1)Which of the following is not a decision that external stakeholders of a company's financial information would make a whether or not to extend credit to the company b whether or not to hold the company's stock c whether or not the company should add a new product line d whether or not to ask for an increase in employees' benefits during union contract negotiations 2) Dividends that are paid to owners would affect both the a income statement and statement of cash flows b income statement and statement of changes in equity c balance sheet and statement of cash flows d balance sheet and income statement 3)Which of the following statements regarding Standards contained in the FASB Accounting Standards Codification (ASC) is true a They were created in 2009 when the ASC was created and did not exist prior to that time b They have to be approved by the SEC before they become effective c They apply to financial reporting by all U S companies d They have the force of law, and failure to follow them can be prosecuted 4)Creditors' information needs revolve around all of the following decisions, except a not extending credit b investing in credit instruments c maintaining a credit relationship d extending credit 5)The Codification was established to assist in reducing the time necessary to research an accounting issue and improve the ability to utilize accounting information that conforms with GAAP True False 6)The demand for relevant and reliable financial information stems from the needs of the internal and external stakeholders True False 7)What is the relationship between the Securities and Exchange Commission and accounting standard setting in the United States a The SEC has a mandate to establish accounting standards for corporations listed in the U S capital markets b The SEC reviews financial statements for compliance with U S GAAP or IFRS c The SEC coordinates with the FASB in establishing accounting standards d The SEC requires all companies listed on an exchange to submit their financial statements to the SEC 8)Which of the following is not considered an ethical issue in accounting a Earnings manipulation b Accelerated revenue recognition c Biased financial statement presentation d Industry practices 9)The four major financial statements of a corporation consist of the a balance sheet, statement of cash flows, statement of retained earnings, and income statement b income statement, statement of cash flows, statement of financial flexibility, and balance sheet c income statement, balance sheet, statement of cash flows, and statement of changes in shareholders' equity d statement of cash flows, balance sheet, income statement, and statement of capital equity 10)Which Principle of the AICPA Code of Professional Conduct is A member, as a professional, should exercise sensitive and moral judgments in all their activities a Responsibilities b Objectivity and Independence c Due Care d Integrity 11)Which of the following statements about the FASB Accounting Standards Codification is true a It is reviewed and periodically updated by the SEC b When the Codification was adopted in 2009, it caused major changes in the contents of U S GAAP c It only exists as an electronic database paper copies are not available d It is only one of a large number of authoritative pronouncements that have been issued over time, all of which comprise U S GAAP 12)Conversion to IFRS reporting by all U S companies would be best accomplished with a transition plan for all of the following reasons except a it needs to be an orderly process with a minimum of cost and disruption to the participants b careful planning would enable maximum manipulation of the IFRS for the financial benefit of the United States c certain IFRS need further improvement through continued convergence efforts d it would have to be a multi year process 13)Which organization has the most legal authority a Securities and Exchange Commission b Accounting Standards Executive Committee c Financial Accounting Standards Board d Governmental Accounting Standards Board 14)Which of the following is not one of the stages used by the FASB process before issuing an Accounting Standards Update a Holding public hearings b Issuing an Exposure Draft c Obtaining approval from the SEC for the new standard d Conducting research 15)Information asymmetry may cause problems because managements behavior a will always follow classic agency law b as agents will always be in the best interests of the owners (shareholders) c may be to enhance the owners' financial interests at the expense of their self interests d may not always be in the best interests of the owners (shareholders) 16)FASBs Emerging Issues Task Force assists and advises the FASB by identifying and addressing timely but more narrow and specific standard setting issues True False 17)A potential issue facing the convergence project is that many companies have entered into contracts based upon U S GAAP financial reporting many of these contracts will have to be renegotiated using IFRS which potentially could cause some companies more harm than good True False 18)The AICPA Code of Professional Conduct includes which of the following principles a Conservatism b Objectivity c Quality d Professionalism 19)Listed below are some of the steps the FASB goes through before issuing a new standard Required Indicate the proper sequence of these steps by matching the appropriate letter in the space provided a 4 (Fourth) b 1 (First) c 5 (Fifth) d 3 (Third) e 2 (Second) f 8 (Eighth) g 6 (Sixth) h 7 (Seventh) Deliberate on Findings Invitations to Comment Identify Topic Issue Exposure Draft Issue Statement Modify Exposure Draft Vote Conduct Research 20)What is the correct presentation of the income statement a Revenues gains losses expenses Net Income b Revenues expenses gains losses Net Income c Revenues expenses Net income losses gains d Revenues losses expenses gains Net Income 21)The FASB Accounting Standards Codification is expected to provide all of the following benefits except a to reduce the research time necessary to solve an accounting research issue b to improve the usability of the authoritative accounting literature c to codify authoritative support such as results of academic research d to provide real time updates as new standards are issued 22)The Securities Exchange Act of 1934 established extensive reporting requirements for listed companies Which is not a commonly required report a Form 10 K An extensive annual report, including financial statements b Form 8 K A report used to describe significant events that may affect the company c Form S 2 A registration statement d Form 10 Q An extensive quarterly report, including financial statements 23)The Financial Accounting Standards Board (FASB) began in 1973 after the AICPA phased out the Accounting Principles Board (APB) True False 24)When making decisions, equity investors are interested in assessing a the company's ability to generate cash flows b management's ability to increase the capital providers' investments c the company's ability to pay dividends d All of these choices 25)Which Principle of the AICPA Code of Professional Conduct is Members should broaden and maintain public confidence by performing all of their professional responsibilities with the highest sense of honesty possible a Scope and Nature of Services b Integrity c Due Care d Objectivity and Independence

