Chapter One Concepts

Corporation

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

Accrual accounting

Which of the following models is best in helping predict future cash flows?

Ethics

A code or moral system that provides criteria for evaluating right and wrong is referred to as

ethics

A code or moral system that provides criteria for evaluating right or wrong is referred to as

asset

A probable future economic benefit obtained or controlled by a particular entity as a result of past transactions or events is a(n)

Operations

Accrual income attempts to measure the resource inflows and outflows generated by the company's _______ during the reporting period.

revenue/expense approach

An emphasis is placed on proper income statement item recognition under what approach under US GAAP?

Financial statements, Notes to the financial statements

Disclosure is the process of including additional pertinent information in (Select all that apply.)

providers of capital

The primary purpose of financial reporting is to provide useful information for decision making to

external or outside

Financial accounting is chiefly concerned with providing information to various_________, users.

force a change in the standard.

If the SEC does not agree with a standard issued by the private sector, it can

Managers or Management

It is the responsibility of _________, to apply Generally Accepted Accounting Principles in preparation of the company's financial statements.

recording information in the basic financial statements.

Recognition refers to the process of

conceptual

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.

future

The accrual accounting model is best able to achieve the goal of predicting Blank 1Blank 1 future , _________cash flows.

Cash

The accrual accounting model measures the entity's accomplishments and resource sacrifices during the period regardless of when ______ is received or paid.

U.S. GAAP.

The conceptual framework does not prescribe which of the following?

Accural

The financial reporting model used by the majority of profit oriented companies is ______ accounting

SEC

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

provide useful information for decision making.

The main focus of accounting information is to

decision usefulness.

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

external

The primary role of financial accounting is to provide useful financial information to users who are ______ to the business enterprise.

Recognition

The process of admitting or recording an item into the basic financial statements is referred to as

Measurement

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

revenue recognition, matching

The revenue/expense approach focuses on the income statement because it relies on which accounting principles?

False

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

True

True or false: In the United States, sole proprietorships and partnerships outnumber corporations.

True

True or false: Resource inflows and outflows may not correspond to cash inflows and outflows.

False

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

Expense

Under the accrual accounting model, the measure of resources sacrificed is called

Assets

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."

Timing, Uncertainty, Amount

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

going concern, monetary unit, periodicity, economic entity

Which of the following are among the basic assumptions underlying U.S. GAAP? (Select all that apply.)

Corporate management

Who has the responsibility for preparing financial statements in accordance with generally accepted accounting principles?

Management

Who has the responsibility to appropriately apply GAAP when preparing financial statements?

Financial

______ accounting is chiefly concerned with providing information to external users.