, SOLUTION MANUAL FOR Financial Accounting
Theory and Analysis Text and Cases, 15th Edition
Schroeder
Notes
1- The file is chapter after chapter.
2- We have shown you few pages sample.
3- The file contains all Appendix and Excel sheet
if it exists.
4- We have all what you need, we make update
at every time. There are many new editions
waiting you.
5- If you think you purchased the wrong file You
can contact us at every time, we can replace it
with true one.
Our email:
,Accounting Theory and Analysis
14th Edition
Test Bank
By
Richard G. Schroeder
University of North Carolina at Charlotte
Myrtle W. Clark
University of Kentucky
Jack M. Cathey
University of North Carolina at Charlotte
,Chapter 1
Multiple Choice:
1. Which of the following bodies has the ultimate authority to issue accounting pronouncements in
the United States?
a. Securities and Exchange Commission
b. Financial Accounting Standards Board
c. International Accounting Standards Committee
d. Internal Revenue Service
Answer a
2. What historical evidence of the business operations of the private estate of Apollonius was
discovered early in the 20th century?
a. The Iliad
b. Plato's Republic
c. The Zenon papyri
d. Pacioli’s work, Summa de Arithmetica Geometria Proportioni et Proportionalita,
Answer c
3. Who has been given credit or developing the double-entry system of bookkeeping?
a. Francis Wheat
b. Fra Luca Pacioli
c. A. C. Littleton
d. William Paton
Answer b
4. Which of the following events marked the beginning of efforts to improve accounting after the
Great Depression?
a. The American Accounting Association (AAA) published "A Tentative Statement of
Accounting Principles Underlying Corporate Financial Statements" in 1936.
b. The Securities Act of 1933 and the Securities Exchange Act of 1934 were passed,
establishing the Securities and Exchange Commission (SEC).
c. Representatives of the New York Stock Exchange (NYSE) and the AIA began meeting to
discuss investor, NYSE, and accountant interests in financial statement preparation.
d. Legislation was introduced in Congress to require auditors to be licensed by the federal
government after passing a civil service examination.
Answer c
5. Which organization was responsible for issuing Accounting Research Bulletins?
a. The Committee on Accounting Procedure
, b. The Accounting Principles board
c. The Financial Accounting Standards Board
d. The Securities and Exchange Commission
Answer a
6. Which of the following pronouncements were issued by the Accounting Principles Board?
a. Accounting Research Bulletins
b. APB Opinions
c. Statements of Financial Accounting Concepts
d. Accounting Standards Updates
Answer b
7. Which of the following was not a criticism of the development of accounting standards by the
Accounting Principles Board?
a. The independence of the members of the APB. The individuals serving on the board had full-
time responsibilities elsewhere that might influence their views of certain issues.
b. The structure of the board. The largest eight public accounting firms (at that time) were
automatically awarded one member, and there were usually five or six other public accountants
on the APB.
c. Harmonization. The accounting standards developed were dissimilar to those developed by the
International Accounting Standards Committee.
d. Response time. The emerging accounting problems were not being investigated and solved
quickly enough by the part-time members.
Answer c
8. What was the key outcome of the SEC's Accounting Series Release No. 4 issued in 1938?
a. It mandated that the SEC would develop all accounting standards internally.
b. It required that reports filed with the SEC must be prepared in accordance with accounting
principles that have "substantial authoritative support."
c. It stated that financial statements with full disclosure of incorrect accounting practices were
acceptable.
d. It led to the immediate establishment of the Financial Accounting Standards Board (FASB).
Answer b
9. Which of the following is the professional organization of university accounting professors?
a. American Accounting Association
b. American Institute of Certified Public Accountants
c. American Institute of Accountants
d. Financial Executives Institute
,Answer a
10. What was the main reason for the controversy over APB Opinion No. 2?
a. The APB's decision to treat the investment tax credit using the flow-through method.
b. The issuance of APB Opinion No. 4 and its partial retraction of APB Opinion No. 2.
c. The lack of authority of the APB to mandate accounting standards.
d. The proper method to use in accounting for the investment tax credit, either the flow-through
or deferred method.
