Question

E 1-15 Multiple choice; concept statements, basic assumptions, principles Determine the response that best completes the following statements or questions. 1. The primary objective of financial reporting is to provide information a. About a firm's management team b. Useful to capital providers C. Concerning the changes in financial position resulting from the income- producing efforts of the entity d. About a firm's financing and investing activities 2. Statements of Financial Accounting Concepts issued by the FASB a. Represent GAAP b. Have been superseded by SFASS c. Are subject to approval of the SEC d. Identify the conceptual framework within which accounting standards are developed 3. In general, revenue is recognized when a. The sales price has been collected b. A purchase order has been received C. A good or service has been delivered to a customer d. A contract has been signed 4. In depreciating the cost of an asset, accountants are most concerned with a. Conservatism b. Recognizing revenue in the appropriate period C. Full disclosure d. Recognizing expense in the appropriate period 5. The primary objective of the matching principle is to a. Provide full disclosure b. Record expenses in the period that related revenues are recognized C. Provide timely information to decision makers d. Promote comparability between financial statements of different periods 6. The separate entity assumption states that, in the absence of contrary evidence, all entities will survive indefinitely. a. True b. False Page 8

Answer 1

Answers:

1. b. Useful to capital providers.

The primary objective of financial reporting is to provide information to capital providers.it helps them to make decisions about how to manage business.

2. d. Identify the conceptual framework within which Accounting Standards are developed.

3. c. A good or service has been delivered to a customer.

4. d. Recognizing expense in the appropriate period.

5. b. Record expense in the period that related revenues are recognised.

6. b. False.