Financial Accounting Exam 1
Practice6
Discontinued operations, and unusual gains and losses are both reported net of tax in the
income statement - ANSWERS False
Financial accounting is the process of identifying, measuring, analyzing, and communicating
financial information needed by management to plan, evaluate, and control a company's
operations - ANSWERS False
Users of financial reports of a company use the information provided by these reports to make
their capital allocation decisions - ANSWERS True
The FASBs Codification creates a net set of GAAP - ANSWERS False
Companies can change principles, but they must demonstrate that the newly adopted principle
is preferable to the old one - ANSWERS True
A conceptual framework is a coherent system of concepts that flow from an objective -
ANSWERS True
Relevance and faithful representation are the two fundamental qualities that make accounting
information useful for decision making - ANSWERS True
Which of the following represents a form of communication through financial reporting but NOT
through financial statements? - ANSWERS President's letter
, Which of the following organizations HAS BEEN responsible for setting US accounting standards?
- ANSWERS Accounting Principles Board, Committee on Accounting Procedure, and Financial
Accounting Standards Board
Companies that are listed on a stock exchange are required to submit their financial statements
to the - ANSWERS SEC
The most significant current source of generally accepted accounting principles is the -
ANSWERS FASB
Which of the following is an ethical concern of accountants? - ANSWERS Earnings manipulation
The underlying theme of the conceptual framework is - ANSWERS Decision usefulness
The objective of general-purpose financial reporting is to provide financial information about
reporting entity to each of the following EXCEPT - ANSWERS Potential equity investors,
potential lenders, and present investors
What is meant by comparability when discussing financial accounting information? - ANSWERS
Information is measured and reported in a similar fashion across companies
A company issuing its annual financial reports within one month of the end of the year is an
example of which enhancing quality of accounting information? - ANSWERS Timeliness
Which basic assumption is illustrated when a firm reports financial results on an annual basis? -
ANSWERS Periodicity assumption
Practice6
Discontinued operations, and unusual gains and losses are both reported net of tax in the
income statement - ANSWERS False
Financial accounting is the process of identifying, measuring, analyzing, and communicating
financial information needed by management to plan, evaluate, and control a company's
operations - ANSWERS False
Users of financial reports of a company use the information provided by these reports to make
their capital allocation decisions - ANSWERS True
The FASBs Codification creates a net set of GAAP - ANSWERS False
Companies can change principles, but they must demonstrate that the newly adopted principle
is preferable to the old one - ANSWERS True
A conceptual framework is a coherent system of concepts that flow from an objective -
ANSWERS True
Relevance and faithful representation are the two fundamental qualities that make accounting
information useful for decision making - ANSWERS True
Which of the following represents a form of communication through financial reporting but NOT
through financial statements? - ANSWERS President's letter
, Which of the following organizations HAS BEEN responsible for setting US accounting standards?
- ANSWERS Accounting Principles Board, Committee on Accounting Procedure, and Financial
Accounting Standards Board
Companies that are listed on a stock exchange are required to submit their financial statements
to the - ANSWERS SEC
The most significant current source of generally accepted accounting principles is the -
ANSWERS FASB
Which of the following is an ethical concern of accountants? - ANSWERS Earnings manipulation
The underlying theme of the conceptual framework is - ANSWERS Decision usefulness
The objective of general-purpose financial reporting is to provide financial information about
reporting entity to each of the following EXCEPT - ANSWERS Potential equity investors,
potential lenders, and present investors
What is meant by comparability when discussing financial accounting information? - ANSWERS
Information is measured and reported in a similar fashion across companies
A company issuing its annual financial reports within one month of the end of the year is an
example of which enhancing quality of accounting information? - ANSWERS Timeliness
Which basic assumption is illustrated when a firm reports financial results on an annual basis? -
ANSWERS Periodicity assumption
