INTERMEDIATE ACCOUNTING BY KIESO
CERTIFICATION EVALUATION TEST COMPLETE
QUESTIONS AND CORRECT ANSWERS
◉ Financial Accounting.
Answer: Preparation of finanical reports
◉ Managerial Accounting.
Answer: using financial information to plan, control, and evaluate a
company's operations
◉ Financial Statements.
Answer: 1. Balance Sheet
2. Income Statement
2. Statement of Retained Earnings (owner's equity)
4. Statement of Cash Flows
◉ Financial Reports.
Answer: 1. President's Letter
2. Prospectuses
3. News Releases
,4. Management Forecasts
5. Impact Statements (social or environmental)
◉ Capital Allocation.
Answer: 1. Resources are limited
2. Effective process of capital allocation is critical to a healthy
economy
3. Promotes productivity, encourages innovations, and provides an
efficient and liquid market for buying and selling securities
◉ Objective of Financial Reporting.
Answer: to provide financial information about the reporting entity
that is useful to present and potential equity investors, lenders, and
other creditors in decisions about providing resources to the entity
◉ General-Purpose Financial Statements.
Answer: 1. provide financial reporting information to a wide variety
of users
2. most useful information
3. cost-effective
◉ Equity Investors and Creditors.
Answer: 1. primary users for general purpose financial statements
, 2. Statements used to determine ability to generate net cash flows
and to understand management's ability to protect and enhance
assets
◉ Entity Perspective.
Answer: companies viewed as separate and distinct from their
owners
◉ Decision-Usefulness.
Answer: 1. Approach that requires that financial reporting be useful
to investors by helping them assess (1) the company's ability to
generate net cash inflows and (2) management's ability to protect
and enhance the capital providers' investments.
◉ Accrual Basis of Accounting.
Answer: 1. the method of accounting that recognizes revenue when
it is earned and matches expenses to the revenues they helped
produce
2. ability to generate favorable cash flows
◉ Need to Develop Standards.
Answer: 1. Generally Accepted Accounting Principles (GAAP)
2. allows for commonality of financial statements so they can be
read from one company to another
CERTIFICATION EVALUATION TEST COMPLETE
QUESTIONS AND CORRECT ANSWERS
◉ Financial Accounting.
Answer: Preparation of finanical reports
◉ Managerial Accounting.
Answer: using financial information to plan, control, and evaluate a
company's operations
◉ Financial Statements.
Answer: 1. Balance Sheet
2. Income Statement
2. Statement of Retained Earnings (owner's equity)
4. Statement of Cash Flows
◉ Financial Reports.
Answer: 1. President's Letter
2. Prospectuses
3. News Releases
,4. Management Forecasts
5. Impact Statements (social or environmental)
◉ Capital Allocation.
Answer: 1. Resources are limited
2. Effective process of capital allocation is critical to a healthy
economy
3. Promotes productivity, encourages innovations, and provides an
efficient and liquid market for buying and selling securities
◉ Objective of Financial Reporting.
Answer: to provide financial information about the reporting entity
that is useful to present and potential equity investors, lenders, and
other creditors in decisions about providing resources to the entity
◉ General-Purpose Financial Statements.
Answer: 1. provide financial reporting information to a wide variety
of users
2. most useful information
3. cost-effective
◉ Equity Investors and Creditors.
Answer: 1. primary users for general purpose financial statements
, 2. Statements used to determine ability to generate net cash flows
and to understand management's ability to protect and enhance
assets
◉ Entity Perspective.
Answer: companies viewed as separate and distinct from their
owners
◉ Decision-Usefulness.
Answer: 1. Approach that requires that financial reporting be useful
to investors by helping them assess (1) the company's ability to
generate net cash inflows and (2) management's ability to protect
and enhance the capital providers' investments.
◉ Accrual Basis of Accounting.
Answer: 1. the method of accounting that recognizes revenue when
it is earned and matches expenses to the revenues they helped
produce
2. ability to generate favorable cash flows
◉ Need to Develop Standards.
Answer: 1. Generally Accepted Accounting Principles (GAAP)
2. allows for commonality of financial statements so they can be
read from one company to another
