________ 4. net income
________ 5. proprietorship
________ 6. balance sheet
________ 7. liabilities
________ 8. assets
Answer:
1. f
2. g
3. b
4. e
5. a
6. h
7. d
8. c
Diff: 2 Type: ES
L.O.: 1-3
CPA COMPETENCIES: Chapter 1
1.1.1 Evaluates financial reporting needs
1.1.2 Evaluates the appropriateness of the basis of financial reporting
1.1.3 Evaluates reporting processes to support reliable financial reporting
1.4 Explain accounting's conceptual framework and underlying assumptions
1) In order for information to be considered a faithful representation it must be all of the following except:
A) complete
B) predictive
C) without material error
D) neutral
Answer: B
Diff: 2 Type: MC
L.O.: 1-4
CPA COMPETENCIES: Chapter 1
1.1.1 Evaluates financial reporting needs
1.1.2 Evaluates the appropriateness of the basis of financial reporting
1.1.3 Evaluates reporting processes to support reliable financial reporting
2) The primary objective of financial reporting is to provide information:
A) to the federal government about tax matters
B) useful for making investment and lending decisions
C) regarding the cash flows of the business
D) about the profitability of the business
Answer: B
Diff: 2 Type: MC
L.O.: 1-4
CPA COMPETENCIES: Chapter 1
1.1.1 Evaluates financial reporting needs
1.1.2 Evaluates the appropriateness of the basis of financial reporting
1.1.3 Evaluates reporting processes to support reliable financial reporting
3) The ________ assumption assumes that the organization will continue operating normally for the foreseeable future.
A) cost
B) stable monetary unit
C) entity
D) going-concern
Answer: D
Diff: 1 Type: MC
L.O.: 1-4
CPA COMPETENCIES: Chapter 1
1.1.1 Evaluates financial reporting needs
1.1.2 Evaluates the appropriateness of the basis of financial reporting
1.1.3 Evaluates reporting processes to support reliable financial reporting
4) The accounting concept that maintains that each organization or section of an organization stands apart from other organizations and individuals is known as the:
A) reliability principle
B) going-concern assumption
C) entity assumption
D) monetary unit assumption
Answer: C
Diff: 2 Type: MC
L.O.: 1-4
CPA COMPETENCIES: Chapter 1
1.1.1 Evaluates financial reporting needs
1.1.2 Evaluates the appropriateness of the basis of financial reporting
1.1.3 Evaluates reporting processes to support reliable financial reporting
5) The principle that states that assets acquired by the business should be recorded at their actual price is the:
A) objectivity assumption