Answer d
11. What controversy originally highlighted the need for standard setting groups to have more
authority?
a. Accounting for stock options
b. Accounting for derivatives
c. Accounting for marketable securities
d. Accounting for the investment tax credit
Answer d
12. Which of the following committees recommended abolishing the Accounting Principles Board and
replacing it with the Financial Accounting Board?
a. Wheat
b. Cohen
c. Trueblood
d. Anderson
Answer a
13. Which of the following is a public sector accounting standard setter?
a. FASB
b. SEC
c. APB
d. CAP
Answer b
14. Which of the following types of pronouncements now establishes generally accepted accounting
principles?
a. Statements of Concepts
b. Statements of Financial Accounting Standards
c. APB Opinions
d. Accounting Standards Updates
,Answer d
15. Which of the following types of pronouncements are intended to establish the objectives and
concepts that the FASB will use in developing standards of financial accounting and reporting?
a. Statements of Concepts
b. Statements of Financial Accounting Standards
c. APB Opinions
d. Accounting Standards Updates
Answer a
16. What is the purpose of Emerging Issues Task Force?
a. Provide interpretation of existing standards.
b. Provide timely guidance on select issues.
c. Provide implementation guidance within the Codification framework to reduce diversity in
practice on a timely basis.
d. Provide interpretive guidance
Answer c
17. What is one of the main criticisms regarding the standard-setting process for small businesses?
a. US GAAP requirements are developed primarily for large international firms.
b. US GAAP requirements are often irrelevant to small business financial reporting needs and
can violate the cost-benefit constraint.
c. US GAAP requirements are based solely on the needs of government agencies.
d. US GAAP requirements exclusively focus on differential disclosure standards for small
businesses.
Answer b
18. Which of the following is not a consequence of the standards overload problem to small businesses?
a. If a small business omits a GAAP requirement from audited financial statements, a qualified
or adverse opinion may be rendered.
b. Small businesses do not need to keep financial records
c. The cost of complying with GAAP requirements may cause a small business to forgo the
development of other, more relevant information.
d. Small CPA firms that audit smaller companies must keep up to date on all the same
requirements as large international firms, but they cannot afford the specialists that are
available on a centralized basis in the large firms.
Answer b
,19. Some accountants maintain that accounting standards are as much a product of political action as
they are of careful logic or empirical findings. This belief is an example of the concept of
a. Standard setting as a political process
b. Standards overload
c. Economic consequences
d. The role of ethics in accounting
Answer a
20. Financial accounting standard-setting in the United States can be described as:
a. A democratic process in the sense that a majority of accountants must agree with a standard
before it becomes enforceable.
b. A research process based on empirical findings
c. A political process which reflects actions of various interested user groups as well as a product
of research and logic.
d. A legalistic process based on rules promulgated by governmental agencies
Answer c
21. The impact of accounting reports on various segments of our economic society is the definition of
the concept of
a. Standard setting as apolitical process
b. Standards overload
c. Economic consequences
d. The role of ethics in accounting
Answer c
22. Considering and understanding how business decisions affect the financial statements is
a. The sole responsibility of the Securities and Exchange Commission.
b. Provided in the auditor’s report.
c. Referred to as an economic consequence perspective.
d. Interpreted strictly by the company’s suppliers.
Answer c
23. Economic consequences of accounting standard-setting means:
a. Standard-setters must give first priority to ensuring that companies do not suffer any adverse
effect as a result of a new standard.
b. Standard-setters must ensure that no new costs are incurred when a new standard is issued.
c. The objective of financial reporting should be politically motivated to ensure acceptance by
the general public.
d. Accounting standards can have detrimental impacts on the wealth levels of the providers of
financial information.
,Answer d
24. Which of the following companies was involved in an accounting failure that caused the public
accounting firm Arthur Andersen to go out of business?
a. Goldman Sachs
b. Wachovia
c. Enron
d. AIG
Answer c
25. The mission of the International Accounting Standards Board (IASB) is to
a. Develop a uniform currency in which the financial transactions of companies throughout the
world would be measured.
b. Issue enforceable standards which regulate the financial accounting and reporting of
multinational corporations.
c. Develop a single set of high-quality and understandable IFRS for general-purpose financial
statements.
d. Arbitrate accounting disputes between auditors and international companies.
Answer c
26. The Financial Accounting Standards Board (FASB) was proposed by the
a. American Institute of Certified Public Accountants.
b. Study Group on establishment of Accounting Principles (Wheat Committee).
c. Accounting Principles Board.
d. Study Group on the Objectives of Financial Statements (Trueblood Committee)
Answer c
27. The body that has the ultimate power to prescribe the accounting practices and standards to be
employed by companies that fall under its jurisdiction is the
a. SEC
b. APB.
c. FASB.
d. AICPA.
