Financial Reporting I Exam One Multiple
Choice Questions and Answers Graded
A+
What is the purpose of information presented in notes to the financial statements? -
Correct answer-To provide disclosure required by generally accepted accounting
principles
What group currently writes generally accepted accounting principles? - Correct
answer-Financial Accounting Standards Board
In analyzing a company's financial statements, which financial statement would a
potential investor primarily use to assess the company's liquidity and financial
flexibility? - Correct answer-Balance Sheet
Which of the following is true regarding the comparison of managerial to financial
accounting? - Correct answer-Managerial accounting need not follow GAAP while
financial accounting must follow them
What has the FASB maintained regarding new GAAP? - Correct answer-New
GAAP should be neutral and not favor any particular reporting objective
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, Which companies violate SEC regulations by a departure from GAAP? - Correct
answer-Publicly traded companies
According to the FASB conceptual framework, what are the objectives of financial
reporting for business enterprises based on? - Correct answer-The needs of the
users of the information
According to the conceptual framework, the process of reporting an item in the
financial statements of an entity is what? - Correct answer-Recognition
Conceptually, interim financial statements can be described as emphasizing -
Correct answer-Timeliness over faithful representation
According to the conceptual framework, the usefulness of providing information in
financial statements is subject to the constraint of - Correct answer-Cost-benefit
What is conceptual framework intended to establish? - Correct answer-The
objectives and concepts for use in developing the standards of financial accounting
When a parent-subsidiary relationship exists, consolidated financial statements are
prepared in recognition of the accounting concept of - Correct answer-Economic
entity
According to the FASB conceptual framework, predictive value is an ingredient of
relevance, representation, both, or neither? - Correct answer-Relevance
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
Choice Questions and Answers Graded
A+
What is the purpose of information presented in notes to the financial statements? -
Correct answer-To provide disclosure required by generally accepted accounting
principles
What group currently writes generally accepted accounting principles? - Correct
answer-Financial Accounting Standards Board
In analyzing a company's financial statements, which financial statement would a
potential investor primarily use to assess the company's liquidity and financial
flexibility? - Correct answer-Balance Sheet
Which of the following is true regarding the comparison of managerial to financial
accounting? - Correct answer-Managerial accounting need not follow GAAP while
financial accounting must follow them
What has the FASB maintained regarding new GAAP? - Correct answer-New
GAAP should be neutral and not favor any particular reporting objective
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
, Which companies violate SEC regulations by a departure from GAAP? - Correct
answer-Publicly traded companies
According to the FASB conceptual framework, what are the objectives of financial
reporting for business enterprises based on? - Correct answer-The needs of the
users of the information
According to the conceptual framework, the process of reporting an item in the
financial statements of an entity is what? - Correct answer-Recognition
Conceptually, interim financial statements can be described as emphasizing -
Correct answer-Timeliness over faithful representation
According to the conceptual framework, the usefulness of providing information in
financial statements is subject to the constraint of - Correct answer-Cost-benefit
What is conceptual framework intended to establish? - Correct answer-The
objectives and concepts for use in developing the standards of financial accounting
When a parent-subsidiary relationship exists, consolidated financial statements are
prepared in recognition of the accounting concept of - Correct answer-Economic
entity
According to the FASB conceptual framework, predictive value is an ingredient of
relevance, representation, both, or neither? - Correct answer-Relevance
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
