1
CMA Study Guide Chapter 1 Part 1 Questions
What is the General Purpose of Financial Reporting? - Correct Answer-
To Report information that is useful for decision making, as it relates to
economic resources and claims for the company
What is the General purpose of Financial Reporting include for reporting
purposes? - Correct Answer-The entities performance based off of the
income statement and the balance sheet
Does General Purpose Financial Reporting follow GAAS? - Correct
Answer-Yes it does follow it because it is provided for external parties.
What is the difference between Managerial Accounting and Financial
Accounting? - Correct Answer-Managerial accounting does not follow
GAAP, it is mainly used to assist in decision making, planning and
control. While Financial accounting addresses accounting for an entity's
assets, liabilities, revenues, expenses and other elements of financial
statements.
Who are Direct Interest Users of Financial Statements? - Correct
Answer-Investors, Creditors, Suppliers, Employees, Management
Who are Indirect Investment Users of Financial Statements? - Correct
Answer-Financial Advisors, analysts, stock market holders or
exchanges, regulatory authority.
What is the difference between indirect and direct interest users of the
financial statements? - Correct Answer-Direct users usually invent in or
1
, 2
manage the business indirect users’ advice, influent, represent users
with direct interest.
What do Financial Statements Include? - Correct Answer-Notes, section,
full set of Information from Financial Statement, and must be relevant
and faithfully represented, must be comparable to other businesses
What does the full set of information from the financial statements
include? - Correct Answer-Balance Sheet (Statement of Financial
Position), Income Statement, Statement of Comprehensive Income,
Changes in Equity, Statement of Cash Flows
What does Going Concern Assumption mean? - Correct Answer-The
entity is assumed to continue operating indefinitely. Liquidating is not
expected in the near future and thus are not important in the calculations
Where does Net Income or loss accumulated in retained earning show
up? - Correct Answer-On the equity section of the financial statement.
Where does the components of cash and equivalents from the statement
of financial position (balance sheet) show up? - Correct Answer-
Statement of Cash Flows
Where do the items in the equity section on the statement of financial
position (balance sheet) reconciles with? - Correct Answer-The
beginning balance on statement changes in equity
Where do the ending inventories for current assets on the balance sheet
(Statement of financial Position) show? - Correct Answer-In the cost of
goods sold on the statement of income
2
CMA Study Guide Chapter 1 Part 1 Questions
What is the General Purpose of Financial Reporting? - Correct Answer-
To Report information that is useful for decision making, as it relates to
economic resources and claims for the company
What is the General purpose of Financial Reporting include for reporting
purposes? - Correct Answer-The entities performance based off of the
income statement and the balance sheet
Does General Purpose Financial Reporting follow GAAS? - Correct
Answer-Yes it does follow it because it is provided for external parties.
What is the difference between Managerial Accounting and Financial
Accounting? - Correct Answer-Managerial accounting does not follow
GAAP, it is mainly used to assist in decision making, planning and
control. While Financial accounting addresses accounting for an entity's
assets, liabilities, revenues, expenses and other elements of financial
statements.
Who are Direct Interest Users of Financial Statements? - Correct
Answer-Investors, Creditors, Suppliers, Employees, Management
Who are Indirect Investment Users of Financial Statements? - Correct
Answer-Financial Advisors, analysts, stock market holders or
exchanges, regulatory authority.
What is the difference between indirect and direct interest users of the
financial statements? - Correct Answer-Direct users usually invent in or
1
, 2
manage the business indirect users’ advice, influent, represent users
with direct interest.
What do Financial Statements Include? - Correct Answer-Notes, section,
full set of Information from Financial Statement, and must be relevant
and faithfully represented, must be comparable to other businesses
What does the full set of information from the financial statements
include? - Correct Answer-Balance Sheet (Statement of Financial
Position), Income Statement, Statement of Comprehensive Income,
Changes in Equity, Statement of Cash Flows
What does Going Concern Assumption mean? - Correct Answer-The
entity is assumed to continue operating indefinitely. Liquidating is not
expected in the near future and thus are not important in the calculations
Where does Net Income or loss accumulated in retained earning show
up? - Correct Answer-On the equity section of the financial statement.
Where does the components of cash and equivalents from the statement
of financial position (balance sheet) show up? - Correct Answer-
Statement of Cash Flows
Where do the items in the equity section on the statement of financial
position (balance sheet) reconciles with? - Correct Answer-The
beginning balance on statement changes in equity
Where do the ending inventories for current assets on the balance sheet
(Statement of financial Position) show? - Correct Answer-In the cost of
goods sold on the statement of income
2
