26. External decision makers would not look primarilyto financial accounting information to assist them in making decisionson:A. Granting credit.B. Capital budgeting.C. Selecting stocks.D. Mergers and acquisitions.
27. Corporations issue their shares to the investingpublic in the:.png”>A. Option AB. Option BC. Option CD. Option D
28. The primary focus for financial accountinginformation is to provide information useful for:.png”>A. Option AB. Option BC. Option CD. Option D
29. Which of the following is not true aboutnet operating cash flow?A. It is the difference between cash receipts and cash disbursements fromproviding goods and services.B. It is a measure used in accrual accounting and is recognized as thebest predictor of future operating cash flows.C. Over short periods of time, it may not be indicative of long-runcash-generating ability.D. It is easy to understand and all information required to measure it isfactual.
30. Which of the following groups is not amongfinancial intermediaries?A. Mutual fund managersB. Financial analystsC. CPAsD. Credit rating organizations
31. Which of the following was the first privatesector entity that set accounting standards in the United States?A. Accounting Principles BoardB. Committee on Accounting ProcedureC. Financial Accounting Standards BoardD. AICPA
32. Which of the following does not apply tosecondary markets?A. Transactions are important to the efficient allocation of resources inour economy.B. New resources are provided when shares of stock are sold by thecorporation to the initial owners.C. Transactions help to establish market prices for additional shares thatmay be issued in the future.D. Many investors might be unwilling to provide resources to corporationsif there is no available mechanism for the future sale of their stocks andbonds to others.
33. A cause-and-effect relationship is implicit inthe:A. Realization principle.B. Historical cost principle.C. Matching principle.D. Going concern assumption.
34. The full disclosure principle requires a balancebetween:A. Comparability and consistency.B. Relevance and cost effectiveness.C. Reliability and neutrality.D. Timeliness and predictive value.
35. Which of the following groups is not among theexternal users for whom financial statements are prepared?A. CustomersB. SuppliersC. EmployeesD. All of the above are external users of financial statements.
36. In a recent annual report, Apple Computer reportedthe following in one of its disclosure notes: “Warranty Expense: TheCompany provides currently for the estimated cost for product warranties at thetime the related revenue is recognized.” This note exemplifies Apple’s useof:A. ConservatismB. The matching principleC. Realization principleD. Economic entity
37. GAAP is an abbreviation for:A. Generally authorized accounting procedures.B. Generally applied accounting procedures.C. Generally accepted auditing practices.D. Generally accepted accounting principles.
38. The SEC issues accounting standards in the formof:A. Accounting Research Bulletins.B. Financial Reporting Releases.C. Financial Accounting Standards.D. Financial Technical Bulletins.
39. Pronouncements issued by the Committee onAccounting Procedures:A. Dealt with specific accounting and reporting problems.B. Were based on exposure drafts and public comment letters.C. Originated from congressional studies and SEC directives.D. Were the outcome of research studies and a theoretical framework.
40. The FASB’s standard-setting process includes, inthe correct order:A. Exposure draft, research, discussion paper, Accounting StandardsUpdate.B. Research, exposure draft, discussion paper, Accounting StandardsUpdate.C. Research, discussion paper, exposure draft, Accounting StandardsUpdate.D. Discussion paper, research, exposure draft, Accounting StandardsUpdate.
41. Which of the following is not a provisionof the Public Company Accounting Reform and Investor Protection Act of 2002(Sarbanes-Oxley)? The Act:A. Changed the entity responsible for setting auditing standards.B. Increased corporate executive responsibility for financial statements.C. Limited nonaudit services that can be performed by auditors for auditclients.D. Changed the entity responsible for setting accounting standards.
42. CPAs are licensed by:A. The AICPA.B. The SEC.C. The federal government.D. State governments.
43. A firm’s comprehensive income always:A. Is the same as its net income.B. Is greater than its net income.C. Is less than its net income.D. Could be greater than or less than net income.
44. Which of the following has the authority to setaccounting standards in the United States?A. FASBB. IRSC. SECD. AICPA
45. The most likely important flaw leading to thedemise of the APB was the perceived lack of:A. Confidence.B. Competence.C. Independence.D. Importance.
46. Accounting standard setting has been characterizedas:A. A political process.B. Using the scientific method.C. Pure deductive reasoning.D. Pure inductive reasoning.
47. The International Accounting StandardsBoard:A. Was the predecessor to the IASC.B. Can overrule the FASB when their policies disagree.C. Promotes the use of high-quality, understandable global accountingstandards.D. Has its headquarters in Geneva.
48. The most political issue in the FASB’s most recentdeliberations and amendments to GAAP on business combinations was:A. The negative effects on subsequent earnings of amortizing goodwill iffirms were required to use the purchase method of accounting for thecombination.B. The negative effects on subsequent earnings of amortizing goodwill iffirms were required to use the pooling method of accounting for thecombination.C. The unrealistic balance sheet assets that would be created if firmswere required to use the purchase method of accounting for the combination.D. The unrealistic balance sheet assets that would be created if firmswere required to use the pooling method of accounting for the combination.
49. Which of the following is not a provisionof the Public Company Accounting Reform and Investor Protection Act of2002?A. Corporate executive accountability.B. Auditor rotation.C. Retention of workpapers.D. All of the above are provisions of the Act.
50. When a registrant company submits its annualfiling to the SEC, it uses:A. Form 10-A.B. Form 10-K.C. Form 10-Q.D. Form S-1.
51. The primary professional organization for thoseaccountants working in industry is the:A. AAAB. AICPAC. IIAD. IMA
52. The primary historical reason for the FASBreversing its positions when political pressures occur is:A. The cost of gathering data was prohibitive.B. The difficulties in measurement were too great.C. They have no authority in such situations.D. The SEC did not support the FASB position.
53. The most recent example of the political processat work in standard setting is the heated debate that occurred on the issueof:A. Pension plan accounting.B. Accounting for posteretirement benefits other than pensions.C. Accounting for business combinations.D. Accounting for stock-based compensation.
54. The recognition of which of the following expensesexemplifies the application of the matching principle?A. President’s salary.B. Research and development.C. Cost of goods sold.D. Advertising.
55. The FASB’s conceptual framework’s qualitativecharacteristics of accounting information include:A. Historical cost.B. Realization.C. Faithful representation.D. Full disclosure.