ACC 563 Week 5 Midterm Exam –
Strayer NEW
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Week 5 Midterm Exam: Chapters 1
Through 7
Chapter 1
Multiple Choice:
- Which of the following bodies has the ultimate
authority to issue accounting pronouncements in the United States?
a.
Securities
and Exchange Commission
b.
Financial
Accounting Standards Board
c.
International
Accounting Standards Committee
d.
Internal
Revenue Service
Answer
- What historical evidence of the business
operations of the private estate of Apollonius was discovered early
inthe20th century?
a. The Iliad
c. The Zenon papyri
d. Pacioli’s work, Summa de Arithmetica Geometria Proportioni
et Proportionalita,
Answer
- Who has been given credit or developing the
double-entry system of bookkeeping?
a.
Francis
Wheat
b.
Fra
Luca Pacioli
c.
A.
C. Littleton
d.
William
Paton
Answer
- Which of the following was not a criticism of
the development of accounting standards by the Accounting Principles
Board?
a. The independence of the members
of the APB. The individuals serving on the board had full-time responsibilities
elsewhere that might influence their views of certain issues.
b. The structure of the board. The
largest eight public accounting firms (at that time) were automatically awarded
one member, and there were usually five or six other public accountants on the
APB.
c. Harmonization. The accounting
standards developed were dissimilar to those developed by the International
Accounting Standards Committee.
d. Response time. The emerging
accounting problems were not being investigated and solved quickly enough by
the part-time members.
Answer
- Which of the following is the professional
organization of university accounting professors?
a.
American
Accounting Association
b.
American
Institute of Certified Public Accountants
c.
American
Institute of Accountants
d.
Financial
Executives Institute
Answer
- What controversy originally highlighted the
need for standard setting groups to have more authority?
a.
Accounting
for stock options
b.
Accounting
for derivatives
c.
Accounting
for marketable securities
d.
Accounting
for the investment tax credit
Answer
- Which of the following committees recommended
abolishing the Accounting Principles Board and replacing it with the
Financial Accounting Board ?
a.
Wheat
b.
Cohen
c.
Trueblood
d.
Anderson
Answer
- Which of the following is a public sector
accounting standard setter?
a.
FASB
b.
SEC
c.
APB
d.
CAP
Answer
- Which of the following types of pronouncements
now establishes generally accepted accounting principles?
a.
Statements
of Concepts
b.
Statements
of Financial Accounting Standards
c.
APB
Opinions
d.
Accounting
Standards Updates
Answer
- Which of the following types of pronouncements
are intended to establish the objectives and concepts that the FASB will
use in developing standards of financial accounting and reporting?
a.
Statements
of Concepts
b.
Statements
of Financial Accounting Standards
c.
APB
Opinions
d.
Accounting
Standards Updates
Answer
- Which of the following is not a consequence of
the standards overload problem to small businesses?
a.
If
a small business omits a GAAP requirement from audited financial statements, a
qualified or adverse opinion may be rendered.
b.
Small
businesses do not need to keep financial records
c.
The
cost of complying with GAAP requirements may cause a small business to forgo
the development of other, more relevant information.
d.
Small
CPA firms that audit smaller companies must keep up to date on all the same
requirements as large international firms, but they cannot afford the
specialists that are available on a centralized basis in the large firms.
Answer
- Some accountants maintain that accounting
standards are as much a product of political action as they are of careful
logic or empirical findings. This belief is an example of the concept of
a.
Standard
setting as apolitical process
b.
Standards
overload
c.
Economic
consequences
d.
The
role of ethics in accounting
Answer
13. T he impact of accounting reports
on various segments of our economic society is the definition of the concept of
a.
Standard
setting as apolitical process
b.
Standards
overload
c.
Economic
consequences
d.
The
role of ethics in accounting
Answer
14. Considering and understanding how business
decisions affect the financial statements is
a. The sole responsibility of the Securities and
Exchange Commission.
b. Provided in the auditor’s report.
c. Referred to as an economic consequence
perspective.
d.
Interpreted strictly by the company’s
suppliers.
Answer
15.
Which
of the following is a source of nonauthoritative accounting guidance and
literature?
a.
Financial Accounting Standards Board
Statements
b.
Financial
Accounting Standards Board Interpretations
c.
Financial
Accounting Standards Board Technical Bulletins
d.
Practices
that are widely recognized and prevalent either generally or in the industry
Answer
16.
