TEST BANK FOR Intermediate Accounting 3rd Edition by Elizabeth A. Gordon |All 22 Chapters Fully Covered| Guide A+

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,Intermediate Accounting, 3e (Gordon/Raedy/Sannella)
Chapter 1 The Financial Reporting Environment

1.1 Overview of Financial Reporting

1) The financial reporting process generates three basic financial statements.
Answer: FALSE
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge

2) The demand for financial information is based on market participant demand.
Answer: TRUE
Diff: 1
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Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge

3) Managers of economic entities are best considered to be users of financial information.
Answer: FALSE
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Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge
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4) Managers of economic entities are best considered to be preparers of financial information.
Answer: TRUE
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
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AACSB: Application of knowledge

5) The Securities and Exchange Commission (SEC) regulates financial reporting for publicly traded
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companies.
Answer: TRUE
Diff: 2
Objective: 1.1
IFRS/GAAP: GAAP
AACSB: Application of knowledge

6) The FASB gives the SEC authority to regulate accounting for publicly traded companies.
Answer: FALSE
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP
AACSB: Application of knowledge




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,7) The Public Company Accounting Oversight Board (PCAOB) sets financial accounting standards and
oversees the audits of public companies in the United States.
Answer: FALSE
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP
AACSB: Application of knowledge

8) Financial accounting standards influence the behavior of managers and other internal users.
Answer: TRUE
Diff: 2
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge

9) Theories and procedures that evolve as a result of lobbying from various groups are examples of
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proactive factors within the legal, economic, political, and social environment.
Answer: FALSE
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge
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10) Financial information includes information that is not governed by rules set forth by the accounting
standard-setting bodies.
Answer: TRUE
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Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge

11) What is the term that describes the process of identifying, measuring, and communicating financial
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information about an economic entity to various user groups?
A) financial reporting
B) accounting standard setting
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C) financial statement
D) financial accounting
Answer: D
Diff: 2
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge




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, 12) Which element of financial accounting involves identifying the individuals who demand financial
information?
A) financial information
B) economic entity
C) user groups
D) legal, economic, political, and social environment
Answer: C
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge

13) Which of the following is not one of the four basic financial statements?
A) balance sheet
B) trial balance
C) cash flows statement
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D) statement of comprehensive income
Answer: B
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge
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14) Which organization is responsible for promulgating U.S. GAAP?
A) Financial Accounting Standards Board
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B) Public Company Accounting Oversight Board
C) International Accounting Standards Board
D) Securities and Exchange Commission
Answer: A
Diff: 1
Objective: 1.1
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IFRS/GAAP: GAAP/IFRS
AACSB: Application of knowledge

15) Which organization is responsible for setting auditing standards and overseeing the audits of public
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companies in the United States?
A) Financial Accounting Standards Board
B) Public Company Accounting Oversight Board
C) American Institute of Certified Public Accountants
D) Securities and Exchange Commission
Answer: B
Diff: 1
Objective: 1.1
IFRS/GAAP: GAAP
AACSB: Application of knowledge




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