Chapter_1___Test_Bank (2).pdf. Environment and Theoretical Structure of Financial Accounting 222-2023 Updated and verified.

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Chapter_1___Test_Bank (2).pdf. Environment and Theoretical Structure of Financial Accounting 222-2023 Updated and verified. 1. The primary function of financial accounting is to provide relevant fina... ncial information to parties external to business enterprises. True False 2. Accrual accounting attempts to measure revenues and expenses that occurred during accounting periods so they equal net operating cash flow. True False 3. The FASB is currently the public-sector organization responsible for setting accounting standards in the United States. True False 4. The FASB's due process invites various interested parties to indicate their opinions about whether financial accounting standards should be changed. True False NURSING 5. Accounting for stock-based compensation is an area in which the FASB has received little political interference. True False 6. The Public Reform and Investor Protection Act of 2002 (Sarbanes-Oxley) changed the entity responsible for setting auditing standards in the United States. True False 7. A rules-based approach to standard setting stresses professional judgment as opposed to following a list of rules. True False 8. Under federal securities laws, the SEC has the authority to set accounting standards in the United States. True False 9. The primary responsibility for properly applying GAAP when communicating with investors and creditors through financial statements lies with a firm's auditors. True False 10. Auditors play an important role in the resource allocation process by adding credibility to financial statements. True False 11. The purpose of the conceptual framework is to provide a structure and framework for a consistent set of GAAP. True False 12. In the United States the conceptual framework indicates GAAP when a more specific accounting standard does not apply. True False 13. Materiality can be affected by the dollar amount of an item, the nature of the item, or both. True False 14. According to the FASB's Statements of Financial Accounting Concepts, conservatism is a desired qualitative characteristic of accounting information. True False 15. Equity is a residual amount representing the owner's interest in the assets of the business. True False 16. Revenues are inflows or other enhancements of assets or settlements of liabilities from activities that constitute the entity's ongoing operations. True False 17. Gains or losses result, respectively, from the disposition of business assets for greater than, or less than, their book values. True False 18. Comprehensive income is another term for net income. True False 19. The FASB's conceptual framework lists relevance and timeliness as the two fundamental qualitative characteristics of decision useful information. True False 20. The monetary unit assumption requires that items in financial statements be measured in a particular monetary unit. True False 21. The periodicity assumption requires that present value calculations take into account the number of compounding periods in each year. True False 22. Determining fair value by calculating the present value of future cash flows is a level 1 type of input. True False 23. The FASB's framework for measuring fair value doesn't change the situations in which fair value is used under current GAAP. True False 24. The revenue/expense approach emphasizes determining the appropriate amounts of revenue and expense in each reporting period. True False 25. The asset/liability approach emphasizes matching to determine what assets and liabilities should be reflected on the balance sheet. True False 26. In IFRS, the conceptual framework indicates appropriate accounting when a more specific accounting standard does not apply. True False 27. The funding of the standard-setting bodies that promulgate IFRS is as independent as that underlying U.S. GAAP. True False Multiple Choice Questions 28. External decision makers would not look primarily to financial accounting information to assist them in making decisions on: A. Granting credit. B. Capital budgeting. C. Selecting stocks. D. Mergers and acquisitions. 29. Corporations issue their shares to the investing public in the: A. Option a B. Option b C. Option c D. Option d [Show More]

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