Role and Standard-Setting Process (Mol. 1)

Question 1

In reference to proposed accounting standards, the term “negative economic consequences” includes:

Answer 1

“negative economic consequences” refers to the potentially negative effects of proposed standards, including a reduced ability to raise capital, and higher capital costs.

Question 2

The FASB is a(n):

Answer 2

Private sector body.

Question 3

the comparison between managerial and financial accounting

Answer 3

Managerial accounting need not follow Generally Accepted Accounting Principles (GAAP), while financial accounting must follow them.

Question 4

the most useful guidance for practicing accountants concerning the FASB Accounting Standards Codification

Answer 4

The Codification is the sole source of U.S. GAAP, other than SEC GAAP, for nongovernmental entities.

Question 5

Which of the following documents is typically issued as part of the due-process activities of the Financial Accounting Standards Board (FASB) for amending the FASB Accounting Standards Codification?

Answer 5

A proposed accounting standards update.

Question 6

In its year two single-step Income Statement, what amount should Dart report as total revenues?

Answer 6

Revenues are inflows of economic resources. The purchase discounts would be netted against purchases, not sales.

Question 7

Which of the following would be reported as an investing activity in a company’s statement of cash flows?

Answer 7

Collection of a note receivable from a related party.