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Multiple Choice Quiz
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1
In order to ensure that they are meaningful and useful, financial statements should be prepared
A)in accordance with section 108 of the Sarbarnes-Oxley Act.
B)on a daily basis.
C)on a timely basis.
D)using generally accepting accounting principles (GAAP).
2
Which of the following statements is not correct?
A)The Securities and Exchange Commission (SEC) issues the Statements of Financial Accounting Standards.
B)Statements issued by the Financial Accounting Standards Board (FASB) are binding on the members of the American Institute of Certified Public Accountants (AICPA).
C)An act of law gave the SEC the authority to determine the form and content of accounting reports filed by companies under its jurisdiction.
D)All of the above statements are correct.
3
The Statements of Financial Accounting Standards that automatically become generally accepted accounting principles are issued by
A)the IRS.
B)the SEC.
C)the FASB.
D)the AICPA.
4
The Financial Accounting Standards Board is
A)a branch of the AICPA.
B)a branch of the IRS.
C)an independent organization.
D)a branch of the SEC.
5
The FASB has concluded that financial reporting rules should
A)help companies minimize the taxes they must pay.
B)be in compliance with income tax law.
C)concentrate on providing helpful information to management.
D)concentrate on providing helpful information to present and potential investors and creditors.
6
In its conceptual framework, the FASB concluded that financial reporting rules should concentrate on providing information that is helpful to
A)current and potential investors and creditors in making investment and credit decisions.
B)management, tax authorities, and regulatory agencies.
C)Both of the above.
D)Neither of the above.
7
Investors and creditors expect to receive a cash flow directly or indirectly from the business entity
A)directly from the distribution of the company's earnings.
B)indirectly through the disposition of their interests for cash.
C)Both of the above.
D)Neither of the above.
8
Financial report users need information about
A)profits
B)economic resources (assets)
C)claims against the assets (liabilities and owner's equity)
D)All of the above.
9
The SEC's 2003 report to the Congress on "principles-based" accounting observed that the first characteristic of objectives-based standards, dictated by the Sarbanes-Oxley Act, is that any standard must be based on
A)the cost-benefit test.
B)an improved and consistently applied framework.
C)qualitative characteristics.
D)transparency.
10
Accounting information is capable of making a difference in a decision by the report user is
A)comparable.
B)reliable.
C)relevant.
D)neutral.





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