LEARNING OBJECTIVES: FACC.PONO.18.02-01 - LO: 02-01

Chapter 2

© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Page 1

True / False

• Financial statements are intended to tell the reader the value of a company.
• True
• False

ANSWER: False

DIFFICULTY: Easy

REFERENCES: pp.52-53

LEARNING OBJECTIVES: FACC.PONO.18.02-01 - LO: 02-01

NATIONAL STANDARDS: United States - BUSPROG: Communications ACCREDITING STANDARDS: ACBSP: APC-01-Purpose

AICPA: FN-Reporting

KEYWORDS: Bloom's: Remembering

• Accountants are the main reason financial statements are prepared.
• True
• False

ANSWER: False

DIFFICULTY: Easy

REFERENCES: pp. 52-53

LEARNING OBJECTIVES: FACC.PONO.18.02-01 - LO: 02-01

NATIONAL STANDARDS: United States - BUSPROG: Communications ACCREDITING STANDARDS: ACBSP: APC-01-Purpose

AICPA: FN-Reporting

KEYWORDS: Bloom's: Remembering

• The SEC created the objectives of financial reporting.
• True
• False

ANSWER: False

DIFFICULTY: Easy

REFERENCES: pp. 52-53

LEARNING OBJECTIVES: FACC.PONO.18.02-01 - LO: 02-01

NATIONAL STANDARDS: United States - BUSPROG: Communications ACCREDITING STANDARDS: ACBSP: APC-01-Purpose

AICPA: FN-Reporting

KEYWORDS: Bloom's: Remembering

Using Financial Accounting Information The Alternative to Debits and Credits 10th Edition Porter Test Bank Visit TestBankDeal.com to get complete for all chapters

Chapter 2

© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Page 2

• The purpose of financial reporting is to provide economic information to external decision makers only.
• True
• False

ANSWER: False

DIFFICULTY: Easy

REFERENCES: pp. 52-53

LEARNING OBJECTIVES: FACC.PONO.18.02-01 - LO: 02-01

NATIONAL STANDARDS: United States - BUSPROG: Communications ACCREDITING STANDARDS: ACBSP: APC-01-Purpose

AICPA: FN-Reporting

KEYWORDS: Bloom's: Remembering

• An objective of financial reporting is to reflect economic information concerning a company's cash flows.
• True
• False

ANSWER: True

DIFFICULTY: Easy

REFERENCES: pp. 52-53

LEARNING OBJECTIVES: FACC.PONO.18.02-01 - LO: 02-01

NATIONAL STANDARDS: United States - BUSPROG: Communications ACCREDITING STANDARDS: ACBSP: APC-01-Purpose

AICPA: FN-Reporting

KEYWORDS: Bloom's: Remembering

• The concept of conservatism is the capacity of information to make a difference in a decision.
• True
• False

ANSWER: False

DIFFICULTY: Easy

REFERENCES: pp. 53-56

LEARNING OBJECTIVES: FACC.PONO.18.02-02 - LO: 02-02

NATIONAL STANDARDS: United States - BUSPROG: Communications

ACCREDITING STANDARDS: ACBSP: APC-02-GAAP

AICPA: FN-Reporting

KEYWORDS: Bloom's: Remembering

Chapter 2

© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Page 3

• There is a standard threshold for materiality set by the Financial Accounting Standards Board for all companies.
• True
• False

ANSWER: False

DIFFICULTY: Easy

REFERENCES: pp. 53-56

LEARNING OBJECTIVES: FACC.PONO.18.02-02 - LO: 02-02

NATIONAL STANDARDS: United States - BUSPROG: Communications

ACCREDITING STANDARDS: ACBSP: APC-02-GAAP

AICPA: FN-Reporting

KEYWORDS: Bloom's: Remembering

• The lack of a common depreciation method makes it impossible to compare the performance of companies using

different methods.

• True
• False

ANSWER: False

DIFFICULTY: Easy

REFERENCES: pp. 53-56

LEARNING OBJECTIVES: FACC.PONO.18.02-02 - LO: 02-02

NATIONAL STANDARDS: United States - BUSPROG: Communications

ACCREDITING STANDARDS: ACBSP: APC-02-GAAP

AICPA: FN-Reporting

KEYWORDS: Bloom's: Remembering

• The amount of a transaction may be immaterial by company standards but still be considered significant by financial

statement users.

• True
• False

ANSWER: True

DIFFICULTY: Easy

REFERENCES: pp. 53-56

LEARNING OBJECTIVES: FACC.PONO.18.02-02 - LO: 02-02

NATIONAL STANDARDS: United States - BUSPROG: Communications

ACCREDITING STANDARDS: ACBSP: APC-02-GAAP

AICPA: FN-Reporting

KEYWORDS: Bloom's: Remembering

Chapter 2

© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Page 4

• The quality of accounting information that allows a user to compare two or more accounting periods for a single

company is known as consistency.

• True
• False

ANSWER: True

DIFFICULTY: Easy

REFERENCES: pp. 53-56

LEARNING OBJECTIVES: FACC.PONO.18.02-02 - LO: 02-02

NATIONAL STANDARDS: United States - BUSPROG: Communications

ACCREDITING STANDARDS: ACBSP: APC-02-GAAP

AICPA: FN-Reporting

KEYWORDS: Bloom's: Remembering

• Materiality deals with the insignificance of an error in accounting information.
• True
• False

ANSWER: False

DIFFICULTY: Easy

REFERENCES: pp. 53-56

LEARNING OBJECTIVES: FACC.PONO.18.02-02 - LO: 02-02

NATIONAL STANDARDS: United States - BUSPROG: Communications

ACCREDITING STANDARDS: ACBSP: APC-02-GAAP

AICPA: FN-Reporting

KEYWORDS: Bloom's: Remembering

• The quality of accounting information that makes it comprehensible to those willing to spend the necessary time is

consistency.

• True
• False

ANSWER: False

DIFFICULTY: Easy

REFERENCES: pp. 53-56

LEARNING OBJECTIVES: FACC.PONO.18.02-02 - LO: 02-02

NATIONAL STANDARDS: United States - BUSPROG: Communications

ACCREDITING STANDARDS: ACBSP: APC-02-GAAP

AICPA: FN-Reporting

KEYWORDS: Bloom's: Remembering