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Multiple Choice Quiz
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1
The process of providing financial information to external decision makers is referred to as:
A)Public accounting.
B)Government accounting.
C)Financial accounting.
D)Managerial accounting.
2
Financial statements generally include all of the following except:
A)Income statement.
B)Federal income tax return.
C)Balance sheet.
D)Statement of cash flows.
3
The primary objective of financial reporting is to provide information:
A)About a firm's financing and investing activities.
B)About a firm's management team.
C)About a firm's product lines.
D)That is useful in decision making.
4
GAAP includes which of the following pronouncements:
A)Statements of Financial Accounting Standards.
B)Accounting Research Bulletins.
C)Accounting Principles Board Opinions.
D)All of the above.
5
The SEC exerts a continuing influence on the establishment of accounting standards. It does so primarily by:
A)Monitoring the development of GAAP within the accounting profession and using its stature to influence that development.
B)Exercising its statutory authority to prescribe external financial reporting requirements.
C)Allying with the AICPA to lobby the efforts of the FASB.
D)Providing auxiliary funding to the FASB.
6
The documents that set forth fundamental concepts on which financial accounting and reporting standards will be based are:
A)Statements of Financial Accounting Standards.
B)Statements of Financial Accounting Concepts.
C)Accounting Principles Board Opinions.
D)All of the above.
7
The two primary decision-specific qualities that make accounting information useful are:
A)Verifiability and representational faithfulness.
B)Predictive value and feedback value.
C)Cost effectiveness and materiality.
D)Relevance and faithful representation.
8
Relevance requires that information possess predictive and/or:
A)Neutrality.
B)Completeness.
C)Confirmatory value.
D)Freedom from error.
9
The qualitative characteristic that means there is agreement between a measure and a real-world phenomenon is:
A)Verifiability.
B)Representational faithfulness.
C)Neutrality.
D)Materiality.
10
Which of the following is considered a practical constraint on the qualitative characteristics?
A)Verifiability.
B)Conservatism.
C)Cost effectiveness.
D)Timeliness.
11
Which of the following characteristics does not describe an asset?
A)Probable future economic benefits.
B)Controlled by an entity.
C)Requires the receipt of cash.
D)Result of a past transaction.
12
Which of the following characteristics does not describe a liability?
A)Result of a past transaction.
B)Probable future sacrifices.
C)Present obligation.
D)Must be legally enforceable.
13
The underlying assumption that presumes a company will continue indefinitely is:
A)Periodicity.
B)Going concern.
C)Economic entity.
D)Monetary unit.
14
The underlying assumption that assumes that the life of a company can be divided into artificial time periods is:
A)Periodicity.
B)Going concern.
C)Economic entity.
D)Monetary unit.
15
In general, revenue is recognized when the earnings process is virtually complete and:
A)Goods or services are transferred to the customer.
B)A purchase order is received.
C)Cash is collected.
D)Production is completed.
16
The primary objective of matching is to:
A)Provide timely information to external decision-makers.
B)Provide full disclosure.
C)Recognize expenses in the same period as the related revenue.
D)All of the above.
17
The main objective of the IASB is to:
A)Set accounting standards for all European Union countries.
B)Develop a single set of global accounting standards.
C)Regulate financial information for all companies around the world.
D)None of the above.





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