d. Common education of market participants and common currency.
Ans: a
LO:1.1
Bloom: C
Difficulty: Medium
Min: 2-4
AACSB: Analytic
AICPA BB: Strategic/Critical Thinking
AICPA FN: Measurement
AICPA PC: Problem Solving and Decision-making
IMA: None
45. General-purpose financial statements are the product of
a. financial accounting.
b. managerial accounting.
c. both financial and managerial accounting.
d. neither financial nor managerial accounting.
Ans: a
LO:1.1
Bloom: K
Difficulty: Easy
Min: 2-4
AACSB: Analytic
Financial Reporting and Accounting Standards
1 - 17
AICPA BB: Strategic/Critical Thinking
AICPA FN: Measurement
AICPA PC: Problem Solving and Decision-making
IMA: None
46. Which of the following parties are likely to use financial reports prepared using the financial
accounting process?
a. Creditors.
b. Government agencies.
c. Unions.
d. All of these answer choices are correct.
Ans: d
LO:1.1
Bloom: K
Difficulty: Easy
Min: 2-4
AACSB: Analytic
AICPA BB: Strategic/Critical Thinking
AICPA FN: Measurement
AICPA PC: Problem Solving and Decision-making
IMA: None
test bank for Intermediate Accounting: IFRS Edition,4e
1 - 18
47. Which of the following is an essential element in developing a set of high-quality accounting
standards?
a. Information delivered using a common delivery system (XBRL).
b. Information provided to interested parties
c. Identification and measurement of financial information.
d. Information concerns an economic entity.
Ans: a
LO:1.1
Bloom: C
Difficulty: Medium
Min: 2-4
AACSB: Analytic
AICPA BB: Strategic/Critical Thinking
AICPA FN: Measurement
AICPA PC: Problem Solving and Decision-making
IMA: None
48. What is the major objective of financial reporting?
a. Provide information that is useful to management in making decisions.
b. Provide information that clearly portrays nonfinancial transactions.
c. Provide information that is useful to present and potential equity investors, lenders, and
other creditors in making decisions.
d. Provide information that excludes claims to the resources.
Ans: c
LO:1.2
Bloom: K
Difficulty: Easy
Min: 2-4
AACSB: Analytic
AICPA BB: Strategic/Critical Thinking
AICPA FN: Measurement
AICPA PC: Problem Solving and Decision-making
IMA: None
49. A company is viewed as separate and distinct from its owners when a(n) ________
perspective is adopted.
a. proprietary
b. stewardship
c. entity
d. governance
Ans: c
LO:1.2
Bloom: K
Difficulty: Easy
Min: 2-4
AACSB: Analytic
AICPA BB: Strategic/Critical Thinking
AICPA FN: Measurement
AICPA PC: Problem Solving and Decision-making
IMA: None
Financial Reporting and Accounting Standards
1 - 19
50. Accrual accounting is used because
a. cash flows are considered less important.
b. it provides a better indication of ability to generate cash flows than the cash basis.
c. it recognizes revenues when cash is received and expenses when cash is paid.
d. None of these answers are correct.
Ans: b
LO:1.2
Bloom: K
Difficulty: Easy
Min: 2-4
AACSB: Analytic
AICPA BB: Strategic/Critical Thinking
AICPA FN: Measurement
AICPA PC: Problem Solving and Decision-making
IMA: None
51. One element of the objective of financial reporting is to provide
a. information about the investors in the business entity.
b. information about the liquidation values of the resources held by the enterprise.
c. information that assists in decisions about providing resources to the entity.
d. information that will attract new investors.
Ans: c
LO:1.2
Bloom: K
Difficulty: Easy
Min: 2-4
AACSB: Analytic
AICPA BB: Strategic/Critical Thinking
AICPA FN: Measurement
AICPA PC: Problem Solving and Decision-making
IMA: None
52. As part of the objective of general-purpose financial reporting, there is an emphasis on
“assessing cash flow prospects.” Under International Financial Reporting Standards (IFRS)
this is interpreted to mean:
a. Cash basis accounting is preferred over accrual based accounting.
b. Information about the financial effects of cash receipts and cash payments is generally
considered the best indicator of a company’s present and continuing ability to
generate favorable cash flows.
c. Over the long run, trends in revenues and expenses are generally more meaningful
than trends in cash receipts and disbursements.
d. All of the choices are correct regarding “assessing cash flow prospects” under IFRS.