Exam 1: Introduction to Financial Reporting

Match the letter of each element with the appropriate definition. -Probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events.

Understating assets and revenues is justified based on:

With the expansion of international business and global capital markets,the business community and governments have shown a decreased interest in the harmonization of international accounting standards.

Match the letter of each phrase with the appropriate definition. -Accounting principles that have substantial authoritative support.

Match the letter of each element with the appropriate definition. -Increases in the equity (net assets)from peripheral or incidental transactions of an entity and from all other transactions and other events except circumstances from revenues or investments by owners.

Match the letter of each Concept Statement with the Concept Statement title. -Elements of Financial Statements (a replacement of No.3)

Domestic accounting standards have developed to meet the needs of international environments.

The Sarbanes-Oxley Act has far-reaching consequences for financial reporting and the CPA profession.

The assumption that allows accountants to accept some inaccuracy,because of incomplete information about the future,in exchange for more timely reporting is:

The most significant current source of generally accepted accounting principles is the:

An entity usually cannot reasonably account for the profits related to inventory until that inventory is sold in the normal course of business.

Match the letter of each Concept Statement with the Concept Statement title. -Using Cash Flow Information in Accounting Measurements

The going concern assumption:

Match the letter of each principle or assumption or qualitative characteristic with the appropriate statement. -Assumption that a business's financial statements are separate and distinct from the personal transactions of the owners.

The following data relate to Rocket Company for the year ended December 31,2012.Rocket Company uses the cash basis. Sales on credit \1 80,000 Cost of inventory sold on credit 130,000 Collections from customers 1700,000 Purchase of inventory on credit 140,000 Payment for purchases 150,000 Selling expenses (accrual basis) 20,000 Payment for selling expenses 25,0000 Which of the following amounts represents income for Rocket Company for the year ended December 31,2012?

Reporting under Sarbanes-Oxley revealed that very few companies had material weaknesses in their controls and processes.

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 IASB published an IFRS for SMEs in 2009.

Match the letter of each element with the appropriate definition. -The change in equity (net assets)of a business enterprise during a period from transactions and other events and circumstances from nonowner sources.It includes all changes in equity during a period,except those resulting from investments by owners and distributions to owners.

Match the letter of each phrase with the appropriate definition. -Presents all known facts and points of view on a topic;issued by the FASB.