Chapter 1 Acct 2010

Which of the following organizations can use financial​ statements?

• 
  Investors and creditors

• 
  Regulatory bodies

• .

  Individuals

• 
  All of the above

Jonathan is a patent attorney and is starting a legal practice. What form of business organization limits his liability to the amount he has invested in the​ business?

• 
  Proprietorship  

• 
  Corporation

• 
  Partnership

• None of the above

An​ organization's investors and creditors will primarily use information provided by

• the Internal Revenue Service.

• 
  the Financial Accounting Standards Board.

• 
  the​ organization's managerial accounting system.

• 
  the​ organization's financial accounting system.

The primary objective of financial reporting is to provide information

• on the cash flows of the company.

• 
  about the profitability of the enterprise.

• 
  useful for making investment and credit decisions.

• to the federal government.

Which type of business organization provides the least amount of protection for bankers and other creditors of a​ company?

• 
  Corporation

• Proprietorship

• Partnership

What is the historical cost?

• 520,000

• 530,000

• 580,000

• 544,000

To be​ useful, information must have which of the following fundamental qualitative​ characteristics?

• Expediency and relevance

• 
  Timeliness and affordability

• 
  Relevance and faithful representation

• Faithful representation and diversity

Which of the following is a true statement about International Financial Reporting​ Standards?

• They are not being applied anywhere in the world​ yet, but soon they will be.

• They are considered to be the single strongest set of accounting standards in the world.

• They are more exact​ (contain more​ rules) than U.S. accounting principles.

• 
  None of the listed answers are true.

Assets are usually reported at their

• appraised value.

• 
  current market value.

• 
  historical cost.

• none of the above.

Assume that a business is headed for certain bankruptcy and it is evident that its liabilities greatly exceed its assets. Which principle would be violated if its financial statements were prepared using standard U.S.​ GAAP?

• Historical cost principle

• 
  Entity assumption

• ​Stable-monetary-unit assumption

• Continuity assumption