Question 1

Porite Company recognizes revenue in the period in which it records an asset for the related account receivable, rather than in the period in which the account receivable is collected in cash. Porite's practice is an example of:

Accepted Answer

A)   Cash basis accounting.
B)   Accrual accounting.
C)   The matching principle.
D)   Economic entity.E) B) and D)
F) A) and B)

Question 2

Equity is a residual amount representing the owner's interest in the assets of the business.

Accepted Answer

A) True 
 B)False

Question 3

Compare net income (loss) for the year to net cash flow from operating activities. Why are these amounts different? Briefly explain.

Accepted Answer

These amounts are different because of t...

Question 4

Listed below are ten organizations followed by a list of phrases that describe or characterize the organizations. Match each phrase with the correct organization.
-IASB

Accepted Answer

A)  FASB's predecessor.
B)  Primary national organization of accountants working in industry.
C)  Regulates the financial reporting for public companies.
D)  The FASB's parent organization.
E)  National organization of certified public accountants.F) Sets accounting standards in the United States.G) Provides timely responses to financial reporting issues.H) Advises the FASBI) Sets global accounting standards.J) Establishes auditing standards in the US for public companies.K) B) and F)
L) A) and B)

Question 5

Political pressure never affects the IFRS standard-setting process.

Accepted Answer

A) True 
 B)False

Question 6

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Gain

Accepted Answer

A)  The change in equity from nonowner transactions.
B)  Contains all information necessary for faithful representation.
C)  Along with relevance, a fundamental decision-specific quality.
D)  Results if an asset is sold for more than book value.
E)  Concerns the decision-making impact of both the amount and nature of an item.F) A) and B)
G) C) and D)

Question 7

-Compute net income for the first year for Tri Fecta.

Accepted Answer

The answer of 
-Compute net income for the first year...

Question 8

What is the value of a company having financial statements audited by an independent auditor?

Accepted Answer

Outside auditors add credibility to fina...

Question 9

The FASB issues accounting standards in the form of:

Accepted Answer

A)   Accounting Research Bulletins.
B)   Accounting Standards Updates.
C)   Financial Accounting Standards.
D)   Financial Technical Bulletins.E) A) and B)
F) B) and D)

Question 10

The asset/liability approach emphasizes:

Accepted Answer

A)   Whether amounts on the balance sheet meet the definitions of assets and liabilities.
B)   A close relation between the balance sheet and the statement of cash flows.
C)   The distinction between net assets and gross assets.
D)   All of these answer choices are correct.E) C) and D)
F) B) and D)

Question 11

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Liabilities

Accepted Answer

A)  Net assets.
B)  Transfers of resources in exchange for common and preferred stock.
C)  Claims of creditors against the assets of a business.
D)  Outflows of resources to generate revenues.
E)  Cash dividends.F) C) and D)
G) B) and D)

Question 12

Which of the following does not apply to secondary markets?

Accepted Answer

A)   Transactions are important to the efficient allocation of resources in our economy.
B)   New resources are provided when shares of stock are sold by the corporation to the initial owners.
C)   Transactions help to establish market prices for additional shares that may be issued in the future.
D)   Many investors might be unwilling to provide resources to corporations if there is no available mechanism for the future sale of their stocks and bonds to others.E) B) and D)
F) A) and B)

Question 13

Enhancing qualitative characteristics of accounting information include each of the following except:

Accepted Answer

A)   Timeliness.
B)   Materiality.
C)   Comparability.
D)   Verifiability.E) A) and D)
F) C) and D)

Question 14

-Compute Amazon's total liabilities at the end of the year.

Accepted Answer

Total assets = Total liabiliti...