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1)Which of the following is not a decision that external stakeholders of a company's financial information would make? a. whether or not to extend credit

1)Which of the following is not a decision that external stakeholders of a company's financial information would make?

	a.	whether or not to extend credit to the company
	b.	whether or not to hold the company's stock
	c.	whether or not the company should add a new product line
	d.	whether or not to ask for an increase in employees' benefits during union contract negotiations

2) Dividends that are paid to owners would affect both the

	a.	income statement and statement of cash flows.
	b.	income statement and statement of changes in equity.
	c.	balance sheet and statement of cash flows.
	d.	balance sheet and income statement.

3)Which of the following statements regarding Standards contained in the FASB Accounting Standards Codification (ASC) is true?

	a.	They were created in 2009 when the ASC was created and did not exist prior to that time.
	b.	They have to be approved by the SEC before they become effective.
	c.	They apply to financial reporting by all U.S. companies.
	d.	They have the force of law, and failure to follow them can be prosecuted.

4)Creditors' information needs revolve around all of the following decisions, except

	a.	not extending credit
	b.	investing in credit instruments
	c.	maintaining a credit relationship
	d.	extending credit

5)The Codification was established to assist in reducing the time necessary to research an accounting issue and improve the ability to utilize accounting information that conforms with GAAP.

True

False

6)The demand for relevant and reliable financial information stems from the needs of the internal and external stakeholders.

True

False

7)What is the relationship between the Securities and Exchange Commission and accounting standard setting in the United States?

	a.	The SEC has a mandate to establish accounting standards for corporations listed in the U.S. capital markets.
	b.	The SEC reviews financial statements for compliance with U.S. GAAP or IFRS.
	c.	The SEC coordinates with the FASB in establishing accounting standards.
	d.	The SEC requires all companies listed on an exchange to submit their financial statements to the SEC.

8)Which of the following is not considered an ethical issue in accounting?

	a.	Earnings manipulation
	b.	Accelerated revenue recognition
	c.	Biased financial statement presentation
	d.	Industry practices

9)The four major financial statements of a corporation consist of the

	a.	balance sheet, statement of cash flows, statement of retained earnings, and income statement.
	b.	income statement, statement of cash flows, statement of financial flexibility, and balance sheet.
	c.	income statement, balance sheet, statement of cash flows, and statement of changes in shareholders' equity.
	d.	statement of cash flows, balance sheet, income statement, and statement of capital equity.

