A. usefulness for decision making
B. free from bias
C. timeliness
D. comparability
E. neutral
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-05 Identify, explain, and apply accounting principles.
Topic: 01-18 GAAP for Public vs. Private Enterprises
182. The adoption of international accounting standards is an application of which of the following quality enhancing characteristics of financial information
A. verifiability
B. understandability
C. timeliness
D. comparability
E. completeness
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 01-05 Identify, explain, and apply accounting principles.
Topic: 01-18 GAAP for Public vs. Private Enterprises
183. The primary objective of financial accounting is
A. to help organizations keep track of financing activities
B. to provide external reports to help users analyze an organization's activities
C. to help an organization define its ideas, goals, and action
D. to help an organization to keep track of its buying and selling of resources
E. to prepare budgets
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 01-03 Identify users and uses of, and opportunities in, accounting.
Topic: 01-07 External Information Users
184. Blue Company collected $2,000 cash for work completed. The effects on the accounting equation are
A. total assets decrease, and equity increases
B. both total assets and total liabilities decrease
C. total assets, total liabilities, and equity are unchanged
D. both total assets and equity are unchanged
E. total assets increase and equity increases
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: Medium
Learning Objective: 01-07 Analyze business transactions by applying the accounting equation.
Topic: 01-22 Transaction Analysis
185. Which of the following is not reported on the income statement?
A. revenues earned by a business
B. expenses incurred by a business
C. withdrawals
D. profit
E. All of these
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 01-06 Identify and explain the content and reporting aims of financial statements.
Topic: 01-20 Previewing Financial Statements
Short Answer Questions
186. Describe the purpose and importance of accounting.
Accounting is an information system. It provides organizations with the tools to identify, record, and communicate relevant information that faithfully represents of an organization's economic activities. Accounting helps organizations to better assess opportunities, products, investments, and social and community responsibilities.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 01-01 Describe the purpose and importance of accounting.
Topic: 01-01 What Is Accounting?
187. Identify the three forms of business organizations.
The three forms of business organizations are sole proprietorships, partnerships, and corporations.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-02 Describe forms of business organization.
Topic: 01-05 Business Organizations
188. Identify three advantages to setting up a corporation as an owner's legal business structure.
Separate legal status means that the shareholders are not personally liable for corporate acts and debts.
It can enter into its own contracts, and it can buy, own, and sell property.
Shareholders are legally distinct from the business and their loss is limited to whatever resources they have invested.
Can raise resources from shareholders who are not active in managing the business
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 01-02 Describe forms of business organization.
Topic: 01-05 Business Organizations
189. Identify the form of business organization(s) to which the following characteristics apply.(a) Is a separate business entity.(b) Can be owned by one person.(c) Owner or owners are personally liable for debts of the business.(d) Is a taxable entity.(e) Is created by a charter from a provincial or the federal government.(f) Keeps the accounting of its transactions separate from the owner's(s') personal transactions.(g) May have a contract specifying the division of profits among the owners.(h) Owner or owners are not personally liable for debts of the business. Use the following format to indicate whether or not a characteristic applies to each type of business organization.