Chapter 1 Review Questions The financial statements most frequently provided include all of the following except the:

statement of retained earnings An effective process of capital allocation is critical to a healthy economy, which: promotes productivity, encourages innovation, provides an efficient and liquid market for buying and selling securities Challenges facing financial accounting include all of the following except: financial measurements All of the following are objectives of financial reporting except to provide information: about the management and major shareholders of an enterprise Which one of the following organizations has not been instrumental in the development of financial accounting standards? IMA. Which of the following was established by the federal government to help develop and standardize financial information presented to stockholders? SEC The first step taken in the establishment of a typical FASB statement is: topics are identified and placed on the board's agenda. The most authoritative source of GAAP among the following is FASB: Interpretations International Financial Reporting Standards (IFRS) are issued by the: IASB All of the following are true regarding iGAAP except: iGAAP includes standards referred to as International Auditing Standards (IAS). iGAAP is: iGAAP is more "principle-based than U.S. GAAP. GAAP standards are developed by the IASB.

iGAAP tends to be simpler in its accounting than U.S. GAAP. Corporations whose securities are listed on a U.S. stock exchange are required to file audited financial statements with the Financial Accounting Standards Board False- with the SEC

Accounting Research Bulletins (ARBs) were issued by the Accounting Principles Board (APb) False APB Opinions were issued by the Accounting Practices Board. False Financial Accounting Concepts are a major type of pronouncement issued by the FASB. True The passage of a new FASB Standards Statement requires the support of three of five Board members. True Financial reports generally focus on soft assets such as Apple's brand image or Wal-Mart's supply chain management system. False The AICPA's Practice Bulletins provide the Accounting Standards Executive Committee's views on narrow financial reporting issues that have not been addressed by the FASB. True Section 404 of the Sarbanes Oxley-Act requires public companies to attest to the effectiveness of their internal controls. True Foreign companies that list on U.S. exchanges are required to use U.S. GAAP. False All listed companies in the European Union use iGAAP True

iGAAP is more rule-based in its approach to standards than U.S. GAAP. False Which of the following generally provides a better indication of an enterprise's present and continuing ability to generate favorable cash flows? Accrual Basis Accounting Which group selects members of the FASB? FAF Which of the following is not a significant difference between the FASB and its predecessor, the APB? Larger membership. Which of the following organizations is not part of the current standardsetting structure? Financial Accounting Council Which of the following documents is not issued during the due process system that results in a new pronouncement? Staff Positions The Financial Accounting Standards Board is composed of how many board members? 5 The organization whose purpose is to reach consensus on how to account for new and unusual financial transactions that have potential for creating differing financial reporting practices is the: EITF All of the following are true regarding the FASB Codification except: The purpose of the Codification is to create new GAAP. International Financial Reporting Standards (IFRSs) are issued by the: IASB The Sarbanes Oxley Act does all of the following except: Transfers the final authority for GAAP to the PCAOB

All of the following statements are true regarding convergence of U.S. GAAP with iGAAP except: Foreign companies that trade shares in U.S. markets are required to reconcile their accounting with U.S. GAAP under these convergence efforts.