Exam 1: Introduction to Financial Reporting

Some industry practices lead to accounting reports that do not conform to the general theory that underlies accounting.

The most accurate way to account for the success or failure of an entity is to accumulate all transactions from the opening of business until the business eventually liquidates.

The going concern assumption:

Understating expenses is justified based on:

According to the second Financial Accounting Concept, those characteristics of information that make it a desirable commodity can be viewed as a hierarchy of qualities, with understandability and usefulness for decision making of most importance.

The following data relate to Falcon Company for the year ended December 31, 2010.Falcon Company uses the cash basis. Sales for cash $180,000 Sales for credit 190,000 Cost of inventory sold 210,000 Collections from customers 350,000 Purchases of inventory on credit 200,000 Payment for purchases 220,000 Selling expenses (accrual basis) 60,000 Payment for selling expenses 70,000 Which of the following amounts represents income for Falcon Company for the year ended December 31, 2010?

Decision usefulness is a pervasive constraint imposed upon financial accounting information.

Accounting Trends & Techniques is a compilation of data obtained by a survey of 600 annual reports to stockholders undertaken for the purpose of analyzing the accounting information disclosed in such reports.

The comment that "items that are not material may be recorded in the financial statements in the most economical and expedient manner possible" is representative of:

The Sarbanes-Oxley Act has had an insignificant effect on the relationship between the company and the internal auditor.

The organization that has by federal law the responsibility to adopt auditing standards is the:

The following data relate to Swift Company for the year ended December 31, 2010.Swift Company uses the accrual basis. Sales on credit $250,000 Cost of inventory sold on credit 170,000 Collections from customers 220,000 Purchase of inventory on credit 150,000 Payment for purchases 140,000 Selling expenses (accrual basis) 40,000 Payment for selling expenses 45,000 Which of the following amounts represents income for Swift Company for the year ended December 31, 2010?

Timeliness is a pervasive constraint imposed upon financial accounting information.

The assumption that deals with when to recognize the costs that are associated with the revenue that is being recognized is:

The Financial Accounting Standards Board has issued statements between:

The business being separate and distinct from the owners is an integral part of the:

The accountant records only the events that affect the financial position of the entity and that can be reasonably determined in monetary terms.

In order to determine the economic success of a grocery store, we should view it as separate from the other resources that are owned by this individual.

The principle that assumes the reader of the financial statements is not interested in the liquidation values is:

Among the many responsibilities of the PCAOB is to adopt accounting standards.