ACCT 351 Exam 1

Four different competent accountants independently agree on the amount and method of reporting an economic event. The concept demonstrated is:

• Reliability.

•  

  Comparability.

• Completeness.

• Verifiability.

A firm's comprehensive income always:

•  

  Is the same as its net income.

• Is greater than its net income.

• Is less than its net income.

• Could be greater than or less than net income.

The possibility that the capital markets' focus on periodic profits may tempt a company's management to bend or even break accounting rules to inflate reported net income is an example of:

• An ethical dilemma.

• An accounting theory issue.

• A technical accounting issue.

• An auditor's responsibility to inform the SEC.

Matching is a(n):

• Valuation method.

• Result of recognizing revenues and expenses that arise from the same transaction.

• Cash basis reporting principle.

• Asset classification procedure.

The FASB's standard-setting process includes, in the correct order:

•  

  Exposure draft, research, discussion paper, Accounting Standards Update.

• Research, exposure draft, discussion paper, Accounting Standards Update.

• Research, discussion paper, exposure draft, Accounting Standards Update.

•  

  Discussion paper, research, exposure draft, Accounting Standards Update.

Independent auditors express an opinion on the:

• Fairness of financial statements.

• Accuracy of financial statements

• Soundness of a company's future.

• Quality of a company's management.

Which of the following groups is not among financial intermediaries?

• Mutual fund managers

• Financial analysts

• CPAs

• Credit rating organizations

The primary objective of financial accounting information is to provide useful information about economic activity to:

• Management.

• Capital providers.

• Regulators.

• Academicians.

The primary focus for financial accounting information is to provide information useful for:

• Investing decisions: yes, Credit decisions yes

• Investing decisions: yes, Credit decisions no

• Investing decisions: no, Credit decisions yes

• Investing decisions: no, Credit decisions no

Information is useful in projecting cash flows.

• Predictive value

• Relevance

• Distribution to owners

• Confirmatory value

• Timeliness