ACC370 Exam

The periodicity assumption requires that present value calculations take into account the number of compounding periods in each year - False The primary function of financial accounting is to provide relevant financial information to parties external to business enterprises - True The purpose of the conceptual framework is to provide a structure and framework for a consistent set of GAAP - True The FASB is currently the public-sector organization responsible for settling accounting standards in the United States - False The adjusted trial balance contains only permanent accounts - False The income statement summarizes the operating activity of a firm at a particular point in time - False Owners' equity can be expressed as assets minus liabilities - True Debits increase asset accounts and decrease liability accounts - True Balance sheet accounts are referred to as temporary accounts because their balances are always changing - False The balance sheet reports a company's financial position at a point in time - True All current assets are either cash or assets that will be converted into cash or consumed within 12 months or the operating cycle, whichever is longer - True Assets classified as property, plant, equipment include machinery, equipment, and inventories - False Accrued salaries and wages in a balance sheet represent salaries and wages that have been earned by employees but not yet paid - True The criteria for demanding which items comprise each cash equivalents often is disclosed in the summary of significant accounting policies - True Subsequent events are significant developments that take place after a firm's year-end, and after the financial statements are issued or available to be issued - False Illegal acts will only need to be disclosed if the impact of the act is material - False Gains, but not losses, from discontinued operations must be separately recorded in an income statement - False Comprehensive income is the total change in shareholders' equity that occurred during the period - False Earnings quality refers to the ability of reported earnings (income) to predict future earnings - True Income statements prepared according to both US GAAP and IFRS require the separate reporting of discontinued operations - True The assumptions that in the absence of contrary information a business entity will continue indefinitely is the: - Going concern assumption CPAs are license by: - State governments An important argument in support of historical cost information is: - Verifiability