ACT 301 Module 1: Mastery Exercise

True or false? The advantage of accounting information is that it provides exact and completely reliable measures.

False

True or false? The convention of consistency pertains to the use of the same accounting principles by firms in the same industry.

False

True or false? The periodicity assumption states that every economic entity can be separately identified and accounted for.

False

True or false?A major function of management is to provide the accountant with relevant and useful information.

False

Issuing shares of stock in exchange for cash is an example of a(n) ________.

Investing activity?

Generally accepted accounting principles ________.

are accounting rules that are recognized as a general guide for financial reporting

The right to receive money in the future is called a(n) ________.

Account receivable

Which of the following statements is true?

Amounts paid out as dividends are not expenses

What organization issues U.S. accounting standards?

FASB

The agency of the United States Government that oversees the U.S. financial markets is the ________.

Securities and Exchange Commission

Most companies use a(n) ________ rather than a retained earnings statement.

Statement of stockholders' equity

True or false? Consistency in accounting means that a company uses the same generally accepted accounting principles from one accounting period to the next accounting period.

True

Debt securities sold to investors that must be repaid at a particular date some years in the future are called ________.

bonds payable

Ending retained earnings for a period is equal to beginning ________.

retained earnings + NI - Div?