Answer a
28. Which of the following organizations was established by the federal government to help develop
and standardize financial information presented to stockholders?
a. AICPA (American Institute of Certified Public Accountants).
b. SEC (Securities and Exchange Commission).
c. FASB (Financial Accounting Standards Board).
d. CAP (Committee on Accounting Procedure)
Answer b
, 29. What was one of the primary goals of the FASB in developing the Accounting Standards
Codification (ASC)?
a. To delay the implementation of new accounting standards.
b. To create a codification research system that remains up to date with released standard-
setting activity.
c. To replace the need for any accounting research system.
d. To eliminate the requirement for financial statements to follow US GAAP.
Answer b
30. All the following are true regarding the FASB Accounting Standards Codification except:
a. The Codification changes the way GAAP is documented, presented, and updated.
b. The goal of the Codification was to provide one place where all authoritative literature about
a particular topic could be found.
c. The purpose of the Codification is to create new GAAP.
d. The Codification was created to simplify user access.
Answer c
31. International Financial Reporting Standards (IFRS) are issued by the:
a. EU (European Union).
b. SEC (Securities and Exchange Commission).
c. FASB (Financial Accounting Standards Board).
d. IASB (International Accounting Standards Board).
Answer d
Essay
1. What is the difference between normative and positive theory?
Normative theories explain what should be, whereas positive theories explain what is. Ideally,
there should be no such distinction, because a well-developed and complete theory encompasses
both what should be and what is.
2. Why is the development of a general theory of accounting important?
The development of a general theory of accounting is important because of the role accounting
plays in our economic society. We live in a capitalistic society, which is characterized by a self-
regulated market that operates through the forces of supply and demand. Goods and services are
available for purchase in markets, and individuals are free to enter or exit the market to pursue their
economic goals. All societies are constrained by scarce resources that limit the attainment of all
individual or group economic goals. In our society, the role of accounting is to report how
organizations use scarce resources and to report on the status of resources and claims to resources.
3. Discuss the evolution of accounting during the 1930s.
Theory and Analysis Text and Cases, 15th Edition
Schroeder
Notes
1- The file is chapter after chapter.
2- We have shown you few pages sample.
3- The file contains all Appendix and Excel sheet
if it exists.
4- We have all what you need, we make update
at every time. There are many new editions
waiting you.
5- If you think you purchased the wrong file You
can contact us at every time, we can replace it
with true one.
Our email:
,Accounting Theory and Analysis
14th Edition
Test Bank
By
Richard G. Schroeder
University of North Carolina at Charlotte
Myrtle W. Clark
University of Kentucky
Jack M. Cathey
University of North Carolina at Charlotte
,Chapter 1
Multiple Choice:
1. Which of the following bodies has the ultimate authority to issue accounting pronouncements in
the United States?
a. Securities and Exchange Commission
b. Financial Accounting Standards Board
c. International Accounting Standards Committee
d. Internal Revenue Service
Answer a
2. What historical evidence of the business operations of the private estate of Apollonius was
discovered early in the 20th century?
a. The Iliad
b. Plato's Republic
c. The Zenon papyri
d. Pacioli’s work, Summa de Arithmetica Geometria Proportioni et Proportionalita,
Answer c
3. Who has been given credit or developing the double-entry system of bookkeeping?
a. Francis Wheat
b. Fra Luca Pacioli
c. A. C. Littleton
d. William Paton
Answer b
4. Which of the following events marked the beginning of efforts to improve accounting after the
Great Depression?
a. The American Accounting Association (AAA) published "A Tentative Statement of
Accounting Principles Underlying Corporate Financial Statements" in 1936.
b. The Securities Act of 1933 and the Securities Exchange Act of 1934 were passed,
establishing the Securities and Exchange Commission (SEC).
c. Representatives of the New York Stock Exchange (NYSE) and the AIA began meeting to
discuss investor, NYSE, and accountant interests in financial statement preparation.
d. Legislation was introduced in Congress to require auditors to be licensed by the federal
government after passing a civil service examination.
