Question 1

Which of the following companies was involved in an accounting failure that caused the public accounting firm Arthur Andersen to gout of business?
A)Goldman Sachs
B)Wachovia
C)Enron
D)AIG

Accepted Answer

Enron was involved in one of the largest accounting frauds in history which led to the collapse of Arthur Andersen, their auditing firm.

Question 2

Considering and understanding how business decisions affect the financial statements is
A)The sole responsibility of the Securities and Exchange Commission.
B)Provided in the auditor's report.
C)Referred to as an economic consequence perspective.
D)Interpreted strictly by the company's suppliers.

Accepted Answer

Understanding how business decisions affect the financial statements is referred to as an economic consequence perspective. It is not the sole responsibility of the SEC or interpreted strictly by the company's suppliers, nor is it always provided in the auditor's report.

Question 3

What historical evidence of the business operations of the private estate of Apollonius was discovered early inthe20th century?
A)The Iliad
B)HYPERLINK "http://en.wikipedia.org/wiki/Plato" \o "Plato" Plato's HYPERLINK "http://en.wikipedia.org/wiki/The_Republic_(Plato)" \o "The Republic (Plato)" Republic
C)The Zenon papyri
D)Pacioli's work,Summa de Arithmetica Geometria Proportioni et Proportionalita,

Accepted Answer

The Zenon papyri, discovered early in the 20th century, contained historical evidence of the business operations of the private estate of Apollonius. The Iliad is an epic poem about the Trojan War, written by Homer. Plato's Republic is a philosophical work about the ideal society. Pacioli's Summa de Arithmetica Geometria Proportioni et Proportionalita is a book on mathematics and accounting, published in the late 15th century. None of these sources are related to the private estate of Apollonius.

Question 4

Which of the following is a source of nonauthoritative accounting guidance and literature?
A)Financial Accounting Standards Board Statements
B)Financial Accounting Standards Board Interpretations
C)Financial Accounting Standards Board Technical Bulletins
D)Practices that are widely recognized and prevalent either generally or in the industry

Accepted Answer

Practices that are widely recognized and prevalent either generally or in the industry are considered a source of nonauthoritative accounting guidance and literature. The other options listed (A, B, and C) are all examples of authoritative accounting guidance from the Financial Accounting Standards Board.

Question 5

Some accountants maintain that accounting standards are as much a product of political action as they are of careful logic or empirical findings.This belief is an example of the concept of
A)Standard setting as apolitical process
B)Standards overload
C)Economic consequences
D)The role of ethics in accounting

Accepted Answer

The statement that accounting standards are influenced by political action suggests the concept of standard setting as a political process, which implies that accounting standards are not solely determined by careful logic or empirical findings, but also by social, economic, and political factors.

Question 6

Who has been given credit or developing the double-entry system of bookkeeping?
A)Francis Wheat
B)Fra Luca Pacioli
C)A.C.Littleton
D)William Paton

Accepted Answer

The double-entry system of bookkeeping is generally attributed to Fra Luca Pacioli, an Italian mathematician and Franciscan friar, who wrote about it in his 1494 book Summa de Arithmetica, Geometria, Proportioni et Proportionalità. While others before Pacioli had written about aspects of double-entry bookkeeping, he is considered the father of the modern system.

Question 7

Which of the following is the professional organization of university accounting professors?
A)American Accounting Association
B)American Institute of Certified Public Accountants
C)American Institute of Accountants
D)Financial Executives Institute

Accepted Answer

The American Accounting Association is the premier professional organization for accounting academics and researchers, representing accounting professors at universities across the United States. The other answer options are professional organizations for practicing accountants in industry, public accounting, or finance.

Question 8

Why is the development of a general theory of accounting important

Accepted Answer

The answer of Why is the development of a general...

Question 9

The impact of accounting reports on various segments of our economic society is the definition of the concept of
A)Standard setting as apolitical process
B)Standards overload
C)Economic consequences
D)The role of ethics in accounting

Accepted Answer

The concept that best fits the definition provided is Economic Consequences. Accounting reports have a significant impact on various segments of our economic society, such as investors, creditors, government agencies, and financial analysts. The economic consequences can be positive or negative, depending on the accuracy and completeness of the information presented in the reports. Therefore, it is essential to ensure that accounting standards and practices are aligned with the overall goal of providing reliable and relevant financial information to stakeholders. Choices A, B, and D are not relevant to the definition provided.

Question 10

Which of the following types of pronouncements now establishes generally accepted accounting principles?
A)Statements of Concepts
B)Statements of Financial Accounting Standards
C)APB Opinions
D)Accounting Standards Updates

Accepted Answer

Accounting Standards Updates (ASUs) are issued by the Financial Accounting Standards Board (FASB) to amend the Accounting Standards Codification, which is the source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities.

Question 11

Which of the following types of pronouncements are intended to establish the objectives and concepts that the FASB will use in developing standards of financial accounting and reporting?
A)Statements of Concepts
B)Statements of Financial Accounting Standards
C)APB Opinions
D)Accounting Standards Updates

Accepted Answer

Statements of Concepts are intended to establish the objectives and concepts that the FASB will use in developing standards of financial accounting and reporting. Statements of Financial Accounting Standards, Accounting Standards Updates, and APB Opinions are all types of standards or guidance that are developed based on the objectives and concepts established in Statements of Concepts.

