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