Chapter 1 Questions (intermediate Acct 3300 (SV) (1)

Chapter 1 Questions (intermediate Acct 3300 (SV) (1) -...

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Chapter 1 Questions Question 1 TRUE-FALSE 1. Financial statements are the principal means through which financial information is communicated to those outside an enterprise. T 2. Users of the financial information provided by a company use that information to make capital allocation decisions. T 3. An effective process of capital allocation promotes productivity and provides an efficient market for buying and selling securities and obtaining and granting credit. T 4. Financial reports in the early 21st century did not provide any information about a company’s soft assets. (intangible access, franchise, branding) F 5. Accounting standards are now less likely to require the recording or disclosure of fair value information due to its inherent subjectivity. F 6. While objectives for financial reporting exist on an informal basis, no formal objectives have been adopted. F 7. 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. Ch3 F 8. Some generally accepted accounting principles have simply been accepted as appropriate because of their universal application rather than due to the action of an authoritative accounting rule-making body. T 9. Users of financial accounting statements have both coinciding and conflicting needs for information of various types. T 10. The Securities and Exchange Commission appointed the Committee on Accounting Procedure. F 11. The passage of a new FASB Standards Statement requires the support of five of the seven board members. F 4/7 12. Financial Accounting Concepts set forth fundamental objectives and concepts that are used in developing future standards of financial accounting and reporting. T
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13. The SEC relies on the AICPA and FASB to regulate the accounting profession and develop and enforce accounting standards. T 14. FASB Technical Bulletins are more authoritative than FASB Standards and Interpretations. F 15. The AICPA’s Code of Professional Conduct requires that members prepare financial statements in accordance with generally accepted accounting principles. T 16. Accounting standards are a product of careful logic or empirical findings and are not influenced by political action. F 17. Currently, both U.S. GAAP and the International Financial Reporting Standards are acceptable for international use. T 18. The expectations gap is caused by what the public thinks accountants should be doing and what accountants think they can do. T 19. Ethical issues in financial accounting are governed by the AICPA. F 20. A conceptual framework is a coherent system of interrelated objectives and fundamentals that can lead to consistent standards. T
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Chapter 1 Questions (intermediate Acct 3300 (SV) (1) -...

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