INTERMEDIATE ACCOUNTING 4TH EDITION BY
ELIZABETH GORDON ACTUAL EXAM
QUESTIONS AND CORRECT ANSWERS
◉ general-purpose financial statements.
Answer: provide financial reporting information to a wide variety of
users
◉ accrual basis accounting.
Answer: ensures that a company records events that change its
financial statements in the periods in which it receives or pays cash
◉ generally accepted accounting principles (GAAP).
Answer: common set of accounting standards and procedures:
Securities and Exchange Commission (SEC)
American Institute of Certified Public Accountants (AICPA)
Financial Accounting Standards Board (FASB)
◉ Financial Accounting Standards Board.
Answer: establish and improve standards of financial accounting
and reporting for the guidance and education of the public which
includes issuers, auditors, and users of financial information
,◉ Accounting Standards Updates.
Answer: These updates amend the Accounting Standards
Codification, which represents the source of authoritative
accounting standards
◉ Four primary financial statements.
Answer: Balance Sheet
Income Statement
Statement of Cash Flows
Statement of Owner's/Stockholders' Equity
◉ Conceptual Framework.
Answer: establishes the concepts that underlie financial reporting.
◉ Relevance (Fundamental Quality).
Answer: accounting information must be capable of making a
difference in a decision. Financial information is capable of making a
difference when it has predictive value, confirmatory value, or both.
◉ Predictive Value.
Answer: if it has value as an input to predictive processes used by
investors to form their own expectations about the future
, ◉ Confirmatory value.
Answer: relevant information also helps users confirm or correct
prior expectations
◉ Faithful Representation (fundamental quality).
Answer: means that the numbers and descriptions match what
really existed or happened
◉ Completeness.
Answer: means that all the information that is necessary for faithful
representation is provided
◉ Neutrality.
Answer: means that a company cannot select information to favor
one set of interested parties over another. Unbiased information
must be the overriding consideration.
◉ Free from Error.
Answer: more accurate (faithful representation) of a financial item
◉ Comparability (Enhancing Qualities).
ELIZABETH GORDON ACTUAL EXAM
QUESTIONS AND CORRECT ANSWERS
◉ general-purpose financial statements.
Answer: provide financial reporting information to a wide variety of
users
◉ accrual basis accounting.
Answer: ensures that a company records events that change its
financial statements in the periods in which it receives or pays cash
◉ generally accepted accounting principles (GAAP).
Answer: common set of accounting standards and procedures:
Securities and Exchange Commission (SEC)
American Institute of Certified Public Accountants (AICPA)
Financial Accounting Standards Board (FASB)
◉ Financial Accounting Standards Board.
Answer: establish and improve standards of financial accounting
and reporting for the guidance and education of the public which
includes issuers, auditors, and users of financial information
,◉ Accounting Standards Updates.
Answer: These updates amend the Accounting Standards
Codification, which represents the source of authoritative
accounting standards
◉ Four primary financial statements.
Answer: Balance Sheet
Income Statement
Statement of Cash Flows
Statement of Owner's/Stockholders' Equity
◉ Conceptual Framework.
Answer: establishes the concepts that underlie financial reporting.
◉ Relevance (Fundamental Quality).
Answer: accounting information must be capable of making a
difference in a decision. Financial information is capable of making a
difference when it has predictive value, confirmatory value, or both.
◉ Predictive Value.
Answer: if it has value as an input to predictive processes used by
investors to form their own expectations about the future
, ◉ Confirmatory value.
Answer: relevant information also helps users confirm or correct
prior expectations
◉ Faithful Representation (fundamental quality).
Answer: means that the numbers and descriptions match what
really existed or happened
◉ Completeness.
Answer: means that all the information that is necessary for faithful
representation is provided
◉ Neutrality.
Answer: means that a company cannot select information to favor
one set of interested parties over another. Unbiased information
must be the overriding consideration.
◉ Free from Error.
Answer: more accurate (faithful representation) of a financial item
◉ Comparability (Enhancing Qualities).