Question 12

Which of the following was not a criticism of the development of accounting standards by the Accounting Principles Board?
A)The independence of the members of the APB.The individuals serving on the board had full-time responsibilities elsewhere that might influence their views of certain issues.
B)The structure of the board.The largest eight public accounting firms at that time)were automatically awarded one member,and there were usually five or six other public accountants on the APB.
C)Harmonization.The accounting standards developed were dissimilar to those developed by the International Accounting Standards Committee.
D)Response time.The emerging accounting problems were not being investigated and solved quickly enough by the part-time members.

Accepted Answer

This statement is actually a criticism of the APB, which did not prioritize harmonization with international accounting standards. Therefore, it does not belong on this list of criticisms of the APB.

Question 13

Discuss the evolution of accounting during the 1930s.

Accepted Answer

The answer of Discuss the evolution of accounting during the...

Question 14

Which of the following is not a consequence of the standards overload problem to small businesses?
A)If a small business omits a GAAP requirement from audited financial statements,a qualified or adverse opinion may be rendered.
B)Small businesses do not need to keep financial records
C)The cost of complying with GAAP requirements may cause a small business to forgo the development of other,more relevant information.
D)Small CPA firms that audit smaller companies must keep up to date on all the same requirements as large international firms,but they cannot afford the specialists that are available on a centralized basis in the large firms.

Accepted Answer

Small businesses still need to keep financial records regardless of the standards overload problem. In fact, failure to keep proper financial records can lead to legal and financial consequences.

Question 15

What controversy originally highlighted the need for standard setting groups to have more authority?
A)Accounting for stock options
B)Accounting for derivatives
C)Accounting for marketable securities
D)Accounting for the investment tax credit

Accepted Answer

The answer of What controversy originally highlighted the need for...

Question 16

Economic consequences of accounting standard-setting means:
A)Standard-setters must give first priority to ensuring that companies do not suffer any adverse effect as a result of a new standard.
B)Standard-setters must ensure that no new costs are incurred when a new standard is issued.
C)The objective of financial reporting should be politically motivated to ensure acceptance by the general public.
D)Accounting standards can have detrimental impacts on the wealth levels of the providers of financial information.

Accepted Answer

Accounting standards can have significant impacts on the wealth levels of the providers of financial information, such as the companies that are required to comply with the standards. Depending on the nature of the standard, companies may incur additional costs in order to comply, and may also experience changes in their reported financial results. This can affect the value of their stock and other financial instruments, potentially leading to significant shifts in wealth for investors and other stakeholders.

Question 17

Which of the following bodies has the ultimate authority to issue accounting pronouncements in the United States?
A)Securities and Exchange Commission
B)Financial Accounting Standards Board
C)International Accounting Standards Committee
D)Internal Revenue Service

Accepted Answer

The answer of Which of the following bodies has the...

Question 18

Which of the following committees recommended abolishing the Accounting Principles Board and replacing it with the Financial Accounting Board?
A)Wheat
B)Cohen
C)Trueblood
D)Anderson

Accepted Answer

The Wheat Committee recommended abolishing the Accounting Principles Board (APB) and replacing it with the Financial Accounting Standards Board (FASB) to improve the standard-setting process in the United States.

Question 19

Which of the following is a public sector accounting standard setter?
A)FASB
B)SEC
C)APB
D)CAP

Accepted Answer

The SEC (Securities and Exchange Commission) is a public sector entity responsible for enforcing federal securities laws and regulating the securities industry, which includes setting accounting standards indirectly through its authority over publicly traded companies. The FASB (Financial Accounting Standards Board), APB (Accounting Principles Board), and CAP (Committee on Accounting Procedure) are private sector entities involved in the development and establishment of financial accounting and reporting standards, primarily for the private sector.

Question 20

What is the difference between normative and positive theory?

Accepted Answer

The answer of What is the difference between normative and...

Quiz 1: The Development of Accounting Theory

Which of the following companies was involved in an accounting failure that caused the public accounting firm Arthur Andersen to gout of business?

Considering and understanding how business decisions affect the financial statements is

What historical evidence of the business operations of the private estate of Apollonius was discovered early inthe20th century?

Which of the following is a source of nonauthoritative accounting guidance and literature?

Some accountants maintain that accounting standards are as much a product of political action as they are of careful logic or empirical findings.This belief is an example of the concept of

Who has been given credit or developing the double-entry system of bookkeeping?

Which of the following is the professional organization of university accounting professors?

Why is the development of a general theory of accounting important

The impact of accounting reports on various segments of our economic society is the definition of the concept of

Which of the following types of pronouncements now establishes generally accepted accounting principles?

Which of the following types of pronouncements are intended to establish the objectives and concepts that the FASB will use in developing standards of financial accounting and reporting?

Which of the following was not a criticism of the development of accounting standards by the Accounting Principles Board?

Discuss the evolution of accounting during the 1930s.

Which of the following is not a consequence of the standards overload problem to small businesses?

What controversy originally highlighted the need for standard setting groups to have more authority?

Economic consequences of accounting standard-setting means:

Which of the following bodies has the ultimate authority to issue accounting pronouncements in the United States?

Which of the following committees recommended abolishing the Accounting Principles Board and replacing it with the Financial Accounting Board?

Which of the following is a public sector accounting standard setter?

What is the difference between normative and positive theory?