True or false: Financial accounting is primarily concerned with providing
financial information to external users.
True
True or false: In the United States, sole proprietorships and partnerships
outnumber corporations.
True
Which accounting model best meets the primary goal of users of financial reporting?
Accrual basis
The financial reporting model used by the majority of profit oriented
companies is __________ accounting. (Enter only one word.)
Accrual
The ______ has the authority to set accounting standards for companies, but
has delegated the task to the private sector.
SEC
__________ accounting is chiefly concerned with providing information to
external users.
Financial
Which organization is currently the national professional organization for
certified professional public accountants?
AICPA
What are the three primary forms of business organizations?
sole proprietorship
corporation
partnership
The private sector organization that is currently responsible for setting
accounting standards in the United States is the
Financial Accounting Standards Board
The accrual accounting model is best able to achieve the goal of predicting __________ cash
flows. (Only one word per blank.)
Future
Which of the following provides an underlying structure for the development
of accounting standards?
Conceptual framework
What financial reporting model is used by most profit-oriented businesses
and not-for-profit entities?
Accrual accounting
What was the purpose of the FASB Accounting Standards Codification
project?
Reorganize all relevant accounting pronouncements in U.S. GAAP.
The legal authority to set accounting and reporting standards for companies
whose securities are publicly traded lies with the
SEC
The acronym GASB refers to the
Governmental Accounting Standards Board.
The AICPA is the national professional organization for certified professional
public __________.
Accountants
The organization that develops global accounting standards is the
International Accounting Standards Board
The __________ was established to set U.S. accounting standards and is the
current standard setting body. (Use acronym.)
FASB
In addition to issuing accounting standards, the FASB has formulated a
conceptual __________ to provide an underlying theoretical and conceptual
structure for accounting standards.
Framework
The IASB's main objective is to develop a single set of global accounting __________ that are
high-quality, understandable, and enforceable. (Enter one word per blank).
Standards
True or false: The FASB Codification project revised and updated U.S.
accounting standards with international accounting standards.
False
The organization that is responsible for the accounting standard setting
process for states and cities in the United States is the
Governmental Accounting Standards Board.
In developing standards, the FASB considers the: (Select all that apply.)
views of key constituents
economic transactions that standards will address
The IASB is dedicated to developing a set of high-quality, understandable,
and enforceable __________ accounting standards. (Enter one word per blank)
Global
Who has the responsibility for preparing financial statements in accordance
with generally accepted accounting principles?
Corporate management
The private sector organization that is currently responsible for setting
accounting standards in the United States is the
Financial Accounting Standards Board.
Which of the following represents the IASB's primary objective?
To develop high quality global standards used to make economic decisions
The involvement of accounting professionals and management in accounting
scandals resulted in Congress passing the Sarbanes-Oxley Act. What is the
purpose of the Sarbanes-Oxley Act? (Select all that apply.)
Regulate auditors.
Require accountability of corporate executives.
Addresses conflicts of interests.
Provide penalties for violators.
The FASB Accounting Standards __________ organizes all relevant accounting
pronouncements in a searchable, online database (Enter only one word.).
Codification
True or false: The FASB considers written comments from interested parties
before issuing an Accounting Standards Update.
True
Ethics deals with the ability to distinguish __________ from __________. (Only
one word per blank)
Right, wrong
Who has the responsibility to appropriately apply GAAP when preparing
financial statements?
Management
The acronym for the private sector organization that sets accounting
standards in the United States is the
FASB
True or false: The conceptual framework does not prescribe GAAP.
True
The Sarbanes-Oxley Act increases accountability of who?
Corporate executives
The conceptual framework includes what types of information?
A system of objectives and fundamentals intended to lead to consistent accounting standards.
The Accounting Standards Codification is organized into
Topics and subtopics
The main focus of accounting information is to
Provide useful information for decision making
A code or moral system that provides criteria for evaluating right or wrong is
referred to as __________. (Enter one word per blank)
Ethics
What element of the financial statements is described by the following
definition? "Probable future economic benefits obtained or controlled by a
particular entity as a result of past transactions."
Assets
Who has the responsibility for preparing financial statements in accordance
with generally accepted accounting principles?
Corporate Management
Which of the following are among the basic assumptions underlying U.S.
GAAP? (Select all that apply.)
economic entity
going concern
periodicity
monetary unit
The purpose of the FASB's conceptual framework in accounting is to
establish objectives and fundamental concepts on which to base standards.
Recognition refers to the process of
admitting information in the basic financial statements.
What concepts are contained in the FASB conceptual framework? (Select all
that apply.)
concepts regarding types of events to be accounted for
measurement concepts
underlying concepts of accounting
Select the four criteria used to determine if an item is recognized in the
financial statements according to SFAC 5.
Definition
Measurability
Relevance
Reliability
The overriding objective in the hierarchy of qualitative characteristics of
financial reporting information is
Decision usefulness
What accounting principle states that an asset or liability should be recorded
at the amount given or received in the exchange transaction?
Historical cost
Probable future economic benefits obtained or controlled by a particular entity as a result of past
transactions or events are referred to as __________
Assets
__________ __________bases measurements on the price that would be
received in an orderly market transaction. (Only one word per blank.)
fair value
The four basic accounting assumptions (Select all that apply.)
assume the entity will continue to exist
identify the frequency of reporting
identify the entity being reported on
identify the denomination in which reporting occurs
The process of admitting or recording an item into the basic financial
statements is referred to as
Recognition
The revenue/expense approach focuses on the income statement because it
relies on which accounting principles? (Select all that apply.)
Revenue recognition
Matching
According to SFAC 5, the four criteria that must be met for an item to be
recognized in the basic financial statements are
the information about the item is relevant to decision making.
the item has relevant attributes that are measurable.
the information about the item is reliable.
The item meets the definition of an element.
The principle stating that asset and liability measurements should be based
on the amount given or received in the original transaction is referred to as
the __________ __________ principle. (Enter one word per blank.)
Historical cost
The price that would be received to sell assets or paid to transfer a liability in
an orderly transaction between market participants at the measurement date
is the
Fair value
Which of the following are among the basic assumptions underlying U.S.
GAAP? (Select all that apply.)
monetary unit
going concern
economic entity
periodicity
An emphasis is placed on proper income statement item recognition under
what approach under US GAAP?
revenue/expense approach
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