is responsible for promulgating U.S. GAAP?
hh hh hh hh hh hh hh
A) Financial Accounting Standards Board
hh hh hh
B) Public Company Accounting Oversight Board
hh hh hh hh
C) International Accounting Standards Board hh hh hh
D) Securities and Exchange hh hh
CommissionAnswer: A
hh h hh
Diff: hh1
Objective: hh hh hh1.1
hhIFRS/GAAP:
h h GAAP/IFRS
AACSB: h h Application hhof hhknowledge
15) Which organization is responsible for setting auditing standards and overseeing the audits
hh hh hh hh hh hh hh hh hh hh hh
of publiccompanies in the United States?
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A) Financial Accounting Standards Board
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B) Public Company Accounting Oversight Board
hh hh hh hh
C) American Institute of Certified Public Accountants
hh hh hh hh hh
D) Securities and Exchange hh hh
CommissionAnswer: B
hh h hh
Diff: hh1
Objective: hh1.1
hhIFRS/GAAP: h h GAAP
AACSB: h h Application hhof hhknowledge
4
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