10)Which Principle of the AICPA Code of Professional Conduct is: A member, as a professional, should exercise sensitive and moral judgments in all their activities?

	a.	Responsibilities
	b.	Objectivity and Independence
	c.	Due Care
	d.	Integrity

11)Which of the following statements about the FASB Accounting Standards Codification is true?

	a.	It is reviewed and periodically updated by the SEC.
	b.	When the Codification was adopted in 2009, it caused major changes in the contents of U.S. GAAP.
	c.	It only exists as an electronic database; paper copies are not available.
	d.	It is only one of a large number of authoritative pronouncements that have been issued over time, all of which comprise U.S GAAP.

12)Conversion to IFRS reporting by all U.S. companies would be best accomplished with a transition plan for all of the following reasons except

	a.	it needs to be an orderly process with a minimum of cost and disruption to the participants.
	b.	careful planning would enable maximum manipulation of the IFRS for the financial benefit of the United States.
	c.	certain IFRS need further improvement through continued convergence efforts.
	d.	it would have to be a multi-year process.

13)Which organization has the most legal authority?

	a.	Securities and Exchange Commission
	b.	Accounting Standards Executive Committee
	c.	Financial Accounting Standards Board
	d.	Governmental Accounting Standards Board

14)Which of the following is not one of the stages used by the FASB process before issuing an Accounting Standards Update?

	a.	Holding public hearings
	b.	Issuing an Exposure Draft
	c.	Obtaining approval from the SEC for the new standard
	d.	Conducting research

15)Information asymmetry may cause problems because managements behavior

	a.	will always follow classic agency law.
	b.	as agents will always be in the best interests of the owners (shareholders).
	c.	may be to enhance the owners' financial interests at the expense of their self-interests.
	d.	may not always be in the best interests of the owners (shareholders).

16)FASBs Emerging Issues Task Force assists and advises the FASB by identifying and addressing timely but more narrow and specific standard setting issues.

True

False

17)A potential issue facing the convergence project is that many companies have entered into contracts based upon U.S. GAAP financial reporting; many of these contracts will have to be renegotiated using IFRS which potentially could cause some companies more harm than good.

True

False

18)The AICPA Code of Professional Conduct includes which of the following principles?

	a.	Conservatism
	b.	Objectivity
	c.	Quality
	d.	Professionalism

19)Listed below are some of the steps the FASB goes through before issuing a new standard.

Required: Indicate the proper sequence of these steps by matching the appropriate letter in the space provided

a.	4 (Fourth)
b.	1 (First)
c.	5 (Fifth)
d.	3 (Third)
e.	2 (Second)
f.	8 (Eighth)
g.	6 (Sixth)
h.	7 (Seventh)

Deliberate on Findings

Invitations to Comment

Identify Topic

Issue Exposure Draft

Issue Statement

Modify Exposure Draft

Vote

Conduct Research

20)What is the correct presentation of the income statement?

	a.	Revenues + gains - losses - expenses = Net Income
	b.	Revenues - expenses + gains - losses = Net Income
	c.	Revenues - expenses = Net income - losses + gains
	d.	Revenues - losses - expenses + gains = Net Income

21)The FASB Accounting Standards Codification is expected to provide all of the following benefits except

	a.	to reduce the research time necessary to solve an accounting research issue.
	b.	to improve the usability of the authoritative accounting literature.
	c.	to codify authoritative support such as results of academic research.
	d.	to provide real-time updates as new standards are issued.

22)The Securities Exchange Act of 1934 established extensive reporting requirements for listed companies. Which is not a commonly required report?

	a.	Form 10-K. An extensive annual report, including financial statements
	b.	Form 8-K. A report used to describe significant events that may affect the company.
	c.	Form S-2. A registration statement
	d.	Form 10-Q. An extensive quarterly report, including financial statements.

23)The Financial Accounting Standards Board (FASB) began in 1973 after the AICPA phased out the Accounting Principles Board (APB).

True

False

24)When making decisions, equity investors are interested in assessing

	a.	the company's ability to generate cash flows.
	b.	management's ability to increase the capital providers' investments.
	c.	the company's ability to pay dividends.
	d.	All of these choices

25)Which Principle of the AICPA Code of Professional Conduct is: Members should broaden and maintain public confidence by performing all of their professional responsibilities with the highest sense of honesty possible?