Answer c
5. Which organization was responsible for issuing Accounting Research Bulletins?
a. The Committee on Accounting Procedure
, b. The Accounting Principles board
c. The Financial Accounting Standards Board
d. The Securities and Exchange Commission
Answer a
6. Which of the following pronouncements were issued by the Accounting Principles Board?
a. Accounting Research Bulletins
b. APB Opinions
c. Statements of Financial Accounting Concepts
d. Accounting Standards Updates
Answer b
7. Which of the following was not a criticism of the development of accounting standards by the
Accounting Principles Board?
a. The independence of the members of the APB. The individuals serving on the board had full-
time responsibilities elsewhere that might influence their views of certain issues.
b. The structure of the board. The largest eight public accounting firms (at that time) were
automatically awarded one member, and there were usually five or six other public accountants
on the APB.
c. Harmonization. The accounting standards developed were dissimilar to those developed by the
International Accounting Standards Committee.
d. Response time. The emerging accounting problems were not being investigated and solved
quickly enough by the part-time members.
Answer c
8. What was the key outcome of the SEC's Accounting Series Release No. 4 issued in 1938?
a. It mandated that the SEC would develop all accounting standards internally.
b. It required that reports filed with the SEC must be prepared in accordance with accounting
principles that have "substantial authoritative support."
c. It stated that financial statements with full disclosure of incorrect accounting practices were
acceptable.
d. It led to the immediate establishment of the Financial Accounting Standards Board (FASB).
Answer b
9. Which of the following is the professional organization of university accounting professors?
a. American Accounting Association
b. American Institute of Certified Public Accountants
c. American Institute of Accountants
d. Financial Executives Institute
,Answer a
10. What was the main reason for the controversy over APB Opinion No. 2?
a. The APB's decision to treat the investment tax credit using the flow-through method.
b. The issuance of APB Opinion No. 4 and its partial retraction of APB Opinion No. 2.
c. The lack of authority of the APB to mandate accounting standards.
d. The proper method to use in accounting for the investment tax credit, either the flow-through
or deferred method.
Answer d
11. What controversy originally highlighted the need for standard setting groups to have more
authority?
a. Accounting for stock options
b. Accounting for derivatives
c. Accounting for marketable securities
d. Accounting for the investment tax credit
Answer d
12. Which of the following committees recommended abolishing the Accounting Principles Board and
replacing it with the Financial Accounting Board?
a. Wheat
b. Cohen
c. Trueblood
d. Anderson
Answer a
13. Which of the following is a public sector accounting standard setter?
a. FASB
b. SEC
c. APB
d. CAP
Answer b
14. Which of the following types of pronouncements now establishes generally accepted accounting
principles?
a. Statements of Concepts
b. Statements of Financial Accounting Standards
c. APB Opinions
d. Accounting Standards Updates
,Answer d
15. Which of the following types of pronouncements are intended to establish the objectives and
concepts that the FASB will use in developing standards of financial accounting and reporting?
a. Statements of Concepts
b. Statements of Financial Accounting Standards
c. APB Opinions
d. Accounting Standards Updates
Answer a
16. What is the purpose of Emerging Issues Task Force?
a. Provide interpretation of existing standards.
b. Provide timely guidance on select issues.
c. Provide implementation guidance within the Codification framework to reduce diversity in
practice on a timely basis.
d. Provide interpretive guidance
Answer c
17. What is one of the main criticisms regarding the standard-setting process for small businesses?
a. US GAAP requirements are developed primarily for large international firms.
b. US GAAP requirements are often irrelevant to small business financial reporting needs and
can violate the cost-benefit constraint.
c. US GAAP requirements are based solely on the needs of government agencies.
d. US GAAP requirements exclusively focus on differential disclosure standards for small
businesses.
Answer b
18. Which of the following is not a consequence of the standards overload problem to small businesses?
a. If a small business omits a GAAP requirement from audited financial statements, a qualified
or adverse opinion may be rendered.
b. Small businesses do not need to keep financial records
c. The cost of complying with GAAP requirements may cause a small business to forgo the
development of other, more relevant information.
d. Small CPA firms that audit smaller companies must keep up to date on all the same
requirements as large international firms, but they cannot afford the specialists that are
available on a centralized basis in the large firms.
