Ch 1 Financial Acc. Theory and Analysis

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Example Test Questions Chapter 1 Multiple Choice: 1. 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 Answer a 2. What historical evidence of the business operations of the private estate of Apollonius was discovered early inthe20th century? a. The Iliad b. Plato 's Republic c. The Zenon papyri d. Pacioli‟s work, Summa de Arithmetica Geometria Proportioni et Proportionalita, Answer c 3. Who has been given credit or developing the double-entry system of bookkeeping? a. Francis Wheat b. Fra Luca Pacioli c.…show more content…
Standard setting as apolitical process b. Standards overload c. Economic consequences d. The role of ethics in accounting Answer c 14. 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. Answer c 15. 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 Answer d 16. 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 Answer c Essay 1. What is the difference between normative and positive theory? Normative theories explain what should be, whereas positive theories explain what is. Ideally, there should be no such distinction, because a well-developed and complete theory encompasses both what should be and what is. 2. Why is the development of a general theory of accounting important The

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