Test Bank for Financial Reporting and Analysis 8th Edition by Lawrence
Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer Questions and
answers Graded A+
Financial statements and related disclosures provide information about - -a company's
economic activity.
/When preparing financial statements, company management - -has discretion in how it
applies accounting methods.
/The information asymmetry role of accounting is associated with - -communicating private
information to people outside the company.
/Fundamental analysis attempts to - -identify mispriced stocks.
/Employees demand financial statement information for which of the following reasons? - -
To know about union contracts
To assess the company's potential future solvency
To monitor the health of company-sponsored pension plans
/Financial statements and related disclosures report - -a company's economic wealth.
/Which of the following is a reason that lenders demand financial statement information? - -
To monitor adherence to covenants.
To determine the security needed for a business loan.
/When preparing financial statements, company management - -must follow accepted
accounting standards.
/Which of the following is a financial statement use of customers? - -To monitor financial
health and make purchasing decisions.
/The contract efficiency role of accounting is associated with - -determining the amount of
bonuses to be paid to managers.
/Shareholders and investors use financial statement information - -when evaluating the
performance of the company's top executives.
to help decide on a portfolio that meets their preferences.
to assess risk, dividend yield, and other firm attributes.
/Government and regulatory agencies demand financial statement information - -to regulate
businesses.
to resolve contractual disputes.
to monitor compliance with securities laws.
/Which of the following is a reason managers demand financial statement data? - -To execute
contracts that are linked to financial statement variables.
/Which of the following are functions of public and private sector regulatory agencies? - -To
establish financial reporting requirements.
, To enforce financial reporting requirements.
/True or false: Suppliers demand financial statements to assess a customer's ability to pay for
goods purchased. - -True
/Customers use financial statement information to - -decide whether to purchase a supplier's
goods and services.
monitor a supplier's financial health.
determine the seller's ability to provide replacement parts and technical support after the sale.
/Which of the following is true of disclosure benefits? - -Firms cannot obtain economic
benefits of disclosure at zero cost.
An economic benefit of proper disclosure is the ability to raise capital at a lower cost.
Competition creates incentives for companies to reveal good news about the firm.
/Which of the following is not one of the four costs that can arise from informative financial
disclosures? - -SEC filing costs
/Financial statement information is demanded by ______ for regulatory intervention. - -
government agencies
/The term "professional analyst" refers to - -equity investors, creditors, and auditors.
/Which of the following are true of financial information disclosure? - -The SEC and FASB
regulate financial reporting in the United States.
Companies frequently communicate more financial information than is required.
/The ability to raise additional cash by selling assets, issuing stock, or borrowing more is
known as - -financial flexibility.
/Which of the following are the primary characteristics needed to achieve GAAP's goal of
ensuring that a company's financial statements clearly represent its economic condition and
performance? - -Relevance
Faithful representation
/Owners and managers have an economic incentive to supply the amount and type of
financial disclosures that will enable them to raise capital - -at the lowest cost.
/A company may be reluctant to disclose information because - -it could be used by
competitors.
/The two primary characteristics of useful financial information are - -relevance and faithful
representation.
/Which of the following professionals use financial statements to project future cash flows? -
-Equity investors, creditors, and auditors.
/Which of the following regulatory bodies currently has the primary responsibility for
determining U.S. accounting standards? - -Financial Accounting Standards Board (FASB)
Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer Questions and
answers Graded A+
Financial statements and related disclosures provide information about - -a company's
economic activity.
/When preparing financial statements, company management - -has discretion in how it
applies accounting methods.
/The information asymmetry role of accounting is associated with - -communicating private
information to people outside the company.
/Fundamental analysis attempts to - -identify mispriced stocks.
/Employees demand financial statement information for which of the following reasons? - -
To know about union contracts
To assess the company's potential future solvency
To monitor the health of company-sponsored pension plans
/Financial statements and related disclosures report - -a company's economic wealth.
/Which of the following is a reason that lenders demand financial statement information? - -
To monitor adherence to covenants.
To determine the security needed for a business loan.
/When preparing financial statements, company management - -must follow accepted
accounting standards.
/Which of the following is a financial statement use of customers? - -To monitor financial
health and make purchasing decisions.
/The contract efficiency role of accounting is associated with - -determining the amount of
bonuses to be paid to managers.
/Shareholders and investors use financial statement information - -when evaluating the
performance of the company's top executives.
to help decide on a portfolio that meets their preferences.
to assess risk, dividend yield, and other firm attributes.
/Government and regulatory agencies demand financial statement information - -to regulate
businesses.
to resolve contractual disputes.
to monitor compliance with securities laws.
/Which of the following is a reason managers demand financial statement data? - -To execute
contracts that are linked to financial statement variables.
/Which of the following are functions of public and private sector regulatory agencies? - -To
establish financial reporting requirements.
, To enforce financial reporting requirements.
/True or false: Suppliers demand financial statements to assess a customer's ability to pay for
goods purchased. - -True
/Customers use financial statement information to - -decide whether to purchase a supplier's
goods and services.
monitor a supplier's financial health.
determine the seller's ability to provide replacement parts and technical support after the sale.
/Which of the following is true of disclosure benefits? - -Firms cannot obtain economic
benefits of disclosure at zero cost.
An economic benefit of proper disclosure is the ability to raise capital at a lower cost.
Competition creates incentives for companies to reveal good news about the firm.
/Which of the following is not one of the four costs that can arise from informative financial
disclosures? - -SEC filing costs
/Financial statement information is demanded by ______ for regulatory intervention. - -
government agencies
/The term "professional analyst" refers to - -equity investors, creditors, and auditors.
/Which of the following are true of financial information disclosure? - -The SEC and FASB
regulate financial reporting in the United States.
Companies frequently communicate more financial information than is required.
/The ability to raise additional cash by selling assets, issuing stock, or borrowing more is
known as - -financial flexibility.
/Which of the following are the primary characteristics needed to achieve GAAP's goal of
ensuring that a company's financial statements clearly represent its economic condition and
performance? - -Relevance
Faithful representation
/Owners and managers have an economic incentive to supply the amount and type of
financial disclosures that will enable them to raise capital - -at the lowest cost.
/A company may be reluctant to disclose information because - -it could be used by
competitors.
/The two primary characteristics of useful financial information are - -relevance and faithful
representation.
/Which of the following professionals use financial statements to project future cash flows? -
-Equity investors, creditors, and auditors.
/Which of the following regulatory bodies currently has the primary responsibility for
determining U.S. accounting standards? - -Financial Accounting Standards Board (FASB)
