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Category: Business and Industry
Date Submitted: 03/18/2014 01:16 PM
Chapter 01
Environment and Theoretical Structure of Financial Accounting
True / False Questions
1. | The primary function of financial accounting is to provide relevant financial information to parties external to business enterprises.
True False |
2. | Accrual accounting attempts to measure revenues and expenses that occurred during accounting periods so they equal net operating cash flow.
True False |
3. | The FASB is currently the public-sector organization responsible for setting accounting standards in the United States.
True False |
4. | The FASB's due process invites various interested parties to indicate their opinions about whether financial accounting standards should be changed.
True False |
5. | Accounting for stock-based compensation is an area in which the FASB has received little political interference.
True False |
6. | The Public Reform and Investor Protection Act of 2002 (Sarbanes-Oxley) changed the entity responsible for setting auditing standards in the United States.
True False |
7. | A rules-based approach to standard setting stresses professional judgment as opposed to following a list of rules.
True False |
8. | Under federal securities laws, the SEC has the authority to set accounting standards in the United States.
True False |
9. | The primary responsibility for properly applying GAAP when communicating with investors and creditors through financial statements lies with a firm's auditors.
True False |
10. | Auditors play an important role in the resource allocation process by adding credibility to financial statements.
True False |
11. | The purpose of the conceptual framework is to provide a structure and framework for a consistent set of GAAP.
True False |
12. | In the United States the conceptual framework indicates GAAP when a more specific accounting standard does not apply.
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