Question;26. 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.;27. Corporations issue their shares to the investing;public in the;A. Option A;B. Option B;C. Option C;D. Option D;28. The primary focus for financial accounting;information is to provide information useful for;A. Option A;B. Option B;C. Option C;D. Option D;29. Which of the following is not true about;net operating cash flow?;A. It is the difference between cash receipts and cash disbursements from;providing goods and services.;B. It is a measure used in accrual accounting and is recognized as the;best predictor of future operating cash flows.;C. Over short periods of time, it may not be indicative of long-run;cash-generating ability.;D. It is easy to understand and all information required to measure it is;factual.;30. Which of the following groups is not among;financial intermediaries?;A. Mutual fund managers;B. Financial analysts;C. CPAs;D. Credit rating organizations;31. Which of the following was the first private;sector entity that set accounting standards in the United States?;A. Accounting Principles Board;B. Committee on Accounting Procedure;C. Financial Accounting Standards Board;D. AICPA;32. Which of the following does not apply to;secondary markets?;A. Transactions are important to the efficient allocation of resources in;our economy.;B. New resources are provided when shares of stock are sold by the;corporation to the initial owners.;C. Transactions help to establish market prices for additional shares that;may be issued in the future.;D. Many investors might be unwilling to provide resources to corporations;if there is no available mechanism for the future sale of their stocks and;bonds to others.;33. A cause-and-effect relationship is implicit in;the;A. Realization principle.;B. Historical cost principle.;C. Matching principle.;D. Going concern assumption.;34. The full disclosure principle requires a balance;between;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 the;external users for whom financial statements are prepared?;A. Customers;B. Suppliers;C. Employees;D. All of the above are external users of financial statements.;36. In a recent annual report, Apple Computer reported;the following in one of its disclosure notes: "Warranty Expense: The;Company provides currently for the estimated cost for product warranties at the;time the related revenue is recognized." This note exemplifies Apple's use;of;A. Conservatism;B. The matching principle;C. Realization principle;D. 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 form;of;A. Accounting Research Bulletins.;B. Financial Reporting Releases.;C. Financial Accounting Standards.;D. Financial Technical Bulletins.;39. Pronouncements issued by the Committee on;Accounting 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, in;the correct order;A. Exposure draft, research, discussion paper, Accounting Standards;Update.;B. Research, exposure draft, discussion paper, Accounting Standards;Update.;C. Research, discussion paper, exposure draft, Accounting Standards;Update.;D. Discussion paper, research, exposure draft, Accounting Standards;Update.;41. Which of the following is not a provision;of 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 audit;clients.;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 set;accounting standards in the United States?;A. FASB;B. IRS;C. SEC;D. AICPA;45. The most likely important flaw leading to the;demise of the APB was the perceived lack of;A. Confidence.;B. Competence.;C. Independence.;D. Importance.;46. Accounting standard setting has been characterized;as;A. A political process.;B. Using the scientific method.;C. Pure deductive reasoning.;D. Pure inductive reasoning.;47. The International Accounting Standards;Board;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 accounting;standards.;D. Has its headquarters in Geneva.;48. The most political issue in the FASB's most recent;deliberations and amendments to GAAP on business combinations was;A. The negative effects on subsequent earnings of amortizing goodwill if;firms were required to use the purchase method of accounting for the;combination.;B. The negative effects on subsequent earnings of amortizing goodwill if;firms were required to use the pooling method of accounting for the;combination.;C. The unrealistic balance sheet assets that would be created if firms;were required to use the purchase method of accounting for the combination.;D. The unrealistic balance sheet assets that would be created if firms;were required to use the pooling method of accounting for the combination.;49. Which of the following is not a provision;of the Public Company Accounting Reform and Investor Protection Act of;2002?;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 annual;filing 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 those;accountants working in industry is the;A. AAA;B. AICPA;C. IIA;D. IMA;52. The primary historical reason for the FASB;reversing 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 process;at work in standard setting is the heated debate that occurred on the issue;of;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 expenses;exemplifies 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 qualitative;characteristics of accounting information include;A. Historical cost.;B. Realization.;C. Faithful representation.;D. Full disclosure.
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