Test Bank for Intermediate Accounting IFRS, 5th Edition by Donald E. Kieso

Test Bank Intermediate Accounting IFRS, International Adaptation, 5th Edition Kieso



CHAPTER 1
FINANCIAL REPORTING AND
ACCOUNTING STANDARDS

CHAPTER LEARNING OBJECTIVES
1. Describe the global financial markets, major standard-setting bodies, and the meaning of
International Financial Reporting Standards (IFRS).
2. Describe the components and usefulness of the conceptual framework, and identify the
qualitative characteristics of accounting information and the basic elements of financial
statements.
3. Discuss the basic assumptions and principles of accounting.
4. Identify the major challenges in the financial reporting environment.

5. Compare the conceptual frameworks underlying IFRS and U.S. GAAP

*Learning objective has been inserted from Global Accounting Insights

,1-2 Test Bank for Intermediate Accounting: IFRS Edition, 5e

TRUE-FALSE—Conceptual
1. Financial statements are the principal means through which financial information is
communicated to those outside an enterprise.
Ans: T
LO: 1.1
Bloom: K
Difficulty: Easy
Min: 1
AACSB: Analytic
AICPA BB: Strategic/Critical Thinking
AICPA FN: Measurement
AICPA PC: Problem Solving and Decision-making
IMA: None

2. Capital markets are increasingly integrated and companies have greater flexibility in
deciding where to raise capital.
Ans: T
LO: 1.1
Bloom: K
Difficulty: Easy
Min: 1
AACSB: Analytic
AICPA BB: Strategic/Critical Thinking
AICPA FN: Measurement
AICPA PC: Problem Solving and Decision-making
IMA: None

3. The major financial statements used under International Financial Reporting Standards
(IFRS) include the statement of changes in financial position and the statement of
stockholders’ equity.
Ans: F
LO: 1.1
Bloom: K
Difficulty: Easy
Min: 1
AACSB: Analytic
AICPA BB: Strategic/Critical Thinking
AICPA FN: Measurement
AICPA PC: Problem Solving and Decision-making
IMA: None

4. General-purpose financial statements are not considered cost-effective because, while they
provide useful information, the cost to provide the information is quite high.
Ans: F
LO: 1.2
Bloom: K
Difficulty: Easy
Min: 1
AACSB: Analytic
AICPA BB: Strategic/Critical Thinking

, Financial Reporting and Accounting Standards 1-3

AICPA FN: Measurement
AICPA PC: Problem Solving and Decision-making
IMA: None

5. Investors and creditors are considered the primary user group of general-purpose financial
reporting.
Ans: T
LO: 1.2
Bloom: K
Difficulty: Easy
Min: 1
AACSB: Analytic
AICPA BB: Strategic/Critical Thinking
AICPA FN: Measurement
AICPA PC: Problem Solving and Decision-making
IMA: None

6. An effective process of capital allocation promotes productivity and provides an efficient
market for buying and selling securities and obtaining and granting credit.
Ans: T
LO: 1.2
Bloom: K
Difficulty: Easy
Min: 1
AACSB: Analytic
AICPA BB: Strategic/Critical Thinking
AICPA FN: Measurement
AICPA PC: Problem Solving and Decision-making
IMA: None

7. The emphasis on “assessing cash flow prospects” means that the cash basis is preferred
over the accrual basis of accounting.
Ans: F
LO: 1.2
Bloom: K
Difficulty: Easy
Min: 1
AACSB: Analytic
AICPA BB: Strategic/Critical Thinking
AICPA FN: Measurement
AICPA PC: Problem Solving and Decision-making
IMA: None

8. While objectives for financial reporting exist on an informal basis, no formal objectives have
been adopted.
Ans: F
LO: 1.2
Bloom: K
Difficulty: Easy
Min: 1
AACSB: Analytic
AICPA BB: Strategic/Critical Thinking

, 1-4 Test Bank for Intermediate Accounting: IFRS Edition, 5e

AICPA FN: Measurement
AICPA PC: Problem Solving and Decision-making
IMA: None

9. One weakness of accrual accounting is that it does not provide a good indication of the
enterprise's present and continuing ability to generate favorable cash flows.
Ans: F
LO: 1.2
Bloom: K
Difficulty: Easy
Min: 1
AACSB: Analytic
AICPA BB: Strategic/Critical Thinking
AICPA FN: Measurement
AICPA PC: Problem Solving and Decision-making
IMA: None

10. The passage of a new International Financial Reporting Standard requires the support of
ten of the thirteen board members.
Ans: F
LO: 1.1
Bloom: K
Difficulty: Easy
Min: 1
AACSB: Analytic
AICPA BB: Strategic/Critical Thinking
AICPA FN: Measurement
AICPA PC: Problem Solving and Decision-making
IMA: None

11. International Financial Reporting Standards preceded International Accounting Standards.
Ans: F
LO: 1.1
Bloom: K
Difficulty: Easy
Min: 1
AACSB: Analytic
AICPA BB: Strategic/Critical Thinking
AICPA FN: Measurement
AICPA PC: Problem Solving and Decision-making
IMA: None

12. The standard-setting structure includes a Monitoring Board whose purpose is to provide
advice and counsel to the IASB on major policies and technical issues.
Ans: F
LO: 1.1
Bloom: K
Difficulty: Easy
Min: 1
AACSB: Analytic
AICPA BB: Strategic/Critical Thinking