Solution Manual For Intermediate
Accounting
Chapter 1: Financial Accounting and Accounting Standards
Question 1:
Which of the following is the primary objective of financial reporting?
a) To provide information that is useful to management.
b) To provide information about the cost of doing business.
c) To provide information that is useful to investors and creditors.
d) To provide information about the profitability of a company.
Answer:
c) To provide information that is useful to investors and creditors.
Question 2:
The Financial Accounting Standards Board (FASB) is responsible for:
a) Setting accounting standards in the U.S.
b) Auditing public companies.
c) Regulating securities markets.
d) Managing the U.S. tax system.
Answer:
a) Setting accounting standards in the U.S.
Chapter 2: Conceptual Framework for Financial Reporting
Question 3:
Which of the following is a characteristic of relevance in financial reporting?
a) Neutrality
b) Completeness
c) Predictive value
d) Verifiability
,Answer:
c) Predictive value
Question 4:
Which of the following is considered a fundamental qualitative characteristic of
useful financial information?
a) Comparability
b) Relevance
c) Timeliness
d) Understandability
Answer:
b) Relevance
Chapter 3: The Accounting Information System
Question 5:
In the accounting cycle, which of the following is prepared after the financial
statements?
a) Post-closing trial balance
b) Adjusted trial balance
c) Unadjusted trial balance
d) Journal entries
Answer:
a) Post-closing trial balance
Question 6:
Which of the following accounts would be closed at the end of an accounting period?
a) Accounts Receivable
b) Inventory
c) Dividends
d) Common Stock
,Answer:
c) Dividends
Chapter 4: Income Statement and Related Information
Question 7:
Which of the following is included in comprehensive income?
a) Unrealized gains on available-for-sale securities
b) Dividends paid to shareholders
c) Investments by owners
d) Loss on sale of equipment
Answer:
a) Unrealized gains on available-for-sale securities
Question 8:
Which of the following is an example of a discontinued operation?
a) A company discontinues a product line.
b) A company sells a segment of its business.
c) A company ceases production at a factory but continues to use the assets in
another location.
d) A company writes off obsolete inventory.
Answer:
b) A company sells a segment of its business.
Chapter 5: Balance Sheet and Statement of Cash Flows
Question 9:
Which of the following is considered a current asset?
a) Land
b) Goodwill
c) Accounts Receivable
, d) Bonds Payable
Answer:
c) Accounts Receivable
Question 10:
Which section of the cash flow statement includes cash received from customers?
a) Operating activities
b) Investing activities
c) Financing activities
d) Non-cash activities
Answer:
a) Operating activities
Chapter 6: Accounting and the Time Value of Money
Question 11:
If an investment earns 6% interest compounded annually, how much will $10,000 be
worth in 3 years?
a) $10,600
b) $11,800
c) $11,191.02
d) $11,680.00
Answer:
c) $11,191.02
Question 12:
The present value of $1,000 to be received 5 years from now, discounted at 10%
annually, is closest to:
a) $620.92
b) $500.00
Accounting
Chapter 1: Financial Accounting and Accounting Standards
Question 1:
Which of the following is the primary objective of financial reporting?
a) To provide information that is useful to management.
b) To provide information about the cost of doing business.
c) To provide information that is useful to investors and creditors.
d) To provide information about the profitability of a company.
Answer:
c) To provide information that is useful to investors and creditors.
Question 2:
The Financial Accounting Standards Board (FASB) is responsible for:
a) Setting accounting standards in the U.S.
b) Auditing public companies.
c) Regulating securities markets.
d) Managing the U.S. tax system.
Answer:
a) Setting accounting standards in the U.S.
Chapter 2: Conceptual Framework for Financial Reporting
Question 3:
Which of the following is a characteristic of relevance in financial reporting?
a) Neutrality
b) Completeness
c) Predictive value
d) Verifiability
,Answer:
c) Predictive value
Question 4:
Which of the following is considered a fundamental qualitative characteristic of
useful financial information?
a) Comparability
b) Relevance
c) Timeliness
d) Understandability
Answer:
b) Relevance
Chapter 3: The Accounting Information System
Question 5:
In the accounting cycle, which of the following is prepared after the financial
statements?
a) Post-closing trial balance
b) Adjusted trial balance
c) Unadjusted trial balance
d) Journal entries
Answer:
a) Post-closing trial balance
Question 6:
Which of the following accounts would be closed at the end of an accounting period?
a) Accounts Receivable
b) Inventory
c) Dividends
d) Common Stock
,Answer:
c) Dividends
Chapter 4: Income Statement and Related Information
Question 7:
Which of the following is included in comprehensive income?
a) Unrealized gains on available-for-sale securities
b) Dividends paid to shareholders
c) Investments by owners
d) Loss on sale of equipment
Answer:
a) Unrealized gains on available-for-sale securities
Question 8:
Which of the following is an example of a discontinued operation?
a) A company discontinues a product line.
b) A company sells a segment of its business.
c) A company ceases production at a factory but continues to use the assets in
another location.
d) A company writes off obsolete inventory.
Answer:
b) A company sells a segment of its business.
Chapter 5: Balance Sheet and Statement of Cash Flows
Question 9:
Which of the following is considered a current asset?
a) Land
b) Goodwill
c) Accounts Receivable
, d) Bonds Payable
Answer:
c) Accounts Receivable
Question 10:
Which section of the cash flow statement includes cash received from customers?
a) Operating activities
b) Investing activities
c) Financing activities
d) Non-cash activities
Answer:
a) Operating activities
Chapter 6: Accounting and the Time Value of Money
Question 11:
If an investment earns 6% interest compounded annually, how much will $10,000 be
worth in 3 years?
a) $10,600
b) $11,800
c) $11,191.02
d) $11,680.00
Answer:
c) $11,191.02
Question 12:
The present value of $1,000 to be received 5 years from now, discounted at 10%
annually, is closest to:
a) $620.92
b) $500.00
