Intermediate Accounting - Chapter 3 SB
What is the role of the auditor's attest function?
To provide an opinion on the financial statements.
A ratio used to measure liquidity is the
current ratio
The full-disclosure principle requires that financial statements report which of the following?
All material relevant information.
The current versus noncurrent classification applies to what in the financial statements?
Assets and liabilities
The Management Discussion and Analysis section of the financial statements includes a perspective on which of the following? (Select all that apply.) Capital resources Liquidity Auditors' report Operations Job costing
Capital resources Liquidity Operations
An analysis provided by the company's management is included in the
Management Discussion and Analysis.
What does a liability represent?
Obligations owed to other entities
Which of the following is true regarding disclosure notes?
They explain or elaborate on data presented in the financial statements.
What is the purpose of additional financial disclosures in an annual report?
To assist in understanding the financial statements.
What is the role of the auditor?
To attest to the fairness of the financial statements.
Current ______ include cash and other items that will be converted to cash or consumed within the coming year. (Enter only one word.)
assets
The role of a(n) _______ is to attest to the fairness of the financial statements they have examined. (Enter only one word.)
auditor
The financial statement that displays a firm's financial position on a particular date is the ______. (Enter one word per blank)
balance sheet
The financial statement that provides information about liquidity and long-term solvency is the
balance sheet
Which of the following financial statements shows a firm's financial position on a particular date?
balance sheet
A company's assets minus its liabilities shown on the balance sheet is referred to as its ______ value.
book
Cash and other assets that are reasonably expected to be converted to cash or consumed within 1 year or the current operating cycle are classified as
current assets
Which of the following are liquidity ratios? (Select all that apply.) current ratio return on equity ratio acid-test or quick ratio debt to asset ratio
current ratio acid-test or quick ratio
The two classifications used for assets and liabilities on the balance sheet are ______ and ______.
current; noncurrent
The risk that a company will not be able to pay its obligations when they come due is referred to as _____ risk. (Enter only one word.)
default
True or false: The balance sheet will directly measure the company's market value.
false
What is the principle that requires that financial statements provide all material relevant information concerning the entity?
full-disclosure
Obligations to other entities are known as what?
liabilties
The balance sheet provides useful information about a company's _____ and long-term solvency. (Enter only one word.)
liquidity
Responsibility for the financial statements and other information found in the annual report lies with ______. (Enter only one word.)
management
Who is responsible for the information in the annual report?
management of the company
Assets minus liabilities, measured according to GAAP, is not likely to be representative of the _____ value of the entity. (Enter only one word.)
market
Default risk refers to the ability of a company to
pay its obligations when they come due.
Which document is required to provide information on executive and director compensation?
proxy statement
The FASB requires that companies that engage in more than one significant business must provide supplemental information concerning individual operating _______.
segment
Companies that operate in more than one significant business must provide which of the following?
segment information
If a company has a large amount of long-term debt in its capital structure, this will affect the firm's ______.
solvency
The ability to pay its long-term debts as they become due is referred to as ______ of the company.
solvency
SEC requirements provide for disclosures on executive and director compensation, particularly concerning _______ options. (Enter only one word.)
stock