Multiple Choice Questions
Determine the response that best completes the following statements or questions.
1. The primary objective of financial reporting is to provide information
a. About a firm’s management team.
b. Useful to capital providers.
c. Concerning the changes in financial position resulting from the income-producing efforts of the entity.
d. About a firm’s financing and investing activities.
2. Statements of Financial Accounting Concepts issued by the FASB
a. Represent GAAP.
b. Have been superseded by SFAS s.
c. Are subject to approval of the SEC.
d. Identify the conceptual framework within which accounting standards are developed.
3. In general, revenue is recognized as earned when the earning process is virtually complete.
a. The sales price has been collected.
b. A purchase order has been received.
c. There is reasonable certainty as to the collectibility of the asset to be received.
d. A contract has been signed.
4. In depreciating the cost of an asset, accountants are most concerned with
a. Conservatism.
b. The realization principle.
c. Full disclosure.
d. The matching principle.
5. The primary objective of the matching principle is to
a. Provide full disclosure.
b. Record expenses in the period that related revenues are recognized.
c. Provide timely information to decision makers.
d. Promote comparability between financial statements of different periods.
6. The separate entity assumption states that, in the absence of contrary evidence, all entities will survive indefinitely.
a. True
b. False