Chapter 1 Financial Accounting Answers

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CHAPTER 1

FINANCIAL ACCOUNTING AND
ACCOUNTING STANDARDS

IFRS questions are available at the end of this chapter.

TRUE-FALSE—Conceptual

Answer No. Description

F 1. Definition of financial accounting. T 2. Purpose of financial statements. T 3. Definition of financial accounting. T 4. Capital allocation process. F 5. Objective of financial reporting. T 6. Decision-Usefulness approach. T 7. Users of financial statements. F 8. Committee on Accounting Procedure. F 9. Passage of FASB standards. T 10. Financial Accounting Concepts. T 11. Creation of Accounting Principles Board. F 12. FASB Codification. T 13. Code of Professional Conduct. F 14. GAAP and political action. T 15. Public Company Accounting Oversight Board. T 16. Expectations gap. F 17. Financial reports. F 18. Fair value information. F 19. International Financial Reporting Standards. F 20. Ethical issues.

Multiple Choice—Conceptual

Answer No. Description

a 21. Financial accounting. d 22. Users of financial reports. d 23. Identify the major financial statements. a 24. Financial reporting entity. d 25. Differences between financial and managerial accounting. b 26. Financial reporting communication. b 27. Managerial accounting. a 28. Capital allocation process. d 29. Efficient use of resources. d 30. Capital allocation process. c 31. Financial statement information. c 32. Accounting profession challenge. c 33. Financial reporting objective. d 34. Financial statements primary users. c 35. Investor’s decision making.
Multiple Choice—Conceptual (cont.)

Answer No. Description

b 36. Accrual accounting. c 37. Objective of financial reporting perspective. c 38. Meaning of “generally accepted.” b 39. Common set of standards and procedures. a 40. Limitation of general purpose financial statements. c 41. Securities…...

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