Multiple-choice questions:

a. Which of the following is a characteristic of information provided by external financial reports?

1. The information is exact and not subject to change.

2. The information is frequently the result of reasonable estimates.

3. The information pertains to the economy as a whole.

4. The information is provided at the least possible cost.

5. None of the above.

b. Which of the following is not an objective of financial reporting?

1. Financial reporting should provide information that is useful to present and potential investors and creditors and other users in making rational investment, credit, and similar decisions.

2. Financial reporting should provide information to help present and potential investors and creditors and other users in assessing the amounts, timing, and uncertainty of prospective cash receipts from dividends or interest and the proceeds from the sale, redemption, or maturity of securities or loans.

3. Financial reporting should provide information about the economic resources of an enterprise, the claims against those resources, and the effects of transactions, events, and circumstances that change the resources and claims against those resources.

4. Financial accounting is designed to measure directly the value of a business enterprise.

5. None of the above.

c. According to FASB Statement of Financial Accounting Concepts No. 2, which of the following is an ingredient of the quality of relevance?

1. Verifiability

2. Representational faithfulness

3. Neutrality

4. Timeliness

5. None of the above

d. The primary current source of generally accepted accounting principles for nongovernment operations is the

1. New York Stock Exchange

2. Financial Accounting Standards Board

3. Securities and Exchange Commission

4. American Institute of Certified Public Accountants

5. None of the above

e. What is the underlying concept that supports the immediate recognition of a loss?

1. Matching

2. Consistency

3. Judgment

4. Conservatism

5. Going concern

f. Which statement is not true?

1. The Securities and Exchange Commission is a source of some generally accepted accounting principles.

2. The American Institute of Certified Public Accountants is a source of some generally accepted accounting principles.

3. The Internal Revenue Service is a source of some generally accepted accounting principles.

4. The Financial Accounting Standards Board is a source of some generally accepted accounting principles.

5. Numbers 1, 2, and 4 are correct.

g. Which pronouncements are not issued by the Financial Accounting Standards Board?

1. Statements of Financial Accounting Standards

2. Statements of Financial Accounting Concepts

3. Technical bulletins

4. Interpretations

5. Opinions