.png){kind=logo}
Chapter 001 Environment and Theoretical Structure of Financial Accounting 1-1
True / False Questions
- The primary function of financial accounting is to provide relevant financial information to
parties external to business enterprises.
TRUE
AACSB: Reflective thinking
Blooms: Knowledge
Learning Objective: 1
Level of Learning: 1
- Accrual accounting attempts to measure revenues and expenses that occurred during
accounting periods so they equal net operating cash flow.
FALSE
AACSB: Reflective thinking
Blooms: Comprehension
Learning Objective: 2
Level of Learning: 1
- The FASB is currently the public sector organization responsible for setting accounting
standards in the U.S.
FALSE
AACSB: Reflective thinking
Blooms: Knowledge
Learning Objective: 3
Level of Learning: 1
- The Public Reform and Investor Protection Act of 2002 (Sarbanes-Oxley) changed the
entity responsible for setting auditing standards in the United States.
TRUE
AACSB: Reflective thinking
Blooms: Knowledge
Learning Objective: 4
Level of Learning: 1
Intermediate Accounting IFRS 6th Edition Spiceland Test Bank Visit TestBankDeal.com to get complete for all chapters
Chapter 001 Environment and Theoretical Structure of Financial Accounting 1-2
- A rules-based approach to standard setting stresses professional judgment as opposed to
following a list of rules.
FALSE
AACSB: Reflective thinking
Blooms: Knowledge
Learning Objective: 4
Level of Learning: 1
- Under federal securities laws, the SEC has the authority to set accounting standards in the
U.S.
TRUE
AACSB: Reflective thinking
Blooms: Knowledge
Learning Objective: 4
Level of Learning: 1
- The primary responsibility for properly applying GAAP when communicating with
investors and creditors through financial statements lies with a firm's auditors.
FALSE
AACSB: Reflective thinking
Blooms: Knowledge
Learning Objective: 6
Level of Learning: 1
- Auditors play an important role in the resource allocation process by adding credibility to
financial statements.
TRUE
AACSB: Reflective thinking
Blooms: Comprehension
Learning Objective: 6
Level of Learning: 1
Chapter 001 Environment and Theoretical Structure of Financial Accounting 1-3
- Materiality can be affected by the dollar amount of an item, the nature of the item, or both.
TRUE
AACSB: Reflective thinking
Blooms: Knowledge
Learning Objective: 6
Level of Learning: 1
- Conservatism is a desired qualitative characteristic of accounting information.
FALSE
AACSB: Reflective thinking
Blooms: Knowledge
Learning Objective: 6
Level of Learning: 1
- Equity is a residual amount representing the owner's interest in the assets of the business.
TRUE
AACSB: Reflective thinking
Blooms: Knowledge
Learning Objective: 6
Level of Learning: 1
- Revenues are inflows or other enhancements of assets or settlements of liabilities from
activities that constitute the entity's ongoing operations.
TRUE
AACSB: Reflective thinking
Blooms: Knowledge
Learning Objective: 6
Level of Learning: 1
Chapter 001 Environment and Theoretical Structure of Financial Accounting 1-4
- Gains or losses result, respectively, from the disposition of business assets for greater
than, or less than, their book values.
TRUE
AACSB: Reflective thinking
Blooms: Knowledge
Learning Objective: 6
Level of Learning: 1
- Comprehensive income is another term for net income.
FALSE
AACSB: Reflective thinking
Blooms: Knowledge
Learning Objective: 6
Level of Learning: 1
- Determining fair value by calculating the present value of future cash flows is a level 1
type of input.
FALSE
AACSB: Reflective thinking
Blooms: Knowledge
Learning Objective: 8
Level of Learning: 1
- SFAC No. 157 doesn't change the situations in which fair value is used under current
GAAP.
TRUE
.png)