80 Free Test Bank for Intermediate Accounting 7th Edition by Spiceland

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The FASB's conceptual framework's qualitative characteristics of accounting information include:

•  A. Full disclosure.
•  B. Relevance.
•  C. Going concern.
•  D. Historical cost.

Which of the following is not a potential benefit of accrual accounting, compared to cash-basis accounting?

•  A. Timeliness.
•  B. Better reflecting economic activity.
•  C. Periodicity.
•  D. Better matching of revenues and expenses.

SFAC No.5 focuses on:

•  A. Objectives of financial reporting.
•  B. Qualitative characteristics of accounting information.
•  C. Recognition and measurement concepts in accounting.
•  D. Elements of financial statements.

Which of the following is not a provision of the Public Company Accounting Reform and Investor Protection Act of 2002?

•  A. Corporate executive accountability.
•  B. Auditor rotation.
•  C. Retention of work papers.
•  D. All of the above are provisions of the Act.

One of the elements that many believe distinguishes a profession from other occupations is the acceptance of responsibility by its members for the interests of those it serves, which is often articulated in:

•  A. Its conceptual framework.
•  B. Its code of ethics.
•  C. Federal laws.
•  D. State laws.

CPAs are licensed by:

•  A. The AICPA.
•  B. The SEC.
•  C. The federal government.
•  D. State governments.

Corporations issue their shares to the investing public in the: option a: Primary market: Yes, Secondary market: yes; option b: Primary market: no, Secondary market: yes; option c: Primary market: Yes, Secondary market: no; option d: Primary market: no, Secondary market: no.

•  A. Option a
•  B. Option b
•  C. Option c
•  D. Option d

The FASB's conceptual framework's qualitative characteristics of accounting information include:

•  A. Historical cost.
•  B. Realization.
•  C. Faithful representation.
•  D. Full disclosure.

The most recent example of the political process at work in standard setting is the heated debate that occurred on the issue of:

•  A. Pension plan accounting.
•  B. Accounting for postretirement benefits other than pensions.
•  C. Accounting for business combinations.
•  D. Accounting for stock-based compensation.

Independent auditors express an opinion on the:

•  A. Fairness of financial statements.
•  B. Accuracy of financial statements.
•  C. Soundness of a company's future.
•  D. Quality of a company's management.

Which of the following does not apply to secondary markets?

•  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.

Which of the following is not true about net operating cash flow?

•  A. It is the difference between cash receipts and cash disbursements from providing goods and services.
•  B. It is a measure used in accrual accounting and is recognized as the best predictor of future operating cash flows.
•  C. Over short periods, it may not be indicative of long-run cash-generating ability.
•  D. It is easy to understand and all information required to measure it is factual.

The most likely important flaw leading to the demise of the APB was the perceived lack of:

•  A. Confidence.
•  B. Competence.
•  C. Independence.
•  D. Importance.

Which of the following is not a provision of the Public Company Accounting Reform and Investor Protection Act of 2002 (Sarbanes-Oxley)? The Act:

•  A. Changed the entity responsible for setting auditing standards.
•  B. Increased corporate executive responsibility for financial statements.
•  C. Limited nonaudit services that can be performed by auditors for audit clients.
•  D. Changed the entity responsible for setting accounting standards.

External decision makers would not look primarily to financial accounting information to assist them in making decisions on:

•  A. Granting credit.
•  B. Capital budgeting.
•  C. Selecting stocks.
•  D. Mergers and acquisitions.

In a recent annual report, Apple Computer reported the following in one of its disclosure notes: "Warranty Expense: The Company provides currently for the estimated cost for product warranties at the time the related revenue is recognized." This note exemplifies Apple's use of:

•  A. Conservatism.
•  B. The matching principle.
•  C. Realization principle.
•  D. Economic entity.

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

•  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.

Pronouncements issued by the Committee on Accounting Procedures:

•  A. Dealt with specific accounting and reporting problems.
•  B. Were based on exposure drafts and public comment letters.
•  C. Originated from congressional studies and SEC directives.
•  D. Were the outcome of research studies and a theoretical framework.

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

•  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.

Which of the following groups is not among financial intermediaries?

•  A. Mutual fund managers.
•  B. Financial analysts.
•  C. CPAs.
•  D. Credit rating organizations.

The possibility that the capital markets' focus on periodic profits may tempt a company's management to bend or even break accounting rules to inflate reported net income is an example of:

•  A. An ethical dilemma.
•  B. An accounting theory issue.
•  C. A technical accounting issue.
•  D. None of the above is correct.

Accounting standard setting has been characterized as:

•  A. A political process.
•  B. Using the scientific method.
•  C. Pure deductive reasoning.
•  D. Pure inductive reasoning.

GAAP is an abbreviation for:

•  A. Generally authorized accounting procedures.
•  B. Generally applied accounting procedures.
•  C. Generally accepted auditing practices.
•  D. Generally accepted accounting principles.

Which of the following has the statutory authority to set accounting standards in the United States?

•  A. FASB.
•  B. IRS.
•  C. SEC.
•  D. AICPA.

The primary focus for financial accounting information is to provide information useful for: option a: Investing decisions: Yes, Credit Decisions: yes; option b: Investing decisions: Yes, Credit Decisions: no; option c: Investing decisions: no, Credit Decisions: yes;option d: Investing decisions: no, Credit Decisions: no.

•  A. Option a
•  B. Option b
•  C. Option c
•  D. Option d

When a registrant company submits its annual filing to the SEC, it uses:

•  A. Form 10-A.
•  B. Form 10-K.
•  C. Form 10-Q.
•  D. Form S-1.