Which of the following statements is not an objective of financial reporting?
a. Provide information that is useful to users in making resource allocation decisions. b. Provide information about an entity’s economic resources, obligations, and equity/net assets.
c. Provide information on the liquidation value of an enterprise.
d. Provide information about changes in an entity’s economic resources, obligations, and equity/net assets.
Which of the following describes one of the causes of management bias?
a. The need to comply with contracts, such as debt covenants.
b. The desire to meet financial analyst's expectations.
c. The tendency to emphasize positive events only.
d. All of these
Financial statements are prepared for the user. Which of the following best describes the responsibility for the preparation of financial statements?
a. They are the responsibility of management.
b. They are the responsibility of external auditors.
c. They are the responsibility of shareholders.
d. They are the responsibility of standard setters.
Which of the following is not an objective of financial reporting?
a. To provide information about an entity’s economic resources, obligations and equity/net assets.
b. To provide information that is helpful to investors and creditors and other users in making resource allocation decisions and/or assessing management stewardship. c. To provide information that is useful in assessing the economic performance of the entity.
d. All of these are objectives of financial reporting.
To measure the fair value of an asset, an entity should determine
a. The asset's nature, condition and location
b. The asset's valuation premise
c. The availability of data
d. All of the above
A severe cold snap may affect this year's crop of Florida's citrus growers. The potentially adverse affect is disclosed in the financial statements of the citrus growers. This practice can be best described as an application of
a. The derecognition of financial statement elements
b. The full disclosure principle
c. The going concern assumption
d. The economic entity assumption
Which of the following elements of financial statements is not a component of comprehensive income?
b. Distributions to owners
Which of the following is not a time when revenue may be recognized?
a. At time of sale
b. At receipt of cash
c. During production
d. All of these are possible times of revenue recognition.
Management Discussion and Analysis (MD&A) is
a. notes on meetings between management and auditors.
b. internal documents not released to shareholders.
c. supplementary information included in the annual report.
d. supplementary information included in the notes to the financial statements.
Adjusting entries are necessary to
a. obtain a proper matching of revenue and expense.
b. achieve an accurate statement of assets and equities.
c. adjust assets and liabilities to their fair market value.
d. both a and b.
Breg Company's account balances at December 31, 2010 for Accounts Receivable and the Allowance for Doubtful Accounts are $860,000 debit and $1,200 credit.
Sales during 2010 were $3,000,000. It is estimated that 2 percent of sales will be uncollectible. The adjusting entry would include a credit to the allowance account for a. $58,800
Use the following information for questions 12 through 14:
Poole Company paid or collected during 2010 the following items:
Insurance premiums paid
The following balances have been excerpted from Poole's balance sheets:
December 31, 2010
December 31, 2009
The insurance expense on the income statement for 2010 was
The interest revenue on the income statement