Question 15

Recognizing expected losses immediately, but deferring expected gains, is an example of:

Accepted Answer

A)   Materiality.
B)   Conservatism.
C)   Cost-effectiveness.
D)   Timeliness.E) None of the above
F) B) and D)

Question 16

The main issue in the debate over accounting for employee stock options was:

Accepted Answer

A)   Which employees should receive options.
B)   The amount of compensation expense that a company should recognize.
C)   How many options should be granted to key executives.
D)   The tax consequences of employee stock options.E) A) and D)
F) A) and B)

Question 17

The primary professional organization for those accountants working in industry is the:

Accepted Answer

A)   AAA.
B)   AICPA.
C)   IIA.
D)   IMA.E) A) and B)
F) A) and C)

Question 18

The FASB's standard-setting process includes, in the correct order:

Accepted Answer

A)   Exposure draft, research, discussion paper, Accounting Standards Update.
B)   Research, exposure draft, discussion paper, Accounting Standards Update.
C)   Research, discussion paper, exposure draft, Accounting Standards Update.
D)   Discussion paper, research, exposure draft, Accounting Standards Update.E) All of the above
F) A) and B)

Question 19

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Securities and Exchange Commission

Accepted Answer

A)  Its EITF Issues are GAAP when entered in the Accounting Standards Codification.
B)  It is the national organization for CPAs in the United States.
C)  It has the authority to set U.S. accounting standards.
D)  It established GAAP before the FASB.
E)  Undermines representational faithfulness by being inconsistent with neutrality.F) None of the above
G) A) and B)

Question 20

Listed below are ten organizations followed by a list of phrases that describe or characterize the organizations. Match each phrase with the correct organization.
-FASB

Accepted Answer

A)  FASB's predecessor.
B)  Primary national organization of accountants working in industry.
C)  Regulates the financial reporting for public companies.
D)  The FASB's parent organization.
E)  National organization of certified public accountants.F) Sets accounting standards in the United States.G) Provides timely responses to financial reporting issues.H) Advises the FASBI) Sets global accounting standards.J) Establishes auditing standards in the US for public companies.K) A) and H)
L) B) and F)

Exam 1: Environment and Theoretical Structure of Financial Accounting

Listed below are ten organizations followed by a list of phrases that describe or characterize the organizations. Match each phrase with the correct organization. -IASB

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Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Liabilities

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The primary professional organization for those accountants working in industry is the:

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Equity is a residual amount representing the owner's interest in the assets of the business.

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Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Gain

Correct AnswerverifiedShow Answer

The asset/liability approach emphasizes:

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Which of the following does not apply to secondary markets?

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-Compute Amazon's total liabilities at the end of the year.

Correct AnswerverifiedTotal assets = Total liabiliti...View AnswerShow Answer

Listed below are ten organizations followed by a list of phrases that describe or characterize the organizations. Match each phrase with the correct organization. -FASB

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What is the value of a company having financial statements audited by an independent auditor?

Correct AnswerverifiedOutside auditors add credibility to fina...View AnswerShow Answer

Political pressure never affects the IFRS standard-setting process.

Correct AnswerverifiedShow Answer

The FASB issues accounting standards in the form of:

Correct AnswerverifiedShow Answer

The FASB's standard-setting process includes, in the correct order:

Correct AnswerverifiedShow Answer

The main issue in the debate over accounting for employee stock options was:

Correct AnswerverifiedShow Answer

Compare net income (loss) for the year to net cash flow from operating activities. Why are these amounts different? Briefly explain.

Correct AnswerverifiedThese amounts are different because of t...View AnswerShow Answer

Porite Company recognizes revenue in the period in which it records an asset for the related account receivable, rather than in the period in which the account receivable is collected in cash. Porite's practice is an example of:

Correct AnswerverifiedShow Answer

-Compute net income for the first year for Tri Fecta.

Correct AnswerverifiedShow Answer

Enhancing qualitative characteristics of accounting information include each of the following except:

Correct AnswerverifiedShow Answer

Recognizing expected losses immediately, but deferring expected gains, is an example of:

Correct AnswerverifiedShow Answer

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Securities and Exchange Commission

Correct AnswerverifiedShow Answer

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Total assets = Total liabiliti...
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Outside auditors add credibility to fina...
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These amounts are different because of t...
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