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Exam 3: Judgment and Applied Financial Accounting Research

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Question 41

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Financial statement users can look to the ________ to determine whether a company uses income-increasing or income-reducing accounting policies.

A) revenue policies footnote
B) contingencies footnote
C) accounting policies footnote
D) intangibles explanation footnote

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Question 42

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Caesar Company needs to purchase a new delivery truck.Rather than taking the time to research which truck would best fit the company's needs,the manager calls his friend to ask which truck he would recommend.The manager is exhibiting ________.

A) bad judgment
B) overconfidence bias
C) availability bias
D) anchoring bias

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Question 43

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Why is it important for accountants to build good research skills?

When evaluating research,you find that you need additional facts related to the business transaction.What should you do?

Regina Woods,CPA is unsure about the presentation of one of the financial statements.In which topic grouping should she begin her research?

Larry Smith,CPA does not know how to account for a deferred revenue transaction.In which topic grouping should he begin his research?

Tracy Smith is researching a financial reporting issue.She did not find guidance for the specific transaction in the Accounting Standards Codification.Briefly explain how she should proceed in resolving her accounting research question.

Typically ________ use the applied financial accounting research process.

In the Accounting Standards Codification,the section numbers under each subtopic are uniform throughout the Codification.

You just landed your dream job - doing accounting for a small,organic farm! Due to high demand for the popular honeycrisp apples,the owner is looking to expand.She has asked you to prepare a set of financial statements for the bank to review with her loan application.The apples have been picked and boxed up,but have not been sold or shipped yet.You are unsure how to report the apples on the balance sheet.You have never dealt with inventory valuation for agricultural products.Complete the first two steps of the research process based on the information provided in this problem.

What is the first step in the financial accounting research process?

The confirmatory bias is the tendency to use the data that is most readily available or most easily recalled to make a decision.

Which account balance is least likely to be based on an estimate?

When the FASB issues a new pronouncement,it is referred to as an ________.

The tendency to agree to an answer or choice based on an attempt to avoid conflict represents the overconfidence bias.

The steps in the financial accounting research process ________.

The ________ are uniform throughout the Codification.

After deciding to record a business event,accountants use assumptions and estimates for what purpose?

Which of the following situations might influence management to intentionally bias estimates and impede the use of good judgment?

It is important to understand the facts of a transaction prior to conducting research because ________.