Intermediate Accounting - Chapter 3 SB

What is the role of the auditor's attest function?

To provide an opinion on the financial statements.

A ratio used to measure liquidity is the

current ratio

The full-disclosure principle requires that financial statements report which of the following?

All material relevant information.

The current versus noncurrent classification applies to what in the financial statements?

Assets and liabilities

The Management Discussion and Analysis section of the financial statements includes a perspective on which of the following? (Select all that apply.) Capital resources Liquidity Auditors' report Operations Job costing

Capital resources Liquidity Operations

An analysis provided by the company's management is included in the

Management Discussion and Analysis.

What does a liability represent?

Obligations owed to other entities

Which of the following is true regarding disclosure notes?

They explain or elaborate on data presented in the financial statements.

What is the purpose of additional financial disclosures in an annual report?

To assist in understanding the financial statements.

What is the role of the auditor?

To attest to the fairness of the financial statements.

Current ______ include cash and other items that will be converted to cash or consumed within the coming year. (Enter only one word.)

assets

The role of a(n) _______ is to attest to the fairness of the financial statements they have examined. (Enter only one word.)

auditor

The financial statement that displays a firm's financial position on a particular date is the ______. (Enter one word per blank)

balance sheet

The financial statement that provides information about liquidity and long-term solvency is the

balance sheet

Which of the following financial statements shows a firm's financial position on a particular date?

balance sheet

A company's assets minus its liabilities shown on the balance sheet is referred to as its ______ value.

book

Cash and other assets that are reasonably expected to be converted to cash or consumed within 1 year or the current operating cycle are classified as

current assets

Which of the following are liquidity ratios? (Select all that apply.) current ratio return on equity ratio acid-test or quick ratio debt to asset ratio

current ratio acid-test or quick ratio

The two classifications used for assets and liabilities on the balance sheet are ______ and ______.

current; noncurrent

The risk that a company will not be able to pay its obligations when they come due is referred to as _____ risk. (Enter only one word.)

default

True or false: The balance sheet will directly measure the company's market value.

false

What is the principle that requires that financial statements provide all material relevant information concerning the entity?

full-disclosure

Obligations to other entities are known as what?

liabilties

The balance sheet provides useful information about a company's _____ and long-term solvency. (Enter only one word.)

liquidity

Responsibility for the financial statements and other information found in the annual report lies with ______. (Enter only one word.)

management

Who is responsible for the information in the annual report?

management of the company

Assets minus liabilities, measured according to GAAP, is not likely to be representative of the _____ value of the entity. (Enter only one word.)

market

Default risk refers to the ability of a company to

pay its obligations when they come due.

Which document is required to provide information on executive and director compensation?

proxy statement

The FASB requires that companies that engage in more than one significant business must provide supplemental information concerning individual operating _______.

segment

Companies that operate in more than one significant business must provide which of the following?

segment information

If a company has a large amount of long-term debt in its capital structure, this will affect the firm's ______.

solvency

The ability to pay its long-term debts as they become due is referred to as ______ of the company.

solvency

SEC requirements provide for disclosures on executive and director compensation, particularly concerning _______ options. (Enter only one word.)

stock