Intermediate Accounting - Chapter 1 SB

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

amount, timing, and uncertainty

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

management

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

true

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 financial reporting model used by the majority of profit oriented companies is _______ accounting. (Enter only one word.)

accrual

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

accrual

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

accrual

The accrual accounting model is best able to achieve the goal of predicting ________ cash flows. (Only one word per blank.)

future

The four basic accounting assumptions (Select all that apply.)

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

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

providers of capital

Recognition refers to the process of

recording information in the basic financial statements.

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

Financial

What is the primary function of financial accounting?

Provide useful information to users external to the business.

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

SEC

Probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events are referred to as _______.

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."

assets

What are the three primary forms of business organizations?

corporation, sole proprietorship, partnership

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

decision usefulness

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

economic entity, going concern, periodicity, monetary unit

The purpose of the FASB's conceptual framework in accounting is to

establish objectives and fundamental concepts on which to base standards.

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 _____ . (Enter one word per blank)

ethics

Financial accounting is chiefly concerned with providing information to various _________ users. (Enter only one word.)

external

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

force a change in the standard

It is the responsibility of _____ to apply Generally Accepted Accounting Principles in preparation of the company's financial statements. (Enter only one word.)

management

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

open hearings, deliberations, and requests for written comments from interested parties

The primary forms of business organization in the United States are the sole proprietorship, the __________ and the corporation.

partnership

The main focus of accounting information is to

provide useful information for decision making.

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

recognition

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

revenue recognition and matching

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

revenue/expense approach

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

true