ACCCOB2_Review_Q1_Theories

The objective of general-purpose financial statements is to provide information about the financial position, performance and cash flows of an entity that is useful to specific range of users in making economic decisions.

• T

• F

A company continues to sell goods on account because it believes its customers will make good their promise to pay their account is an application of going concern.

• T

• F

All of the following are components of relevance, EXCEPT

• Predictive value

• Confirmatory value

• Completeness

• Materiality

Profit is the difference between

• assets and liabilities.

• the incoming cash and outgoing cash.

• the assets purchased with cash contributed by the owner and the cash spent to operate the business.

• the assets received for goods and services and the amounts used to provide the goods and services.

Which of the following is usually considered cash?

• CDs

• Checking account

• Money market savings certificate

• Postdated cheque

Highly liquid investments are cash equivalents if the maturity is 90 days or less

• from the date the investments are acquired.

• from the end of the reporting period.

• from the date of issue of financial statements.

• from the beginning of the reporting period.

In preparing a bank reconciliation, the amount indicated by a debit memorandum for bank service charges is deducted from the balance per books.

• T

• F

Accounts receivable should normally be reported at

• Present value of future cash receipts

• Expected amount to be received

• Current value plus accrued interest

• Current value less expected collections

When an accounts receivable is sold outright, the accounts receivable has been pledged.

• T

• F