A304 Module 1 Review

Financial vs. managerial accounting differs primarily in that financial accounting:

Which is NOT one of the three primary business activities measured by accounting? Options: Operating, Investing, Hedging, Financing

The 1934 Securities Exchange Act most directly: Created the FASB, Created the SEC and periodic reporting, Mandated integrated audit for all private firms, Required sustainability reports

Which filing contains audited annual statements, notes, MD&A, and auditor’s report? Options: 10-Q, 8-K, 10-K, S-1

An unqualified audit opinion states that the financial statements are:

The Conceptual Framework’s fundamental qualitative characteristics are: Comparability and Verifiability, Relevance and Faithful Representation, Timeliness and Understandability, Materiality and Cost Constraint

Which is an enhancing qualitative characteristic (not fundamental)? Options: Relevance, Faithful Representation, Comparability, Neutrality

Which is a basic assumption underlying GAAP? Options: Conservatism, Periodicity (time-period), Full disclosure, Matching

Which best describes the agency problem? Options: Bank competition raises deposit rates, Managers (agents) may not act in owners’ interests due to information asymmetry, Auditors set GAAP to control firms, Investors disagree on returns

Typical ESG/sustainability disclosures include: LIFO layers, Greenhouse gas emissions and safety metrics, EPS computations, Derivatives fair-value hierarchy only