Question 1

Use the following to answer questions
The following information ($ in millions)comes from a recent annual report of Amazon.com,Inc.:
 
-Compute Amazon's balance in cash at the beginning of the year.

Accepted Answer

Beginning balance in Cash + Ne...

Question 2

How does GAAP define fair value?

Accepted Answer

Fair value is defined as the p...

Question 3

The funding of the standard-setting bodies that promulgate IFRS is as independent as that underlying U.S.GAAP.

Accepted Answer

A) True 
 B)False  False

Question 4

A rules-based approach to standard-setting stresses professional judgment as opposed to following a list of rules.

Accepted Answer

A) True 
 B)False  False

Question 5

Which of the following best describes the additional information that companies use to meet the requirements of full disclosure in financial statements?

Accepted Answer

A)  Parenthetical comments or modifying comments placed on the face of the financial statements.
B)  Disclosure notes conveying additional insights about company operations,accounting principles,contractual agreements,and pending litigation.
C)  Supplemental schedules and tables that report more detailed information than is shown in the primary financial statements.
D)  Comments on the face of the financial statements,and schedules,tables,and narrative disclosures in notes to the financial statements.E) None of the above
F) A) and B)

Question 6

If a company has declared bankruptcy,its financial statements likely violate:

Accepted Answer

A)  The fair value measurement approach.
B)  The present value measurement approach.
C)  The stable monetary unit assumption.
D)  The going concern assumption.E) A) and B)
F) A) and C)

Question 7

An important argument in support of historical cost information is:

Accepted Answer

A)  Relevance.
B)  Predictive quality for future cash flows.
C)  Materiality.
D)  Verifiability.E) A) and D)
F) B) and D)

Question 8

Over time,accounting standards have developed to reflect changes in the business world as well as changes in our ability to account for such changes.Using the example of marking assets and liabilities to their fair value,explain why you would expect accounting standards to change.

Accepted Answer

Historically,financial accounting relied...

Question 9

A firm's comprehensive income always:

Accepted Answer

A)  Is the same as its net income.
B)  Is greater than its net income.
C)  Is less than its net income.
D)  Could be greater than or less than net income.E) A) and B)
F) None of the above

Question 10

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

Accepted Answer

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.E) A) and B)
F) B) and C)

Question 11

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

Accepted Answer

A)  Full disclosure.
B)  Relevance.
C)  Going concern.
D)  Historical cost.E) A) and C)
F) A) and B)

Question 12

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) C) and D)
F) B) and D)

Question 13

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) B) and C)

Question 14

The primary responsibility for properly applying GAAP when communicating with investors and creditors through financial statements lies with a firm's auditors.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following groups is not among financial intermediaries?

Accepted Answer

A)  Mutual fund managers.
B)  Financial analysts.
C)  CPAs.
D)  Credit rating organizations.E) A) and C)
F) B) and C)

Question 16

The revenue/expense approach emphasizes determining the appropriate amounts of revenue and expense in each reporting period.

Accepted Answer

A) True 
 B)False

Question 17

Under IFRS,the conceptual framework:

Accepted Answer

A)  Emphasizes the overarching concept of the financial statements providing a "true and fair representation" of the company.
B)  Is not designed to provide guidance to standard setters,but rather only to practitioners.
C)  Is not designed to provide guidance to practitioners,but rather only to standard setters.
D)  Specifies a set of rules that determine what constitutes a true IFRS standard.E) A) and B)
F) A) and C)

Question 18

The full disclosure principle requires a balance between:

Accepted Answer

A)  Comparability and consistency.
B)  Relevance and cost-effectiveness.
C)  Reliability and neutrality.
D)  Timeliness and predictive value.E) All of the above
F) A) and B) B

Question 19

What is the SEC and how is it involved with accounting standard-setting?

Accepted Answer

The Securities and Exchange Commission i...

Question 20

Accrual accounting attempts to measure revenues and expenses that occurred during accounting periods so they equal net operating cash flow.

Accepted Answer

A) True 
 B)False

Exam 1: Environment and Theoretical Structure of Financial Accounting

Use the following to answer questions The following information ($ in millions)comes from a recent annual report of Amazon.com,Inc.: -Compute Amazon's balance in cash at the beginning of the year.

Correct AnswerverifiedBeginning balance in Cash + Ne...View AnswerShow Answer

How does GAAP define fair value?

Correct AnswerverifiedFair value is defined as the p...View AnswerShow Answer

The funding of the standard-setting bodies that promulgate IFRS is as independent as that underlying U.S.GAAP.

Correct AnswerverifiedFalse

A rules-based approach to standard-setting stresses professional judgment as opposed to following a list of rules.

Correct AnswerverifiedFalse

Which of the following best describes the additional information that companies use to meet the requirements of full disclosure in financial statements?

Correct AnswerverifiedShow Answer

If a company has declared bankruptcy,its financial statements likely violate:

Correct AnswerverifiedShow Answer

An important argument in support of historical cost information is:

Correct AnswerverifiedShow Answer

Over time,accounting standards have developed to reflect changes in the business world as well as changes in our ability to account for such changes.Using the example of marking assets and liabilities to their fair value,explain why you would expect accounting standards to change.

Correct AnswerverifiedHistorically,financial accounting relied...View AnswerShow Answer

A firm's comprehensive income always:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

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

The primary responsibility for properly applying GAAP when communicating with investors and creditors through financial statements lies with a firm's auditors.

Correct AnswerverifiedShow Answer

Which of the following groups is not among financial intermediaries?

Correct AnswerverifiedShow Answer

The revenue/expense approach emphasizes determining the appropriate amounts of revenue and expense in each reporting period.

Correct AnswerverifiedShow Answer

Under IFRS,the conceptual framework:

Correct AnswerverifiedShow Answer

The full disclosure principle requires a balance between:

Correct AnswerverifiedB

What is the SEC and how is it involved with accounting standard-setting?

Correct AnswerverifiedThe Securities and Exchange Commission i...View AnswerShow Answer

Accrual accounting attempts to measure revenues and expenses that occurred during accounting periods so they equal net operating cash flow.

Correct AnswerverifiedShow Answer

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Beginning balance in Cash + Ne...
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Fair value is defined as the p...
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False

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False

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Historically,financial accounting relied...
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B

Correct Answer
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The Securities and Exchange Commission i...
View Answer

Correct Answer
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