INTERMEDIATE ACCOUNTING MIDTERM ONE COMPREHENSIVE EXAM SCRIPT COMPLETE
QUESTIONS VERIFIED SOLUTIONS
⩥General-purpose financial statements are prepared primarily for
internal users. Answer: False: prepared for external users
⩥Financial reporting is directly concerned with stockholders and
creditors. Answer: True
⩥Financial reporting requires only a balance sheet, an income statement,
and a statement of cash flows, while other statements are optional.
Answer: False: also requires a statement of stockholders' equity and
comprehensive income statement
⩥Disclosure notes are considered an integral part of financial
statements. Answer: True
⩥Because accrual accounting is more predictive of future performance
than cash accounting, all financial statements reported follow accrual
accounting Answer: False: Financial accounting under GAAP employs
accrual accounting, however a statement of cash flows (that employs
cash basis accounting) is one of the required statements
, ⩥Resource allocation decisions drive the need for financial reporting.
Answer: True
⩥The process by which we identify, measure, and communicate
financial information about economic states and transactions to
interested parties Answer: Finanial Accounting
⩥what the public thinks accountants should be vs. what accountants
think they can do Answer: Expectations Gap
⩥A company's Form 10-K statement includes two or three years of
financial statement history, which is a source of information for
investors in forecasting future earnings. Answer: Relevance: predictive
value
⩥An investor reviewed the notes to the financial statements to assess a
company's debt structure. The investor was interested in the interest rate
on the loans, the terms of the notes, future payments, and related debt
covenants. Answer: Faithful representation: completeness
⩥A company discloses the impact of all recently proposed standards on
the company's consolidated financial position, results of operations, and
cash flows, regardless if it has a positive, negative, or immaterial impact.
Answer: Faithful representation: neutrality
QUESTIONS VERIFIED SOLUTIONS
⩥General-purpose financial statements are prepared primarily for
internal users. Answer: False: prepared for external users
⩥Financial reporting is directly concerned with stockholders and
creditors. Answer: True
⩥Financial reporting requires only a balance sheet, an income statement,
and a statement of cash flows, while other statements are optional.
Answer: False: also requires a statement of stockholders' equity and
comprehensive income statement
⩥Disclosure notes are considered an integral part of financial
statements. Answer: True
⩥Because accrual accounting is more predictive of future performance
than cash accounting, all financial statements reported follow accrual
accounting Answer: False: Financial accounting under GAAP employs
accrual accounting, however a statement of cash flows (that employs
cash basis accounting) is one of the required statements
, ⩥Resource allocation decisions drive the need for financial reporting.
Answer: True
⩥The process by which we identify, measure, and communicate
financial information about economic states and transactions to
interested parties Answer: Finanial Accounting
⩥what the public thinks accountants should be vs. what accountants
think they can do Answer: Expectations Gap
⩥A company's Form 10-K statement includes two or three years of
financial statement history, which is a source of information for
investors in forecasting future earnings. Answer: Relevance: predictive
value
⩥An investor reviewed the notes to the financial statements to assess a
company's debt structure. The investor was interested in the interest rate
on the loans, the terms of the notes, future payments, and related debt
covenants. Answer: Faithful representation: completeness
⩥A company discloses the impact of all recently proposed standards on
the company's consolidated financial position, results of operations, and
cash flows, regardless if it has a positive, negative, or immaterial impact.
Answer: Faithful representation: neutrality
