CFAS - Chapter 4: Multiple Choice questions with correct answers

What is the general objective of financial statements? a. To provide information about economic resources of an entity, claims against the entity and changes in the economic resources and claims. b. To assess future cash flows to the entity c. To assess management stewardship of economic resources d. To satisfy the information needs of users of financial statements - correct answer a A reporting entity is a. Necessarily a legal entity b. Necessarily an economic entity c. An entity that is required or chooses to prepare financial statements d. A regulatory government authority - correct answer c A reporting entity a. Can be a single entity b. Can be a portion of a single entity c. Can comprise more than one entity d. All of these can be considered a reporting entity - correct answer d If the reporting entity comprises both the parent and its subsidiaries, the financial statements are referred to as