Which
of the following companies was involved in an accounting failure that caused
the public accounting firm Arthur Andersen to gout of business?
a.
Goldman
Sachs
b.
Wachovia
c.
Enron
d.
AIG
Answer
Essay
1. What
is the difference between normative and positive theory?
2. Why
is the development of a general theory of accounting important
3. Discuss
the evolution of accounting during the 1930s.
4. Discuss
the evolution of the three private sector accenting standard setting
organizations.
5. What
were the purposes of the Wheat and Trueblood committees?
6. What
was the purpose of the GAAP Hierarchy?
7. What
were the four types of pronouncements issued by the FASB?
8. Discuss
why standard setting may be viewed as a political process.
9. Define
the following terms
10. Discuss
the evolution of the phrase “generally accepted accounting principles.
11. What
controversy caused the AICPA to issue Rule 203 that requires companies to use
GAAP when issuing financial statements?
12. Discuss
the FASB ASC including the reasons for its adoption and the FASB’s goals in
developing it..
13. Discuss
the role of ethics in accounting.
14. What
is a special purpose entity and how do they work?
15. How
did the Sarbanes-Oxley Act change the way the FASB is funded?
16. Discuss
the objectives of the International Accounting Standards Board.
Chapter 2
Multiple Choice
1.
Which early accounting theorist was among the first to express the view that
all changes in the value of assets and liabilities should be reflected in the
financial statements ?\
a. A.
C. Littleton
b. John
Canning
c. William
Paton
d. DR
Scott
Answer
2. Which
of the following economists most influenced the views of DR Scott?
a. Thorstein
Veblen
b. John
Hicks
c. Karl
Marx
d. John
Smith
Answer
3. Which
of the following is not one of DR Scott’s hierarchy of accounting postulates
and principles?
a.
Orientation
postulate.
b. The principles of truth and
fairness.
c. The materiality principle
d. The principles of adaptability
and consistency.
Answer
4.
Which of the following organizations published
the monograph titled A Tentative Statement of Accounting Principles Affecting
Annual Corporate Reports
a.
SEC
b.
AAA
c.
AIA
d.
NAA
Answer
5.
Which
of the following organizations published the monograph titled A Statement of Accounting Principles?
a.
SEC
b.
AAA
c.
AIA
d.
NAA
Answer
6.
Who
was the author of Accounting Research Study No. 1, The Basic Postulates of Accounting?
a.
Robert
Sprouse
b.
Maurice
Moonitz
c.
Alvin
Jennings\
d.
Thomas
Hatfield
Answer
7.
Which
of the following is not an approaches to accounting theory AS categorized by Statement on Accounting Theory and Theory
Acceptance?
a.
Classical,
b.
Neoclassical
c.
Decision
usefulness
d.
Information
economics.
Answer
8.
Under
Statement of Financial Accounting Concepts No. 2, feedback value is an
ingredient of the primary quality o
Relevance Reliability
a.
No No
b. No Yes
c. Yes Yes
d. Yes No
Answer
9. Under
Statement of Financial Accounting Concepts No. 2, which of the following
interacts with both relevance and reliability to contribute to the usefulness
of information?
a. Comparability
b. Timeliness
c. Neutrality
d. Predictive
value
Answer
10. Which
of the following hierarchy of qualities did Statement of Financial Accounting
Concepts No. 2 indicate as being most important?
a. Relevance
b. Reliability
c. Verifiability
d. Decision
usefulness
Answer
11. Which
of the following is considered a
pervasive constraint by Statement of Financial Accounting Concepts No. 2
a. Benefits>costs
b. Conservatism
c. Timeliness
d. Verifiability
Answer
12. Under
Statement of Financial Accounting Concepts No. 2, which of the following is an
ingredient of the primary quality of relevance?
a. Predictive
value
b. Materiality
c. Understandability
d. Verifiability
Answer
13. Under
Statement of Financial Accounting Concepts No. 2, which of the following is an
ingredient of the primary quality of reliability?
a. Understandability
b. Verifiability
c. Predictive
value
d. Materiality
Answer
14. Under
Statement of Financial Accounting Concepts No. 2, the ability through consensus
of measures to ensure that information represents what it purports to represent
is an example of the concept of
a. Relevance
b. Verifiability
c. Representational
faithfulness
d. Feedback
value
Answer
15. Under
Statement of Financial Accounting Concepts No. 2, which of the following
relates to both relevance and reliability?
a. Timeliness
b. Materiality
c. Verifiability
d. Neutrality
Answer
16.
