Accounting 471 HW 1

Which accounting model best meets the primary goal of users of financial reporting?

Cash Net Basis Accural Cost basis

Cause-and-effect relationship Specific time period Without regard to related revenue in the period incurred

Cost of goods sold Monthly salary payments to an office employee Advertising expenditures

The legal authority to set accounting and reporting standards for companies whose securities are publicly traded lies with the

SEC

What is the purpose of the audit report?

To add credibility to the financial statements.

To help ensure management has appropriately applied GAAP in preparing the financial statements.

To help ensure management has appropriately applied GAAP in preparing the financial statements.

What financial reporting model is used by most profit-oriented businesses and not-for-profit entities?

accrual accounting tax accounting cost accounting cash basis accounting

What information regarding an entity's future cash flows are investors and lenders interested in? (Select all that apply.)

amount, timing, uncertainty

What element of the financial statements is described by the following definition? "Probable future economic benefits obtained or controlled by a particular entity as a result of past transactions."

assets

Who serves as an independent intermediary to help ensure that management has appropriately applied GAAP in preparing the financial statements?

auditors

Which of the following forms of business provide shares of stock as an ownership interest?

corporation partnership proprietorship

The overriding objective in the hierarchy of qualitative characteristics of financial reporting information is

decision usefulness.

In developing standards, the FASB considers the: effect on the financial position of constituents concerns and opinions of constituents

economic transactions that standards will address

Expenses are __________ to revenues from the same transaction. (Enter only one word.)

matched

The process of associating numerical amounts to the elements in the financial statements is called

measurement

Which of the following are among the basic assumptions underlying U.S. GAAP? (Select all that apply.) monetary unit going concern periodicity revenue recognition neutrality full disclosure economic entity

monetary unit going concern periodic economic entity

Recognition refers to the process of

recording information in the basic financial statements.

True or false: The conceptual framework does not prescribe GAAP.

true

Before issuing an Accounting Standards Update, the FASB undertakes a series of information-gathering steps including

written comments, deliberations, open hearings