Exam 1 review

Which of the following models is best in helping predict future cash flows? Multiple choice question. Cash accounting Cost accounting Accrual accounting

Accrual Accounting

Who serves as an independent intermediary to help ensure that management has appropriately applied GAAP in preparing the financial statements? financial analysts auditors the Financial Accounting Standards Board financial press

Auditors

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

Corporation

The primary focus of the qualitative characteristics of accounting information is: decision usefulness accuracy accountability outcome certainty

Decision usefulness

Disclosure is the process of including additional pertinent information in (Select all that apply.) Media press releases Financial statements Notes to the financial statements

FInancial statements Notes to financial statements

True or false: Cash basis accounting is the required accounting method for most profit-oriented companies.

False

True or false: The primary function of financial accounting is to provide useful financial information to users who are internal to the business.

False

The revenue/expense approach focuses on the income statement because it relies on which accounting principles? (Select all that apply.) matching historical cost going concern revenue recognition

Matching Revenue Recognition

four criteria used to determine if an item is recognized in the financial statements according to SFAC5

Measurability Reliability Definition Relevance

The process of associating numerical amounts to the elements in the financial statements is called measurement. allocation. recognition. historical cost.

Measurement

Select the four criteria used to determine if an item is recognized in the financial statements according to SFAC 5. Quality Reliability Relevance Definition Measurability Persistence

Reliability Relevance Definition Measurability

Expense recognition often matches BLANK and BLANK that arise from the same transaction.

Revenues , expenses

The _____ has the authority to set accounting standards for companies, but has delegated the task to the private sector.

SEC

The _____ has the authority to set accounting standards for companies, but has delegated the task to the private sector. Multiple choice question. FASB SEC PCAOB

SEC

What is the purpose of the auditor? Multiple choice question. To help ensure management has appropriately applied IRS guidelines in preparing the federal income tax return. To help ensure management has appropriately applied GAAP in preparing the financial statements. To prepare the company's financial statements in accordance with GAAP. To prepare the company's federal income tax returns in accordance with IRS guidelines.

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

True or false: Financial accounting is primarily concerned with providing financial information to external users.

True

True or false: The FASB considers written comments from interested parties before issuing an Accounting Standards Update.

True

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." Multiple choice question. assets liabilities equity revenue gains

assets

The four basic accounting assumptions (Select all that apply.) assume the entity will continue to exist identify the denomination in which reporting occurs assume the entity follows proper GAAP standards identify the entity being reported on identify the frequency of reporting identify asset and liability values

assume the entity will continue to exist identify the denomination in which reporting occurs identify the entity being reported on identify the frequency of reporting

Which of the following are among the basic assumptions underlying U.S. GAAP? (Select all that apply.) cost-effectiveness conservatism economic entity fair value going concern monetary unit periodicity

economic entity going concern monetary unit periodicity

A code or moral system that provides criteria for evaluating right and wrong is referred to as ethics. standards. a dilemma system. a values model.

ethics

Financial accounting is chiefly concerned with providing information to various BLANK users.

external

The accrual accounting method is able to achieve the goal of predicting

future cash flows

Recognition refers to the process of measuring the numbers associated with the elements. analyzing the financial statements. recording information in the basic financial statements. estimating amounts for allocation purposes.

recording information in the basic financial statements

The "Accounting Constitution", a coherent system of interrelated objectives and fundamentals that lead to consistent standards and that prescribe the nature, function, and limits of financial accounting and reporting is referred to as the framework.

conceptual

What is the primary function of financial accounting? Provide information to internal users of the business. Provide useful information to users external to the business. Provide financial information to regulatory agencies. Provide financial information for tax purposes.

provide useful information to external users of buisness

The primary purpose of financial reporting is to provide useful information for decision making to capital market regulators management employees providers of capital

providers of capital