CFAS - Chapter 4: Multiple Choice questions correctly answered already passed

CFAS - Chapter 4: Multiple Choice questions correctly answered already passedWhat 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 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 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 d If the reporting entity comprises both the parent and its subsidiaries, the financial statements are referred to as a. Consolidated financial statements b. Unconsolidated financial statements c. Combined financial statements d. Separate financial statements a Combined financial statements provide financial information about a. The parent and its subsidiaries b. The parent c. The subsidiaries d. Two or more entities without a parent- subsidiary relationship d Which best describes the term going concern? a. When current liabilities exceed current assets b. The ability of the entity to continue in operation for the foreseeable future c. The potential to contribute to the flow of cash and cash equivalent to the entity d. The expenses exceed income b Which is an implication of the going concern assumption? a. The historical cost principle is credible b. Depreciation and amortization polices are justifiable and appropriate c. The current and non current classification of assets and liabilities is justifiable and significant d. All of these are an implication of going conern d The relatively stable economic, political and social environment supports a. Conservatism b. Materiality c. Timeliness d. Going concern d Which of the following is not a basic assumption underlying financial accounting? a. Economic entity assumption b. Going concern assumption c. Periodicity assumption d. Historical cost assumption d Which basic assumption may not be followed when an entity in bankruptcy reports financial results? a. Economic entity assumption b. Going concern assumption c. Periodicity assumption d. Monetary unit assumption b The economic entity assumption a. Is inapplicable to unincorporated businesses b. Recognize the legal aspects of business organization c. Requires periodic income measurement d. Is applicable to all forms of business organization d What is being violated if an entity provides financial reports in connection with a new product introduction? a. Economic entity b. Periodicity c. Monetary unit d. Continuity a Which underlying assumption serves as the basis for preparing financial statements at regular artificial points in time? a. Accounting entity b. Going concern c. Accounting period d. Stable monetary unit c Which basic accounting assumption us threatened by the existence of severe inflation in the economy? a. Monetary unit assumption b. Periodicity assumption c. Going concern assumption d. Economic entity assumption a Inflation is ignored in accounting due to a. Economic entity assumption b. Going concern assumption c. Monetary unit assumption d. Time period assumption c The concept of accounting entity is applicable a. Only to the legal aspects of business organization b. Only to the economic aspects of business organizations c. Only to business organizations d. Whenever accounting is involved d When a parent and subsidiary relationship exists, consolidated financial statements are prepared in recognition of a. Legal entity b. Economic entity c. Stable monetary unit d. Time period b The valuation of a promise to receive cash in the future at present value is valid because of what accounting concept? a. Entity b. Time period c. Going concern d. Monetary unit c what is the accounting concept that justifies the usage of accruals and deferrals? a. Going concern b. Materiality c. Consistency d. Stable monetary unit a During the lifetime of an entity accountant produce financial statements at arbitrary points in time in accordance with what basic accounting concept? a. Accruals b. Periodicity c. Unit of measure d. Continuity b