Kieso IFRS TestBank Ch01

CHAPTER 1 FINANCIAL ACCOUNTING AND ACCOUNTING STANDARDS CHAPTER LEARNING OBJECTIVES 1. Identify the major major financial financial statements statements and other other means means of of financial financial reporting. reporting. 2. Explain Explain how how account accounting ing assists assists in the the effici efficient ent use of of scarce reso resource urces. s. 3. Explain Explain the need need for for high-q high-qual uality ity stand standards ards.. 4. Identify Identify the ojecti! ojecti!es es of of financi financial al report reporting ing.. ". Identify the major major policy-setting policy-setting odies and their their role role in the standard-se standard-setting tting process. process. #. Expla Explain in the the mea meanin ning g of of I$% I$%&. &. '. (escrie (escrie the the challe challenges nges facin facing g financ financial ial report reporting. ing. )*. Identity the major major +.&. policy-setting policy-setting odies odies and their role in the standard-setting standard-setting process. process. ) ,his material can e found in the ppendix to the chapter 

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Test Bank for Interme!ate A""o#nt!n$% IFRS E!t!on

TRUE&FALSE'Con"e(t#a) 1. $inancial accounting accounting is the process process of identifying identifying measuring measuring analy/ing analy/ing and communicating communicating financial information needed y management to plan e!aluate and control an organi/ation0s operations. 2. $inan $inancia ciall statem statemen ents ts are the the princi principa pall means means throu through gh which which finan financia ciall infor informat matio ion n is communicated to those outside an enterprise. 3. ,he major financia financiall statemen statements ts used used under under Internat Internationa ionall $inancia $inanciall %eportin %eporting g &tandard &tandards s I$%& I$%& inclu include de the the state statemen mentt of chan change ges s in finan financia ciall posit position ion and and the the state statemen mentt of  stocholders equity. 4. In order to pro!ide informat information ion that is useful in decision decision maing and capital capital allocation allocation the International $inancial %eporting &tandards I$%& requires all companies to use a common currency. ". +sers +sers of the financia financiall informat information ion pro!ided pro!ided y a company company use that informat information ion to mae capital allocation decisions. #. n effecti!e effecti!e process process of capital capital allocation allocation promotes promotes product producti!it i!ity y and pro!ides pro!ides an efficie efficient nt maret for uying and selling securities and otaining and granting credit. '. 5!er 11" 11" countrie countries s require require or permit permit use of Internat Internationa ionall $inancia $inanciall %eportin %eporting g &tanda &tandards rds I$%&. *. 6hile ojecti!es ojecti!es for financial financial reporting exist on an informal informal asis asis no formal ojecti!es ojecti!es ha!e een adopted. 7. 5ne 5ne weane weaness ss of accrua accruall accou accounti nting ng is that that it does does not  not  pro!ide a good indication of the enterprise0s present and continuing aility to generate fa!orale cash flows. 18. ,he passage passage of a new $&9 $&9 &tandards &tandards &tatement &tatement requires the support support of fi!e of the se!en oard memers. 11. International International $inancial %eporting &tandards &tandards preceded International International ccounting ccounting &tandards. &tandards. 12. ,he standard-setting standard-setting structure structure used y the International International ccounting ccounting &tandards 9oard 9oard is !ery similar to that used y the $inancial ccounting &tandards 9oard. 13. ,he rules-ase rules-ased d standa standards rds of I&9 I&9 are more detailed detailed than the simpler simpler principl principles- es-ased ased standards of +.&. :;. :;. 14. ,he Internat Internationa ionall ccount ccounting ing &tandard &tandards s 9oard 9oard issues issues Internat Internation ional al $inancia $inanciall %eporti %eporting ng &tandards. 1". International International ccounting ccounting &tandards &tandards are no longer longer considered applicale applicale ecause ecause they ha!e een replaced y International $inancial %eporting &tandards.

$inancial ccounting and ccounting &tandards

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1#. ,he standards standards issued y !arious !arious standard-se standard-settin tting g organi/a organi/ation tions s around around the world world include include standards that are profit-oriented and in!estor-focused. 1'. ,he two major standard-setting standard-setting organi/ation organi/ations s in the world are the International International ccounting ccounting &tandards 9oard I&9 and International 5rgani/ation of &ecurities