Intermediate CPA Exam Questions with Complete Solution 2022/2023

The purpose of financial accounting is to provide information primarily for which of the following groups? -Internal Revenue Service. -Investors and creditors. -Financial Accounting Standards Board. -Government. - ...

The purpose of financial accounting is to provide information primarily for which of the following groups? -Internal Revenue Service. -Investors and creditors. -Financial Accounting Standards Board. -Government. - ANSWER investors and creditors The FASB has maintained that: -New GAAP should be neutral and not favor any particular reporting objective. -GAAP should have little or no cost of compliance. -GAAP should result in the most conservative possible financial statements. -The interests of the reporting firms will be a primary consideration when developing new GAAP. - ANSWER New GAAP should be neutral and not favor any particular reporting objective. Which of the following statements includes the most useful guidance for practicing accountants concerning the FASB Accounting Standards Codification. -The Codification includes only FASB Statements. -The Codification significantly modified the content of GAAP when it became effective. -An accountant can be sure that all SEC rules are included in the Codification. -The Codification is the sole source of U.S. GAAP, for nongovernmental entities. - ANSWER The Codification is the sole source of U.S. GAAP, for nongovernmental entities. The FASB is a(n): Governmental unit. Group of accounting firms. Private sector body. International organization. - ANSWER Private Sector body U.S. GAAP includes a very large set of accounting guidance. Choose the correct statement. -There is an implied hierarchy within the FASB Accounting Standards Codification, with FASB Statements assuming the top level. -International accounting standards are not included in the FASB Accounting Standards Codification. -Authoritative guidance from FASB Statements adopted before the FASB Accounting Standards Codification does not appear in the Codification. -The FASB Accounting Standards Codification includes guidance about items that are not under the purview of the Generally Accepted Accounting Principles, such as the income tax basis of accounting. - ANSWER International accounting standards are not included in the FASB Accounting Standards Codification. Which of the following will best protect investors against fraudulent financial reporting by corporations? The fact that all firms must report the same way. The requirement that financial statements be audited. The integrity of management. Criminal statutes. - ANSWER The requirement that financial statements be audited. Each of the following statements is correct regarding the Financial Accounting Standards Board except -It develops principles and attributes that allow organizations to understand the necessary elements to ensure a robust system of internal control. -It is recognized as authoritative by the United States Securities and Exchange Commission and the American Institute of Certified Public Accountants. -It establishes accounting concepts and standards for financial accounting and reporting and provides guidance on implementation of standards. -It provides a conceptual framework that helps to increase understanding of, and confidence in, financial information on the part of users of financial reports. - ANSWER It develops principles and attributes that allow organizations to understand the necessary elements to ensure a robust system of internal control. Which of the following accounting literature is not included in the FASB Accounting Standards Codification? -Statements of Auditing Standards. -AICPA Statements of Position. -Accounting Research Bulletins. -FASB Statements. - ANSWER Statements of Auditing Standards. The FASB amends the Accounting Standards Codification through the issuance of Staff Accounting Bulletins. Technical Bulletins. Statements of Financial Accounting Standards. Accounting Standards Updates. - ANSWER Accounting Standards Updates. Which of the following statements best describes the operating procedure for issuing a new Financial Accounting Standards Board (FASB) statement?