Answer b
,19. Some accountants maintain that accounting standards are as much a product of political action as
they are of careful logic or empirical findings. This belief is an example of the concept of
a. Standard setting as a political process
b. Standards overload
c. Economic consequences
d. The role of ethics in accounting
Answer a
20. Financial accounting standard-setting in the United States can be described as:
a. A democratic process in the sense that a majority of accountants must agree with a standard
before it becomes enforceable.
b. A research process based on empirical findings
c. A political process which reflects actions of various interested user groups as well as a product
of research and logic.
d. A legalistic process based on rules promulgated by governmental agencies
Answer c
21. The impact of accounting reports on various segments of our economic society is the definition of
the concept of
a. Standard setting as apolitical process
b. Standards overload
c. Economic consequences
d. The role of ethics in accounting
Answer c
22. Considering and understanding how business decisions affect the financial statements is
a. The sole responsibility of the Securities and Exchange Commission.
b. Provided in the auditor’s report.
c. Referred to as an economic consequence perspective.
d. Interpreted strictly by the company’s suppliers.
Answer c
23. Economic consequences of accounting standard-setting means:
a. Standard-setters must give first priority to ensuring that companies do not suffer any adverse
effect as a result of a new standard.
b. Standard-setters must ensure that no new costs are incurred when a new standard is issued.
c. The objective of financial reporting should be politically motivated to ensure acceptance by
the general public.
d. Accounting standards can have detrimental impacts on the wealth levels of the providers of
financial information.
,Answer d
24. Which of the following companies was involved in an accounting failure that caused the public
accounting firm Arthur Andersen to go out of business?
a. Goldman Sachs
b. Wachovia
c. Enron
d. AIG
Answer c
25. The mission of the International Accounting Standards Board (IASB) is to
a. Develop a uniform currency in which the financial transactions of companies throughout the
world would be measured.
b. Issue enforceable standards which regulate the financial accounting and reporting of
multinational corporations.
c. Develop a single set of high-quality and understandable IFRS for general-purpose financial
statements.
d. Arbitrate accounting disputes between auditors and international companies.
Answer c
26. The Financial Accounting Standards Board (FASB) was proposed by the
a. American Institute of Certified Public Accountants.
b. Study Group on establishment of Accounting Principles (Wheat Committee).
c. Accounting Principles Board.
d. Study Group on the Objectives of Financial Statements (Trueblood Committee)
Answer c
27. The body that has the ultimate power to prescribe the accounting practices and standards to be
employed by companies that fall under its jurisdiction is the
a. SEC
b. APB.
c. FASB.
d. AICPA.
Answer a
28. Which of the following organizations was established by the federal government to help develop
and standardize financial information presented to stockholders?
a. AICPA (American Institute of Certified Public Accountants).
b. SEC (Securities and Exchange Commission).
c. FASB (Financial Accounting Standards Board).
d. CAP (Committee on Accounting Procedure)
Answer b
, 29. What was one of the primary goals of the FASB in developing the Accounting Standards
Codification (ASC)?
a. To delay the implementation of new accounting standards.
b. To create a codification research system that remains up to date with released standard-
setting activity.
c. To replace the need for any accounting research system.
d. To eliminate the requirement for financial statements to follow US GAAP.
Answer b
30. All the following are true regarding the FASB Accounting Standards Codification except:
a. The Codification changes the way GAAP is documented, presented, and updated.
b. The goal of the Codification was to provide one place where all authoritative literature about
a particular topic could be found.
c. The purpose of the Codification is to create new GAAP.
d. The Codification was created to simplify user access.
Answer c
31. International Financial Reporting Standards (IFRS) are issued by the:
a. EU (European Union).
b. SEC (Securities and Exchange Commission).
c. FASB (Financial Accounting Standards Board).
d. IASB (International Accounting Standards Board).
Answer d
Essay
1. What is the difference between normative and positive theory?
Normative theories explain what should be, whereas positive theories explain what is. Ideally,
there should be no such distinction, because a well-developed and complete theory encompasses
both what should be and what is.
2. Why is the development of a general theory of accounting important?
The development of a general theory of accounting is important because of the role accounting
plays in our economic society. We live in a capitalistic society, which is characterized by a self-
regulated market that operates through the forces of supply and demand. Goods and services are
available for purchase in markets, and individuals are free to enter or exit the market to pursue their
economic goals. All societies are constrained by scarce resources that limit the attainment of all
individual or group economic goals. In our society, the role of accounting is to report how
organizations use scarce resources and to report on the status of resources and claims to resources.
3. Discuss the evolution of accounting during the 1930s.