Which of the following is not a
qualitative characteristic associated with reliability?
a. Verifiable
b. Conservatism
c. Neutral
d. Faithful representation
Answer
17. An item is considered material if
a. It doesn’t costs a lot of money.
b. It is of a tangible good.
c. It is likely to influence the decision of an
investor or creditor.
d. The cost of reporting the item is greater
than its benefits
Answer
Essay
1.
Discuss the contributions of Paton and
Canning to the development of accounting theory.
2.
Discuss DR Scott’s hierarchy of
postulates and principles.
3.
Discuss the contributions of the works
by Sanders Hatfield and More, and Paton and Littleton to accounting theory.
4.
Discuss accounting Research Study No. 1.
5.
Discuss the objectives of accounting as
outlined by the T rueblood Committee.
6.
What were the approaches to accounting
theory identified by SATTA?
7.
According to Kuhn, how dies scientific
progress occur?
8.
What is the purpose of the conceptual
framework?
9.
List the objectives of financial
accounting as outlined in SFAC No 1: “Objective of Financial Reporting by
Business Enterprises.
10.
What quality of information is viewed as
the most important in SFAC No. 2: Qualitative Characteristics of Accounting
Information?
11.
Define the following terms:
a. Relevance
.
b. Reliability
12. According to SFAC No. 5, what should a full set of financial statements for a
period show?
13. What is the purpose of SFAC No.
7: “Using Cash Flow Information and Present Value in Accounting Measurements?
14. What two approaches to present
value were discussed in SFAS No. 7?
15. Discuss the issue of principles
based vs. rule based accounting standards.
16. Discuss how the FASB and the IASC
acted to improve comparability under the Norwalk Agreement.
Chapter
3
Multiple Choice
1. Which
of the following is not an environmental actor that could impact on the
development of a country’s accounting system?
a. Level
of education\
b. Political
system
c. Geographic
location
d. Legal
system
Answer
2. What is the current acronym for the body most
responsible for issuing international accounting standards?
a. IASB
b. SEC
c. FASB
d. IASC
Answer
3. How
many trustees serve on the IASC Foundation?
a. 14
b. 18
c. 20
d. 22
Answer
4. How
many members serve on the IASB?
a.
14
b.
18
c.
20
d.
22
Answer
5. Which
of the following bodies has the responsibility to issue international
financial reporting standards (IFRS)
a.
The
International Financial Reporting Interpretations Committee
b.
The
International Standards Advisory Council
c.
The
IASC Foundation
d.
The
International Accounting Standards Board
Answer
6. Which
of the following is not a use of international accounting standards?
a.
As
national requirements.
b.
As
standards to be violated to improve intercountry comparability..
c.
As
an international benchmark for those countries that develop their own
requirements.
d.
By
regulatory authorities for domestic and foreign companies
Answer
7. How does the IASC enforce its
standards?
a.
Through
, the International Organization of Securities Commission
b.
Through
the concept of best endeavors
c.
Through
the Securities and Exchange Commission
d.
Through
the Financial Accounting Standards Board
Answer
8.
What
is the name given to the agreement between the FASB and IASC to harmonize
accounting standards?
a.
The
Norwalk Agreement
b.
The
London agreement
c.
The
Washing ton D C agreement
d.
The
Paris Accords
Answer
9.
What
is the title of the form that foreign companies have used to reconcile their
financial statements to U. S. GAAP?
a.
Form
10-K
b.
Form
10-Q
c.
Form
SX
d.
Form20-F
Answer
10.
Which
of the following is not a qualitative characteristic contained in the IASB’s Framework for the Preparation of Financial
Statements?
a.
Understandability
b.
Timeliness
c.
Relevance
d.
Reliability
Answer
11.
Which
of the following is not an element of financial statements contained in the
IASB’s Framework for the Preparation of
Financial Statements?
a. Gain
b. Income
c. Expense
d. Asset
Answer
12.
Which of the following is seen as a pervasive
difference between IASB’s and FASB’s Conceptual Frameworks?
a.
Definition
of elements
b.
Number
of qualitative characteristics
c.
Scope
of authority
d.
Level
of detail
Answer
13.
Which
of the following concepts is contained in the FASB’s conceptual framework
but not in the IASC’s
a.
Expense
b. Comprehensive income
c. Asset
d. Liability
Answer
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