ACC 311 - Final Exam Study Q's - Chapter 2

The going-concern assumption states that A. a company will continue to operate into the foreseeable future. B. the reporting entity is distinct from its owners. C. financial statement users need timely information on an ongoing basis. D. all of these choices.

A. A company will continue to operate into the foreseeable future.

Which of the following establish the authoritative guidance on how U.S. companies should account for and report specific transactions, events, and arrangements in their financial statements? A. accounting standards in GAAP B. accounting standards in IASB C. FASB's Statements of Financial Accounting Concepts D. all of these choices

A. Accounting Standards in GAAP

Recognizing an economic effect in the current period even though the cash flows will occur in a later period is known as A. an accrual. B. a deferral. C. conservatism. D. the monetary unit assumption.

A. An Accrual

What single, pervasive constraint bounds the qualitative characteristics of financial reports? A. the time constraint B. the cost constraint C. the verifiability constraint D. the accessibility constraint

B. The Cost Constraint

Which source of information useful for investors and lenders is not directly affected by existing FASB standards? A. statement of cash flows B. notes to the financial statements C. management's discussion and analysis D. statement of shareholders' equity

C. Management's discussion and analysis

The FASB's Conceptual Framework does all except A. identify the goals and purpose of accounting. B. provide definitions of accounting concepts and principles. C. provide the Accounting Standards Codification. D. provide guidance in establishing accounting standards.

C. Provide the Accounting Standards Codification

The primary objective of financial reporting is to A. provide positive information so as to be attractive to investors and creditors. B. provide negative information so as to ward off takeovers. C. provide useful information for decision making. D. satisfy government authorities.

C. Provide useful information for decision making

Which of the following is an enhancing qualitative characteristic of decision-useful financial information? A. comparability B. timeliness C. understandability D. all of these choices

D. All of these choices

The notes to the financial statements include all except A. accounting policies. B. inventory methods. C. contingencies. D. analyst reports.

D. Analyst Reports

A company's cash flow information is used by investors, lenders, and other creditors to A. help understand its operations and cash-generating ability. B. evaluate its strategic sourcing and use of cash for financing and investing activities. C. assess its liquidity and solvency. D. do all of these choices.

D. Do all of these choices

Faithful representation of financial information includes all except A. completeness. B. neutrality. C. accuracy (error free). D. materiality.

D. Materiality

Which accounting assumption or principle states that historical cost can lose relevance and other valuation methods may be more relevant to financial statement users? A. recognition B. accrual accounting C. going-concern assumption D. mixed attribute measurement model

D. Mixed Attribute Measurement Model