Intermediate Accounting 8th Edition By David Spiceland James Sepe Mark Nelson (Copy) – Test Bank

Exam Question Bank For Intermediate Financial Accounting Eighth Edition By David Spiceland James Sepe Mark Nelson

Chapter 01: Establishment and Theoretical Building of Monetary Accounting

Statements to Determine Authenticity

1. The main purpose of monetary accounting is to supply relevant monetary information to external entities of business organizations.

True    False

2. Accrual accounting aims to quantify revenues and expenses incurred during accounting periods to match net operating cash flow.

True    False

3. The FASB currently assumes responsibility for establishing accounting standards in the United States.

True    False

4. The due process of the FASB welcomes various stakeholders to express their views on potential modifications to financial accounting standards.

True    False

5. Handling stock-based compensation in accounting is an area where the FASB has faced minimal political intervention.

True    False

6. The Sarbanes-Oxley Act of 2002 altered the body accountable for defining auditing standards in the United States.

True    False

7. A principle-oriented approach to standard-setting emphasizes professional judgment over adhering to a fixed set of regulations.

True    False

8. According to federal securities regulations, the SEC holds the power to establish accounting principles in the United States.

True    False

9. The primary responsibility for correctly applying GAAP when communicating through financial statements with investors and creditors rests with a company’s auditors.

True    False

10. Auditors contribute to the allocation of resources by enhancing the credibility of financial statements.

True    False

11. The conceptual framework’s objective is to furnish a consistent structure and basis for a unified set of GAAP.

True    False

12. In the United States, GAAP is referenced in the conceptual framework when a more specific accounting standard is not applicable.

True    False

13. Materiality can be influenced by the monetary value of an item, the nature of the item, or both.

True    False

14. In line with the FASB’s Statements of Financial Accounting Concepts, conservatism is deemed a desirable qualitative characteristic of accounting information.

True    False

15. Equity denotes the residual amount representing the owner’s stake in the business assets.

True    False

16. Revenues pertains to inflows or enhancements of assets or settlements of liabilities from activities forming the entity’s ongoing operations.

True    False

17. Profits or losses arise, respectively, from the sale of business assets at values exceeding or falling below their book worth.

True    False

18. Total income is an alternate term for net profit.

True    False

19. The FASB’s conceptual framework identifies relevance and timeliness as the two primary qualitative attributes of decision-useful information.

True    False

20. The monetary unit assumption dictates that items in financial statements are to be measured in a distinct monetary unit.

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