Conceptual framework

How does accounting help the capital allocation process attract investment capital?

• Provides timely, relevant information.

• Encourages innovation.

• Promotes productivity.

• Increase good reputation

The major financial statements include all of the following except:

• a. Statement of financial position.

• Statement of changes in financial position.

• a. Statement of comprehensive income.

• a. Statement of stockholders’ equity.

General-purpose financial statements are the product of

• financial accounting.

• managerial accounting.

• both financial and managerial accounting.

• neither financial nor managerial accounting.

What is a major objective of financial reporting?

• Provide information that is useful to management in making decisions.

• Provide information that clearly portray nonfinancial transactions.

• Provide information that is useful to assess the amounts, timing, and uncertainty of perspective cash receipts.

• Provide information that excludes claims to the resources.

The underlying theme of the conceptual framework is

• decision usefulness.

• understandability.

• reliability.

• comparability.

Which of the following is a fundamental quality of useful accounting information?

• Comparability.

• Relevance.

• Consistency.

• Materiality.

Which of the following is an ingredient of relevance?

• Completeness.

• Representational faithfulness.

• Neutrality.

• Predictive value.

Which of the following is an ingredient of faithful representation?

• Predictive value.

• Timeliness.

• Neutrality.

• Feedback value.

The two fundamental qualities that make accounting information useful for decision making are

• comparability and consistency.

• materiality and timeliness.

• relevance and faithful representation.

• reliability and comparability.

Which of the following is not a basic element of financial statements?

• Assets.

• Statement of financial position.

• Equity.

• Income.