Exam 1: Introduction to Financial Reporting

Match the letter of each Concept Statement with the Concept Statement title. -Objectives of Financial Reporting by nonbusiness

Relevance and reliability are two primary qualities that make accounting information useful for decision making.

The following data relate to Falcon Company for the year ended December 31, 2012.Falcon Company uses the cash basis. Sales for cash \ 180,000 Sales for credit 190,000 Cost of inventory sold 210,000 Collections from customers 350,000 Purchases of inventory on credit 200,000 Payment for purchases 220,000 Selling expenses (accrual basis) 60,000 Payment for selling expenses 70,000 Which of the following amounts represents income for Falcon Company for the year ended December 31, 2012?

It would always be conservative to value inventory at market.

The realization principle leads accountants to usually recognize revenue at:

At the time of originally recording a transaction, historical cost also represents the fair market value.

Other than December, the most popular month for fiscal year-end is:

The Sarbanes-Oxley Act has far-reaching consequences for financial reporting and the CPA profession.

For a public company, the SEC requires that a report be filed annually on its internal control systems.

Valuing inventory at the lower of cost or market is an application of the:

Accounting Trends & Techniques is a compilation of data obtained by a survey of annual reports to stockholders undertaken for the purpose of analyzing the accounting information disclosed in such reports.

Reporting under Sarbanes-Oxley revealed that very few companies had material weaknesses in their controls and processes.

Match the letter of each phrase with the appropriate definition. -Created by the Securities Exchange Act of 1934.

The SEC has the authority to determine generally accepted accounting principles and to regulate the accounting profession.

All but one of the following statements indicates a difference between the Financial Accounting Standards Board (FASB) and prior approaches.Select the one that is not a difference.

The following data relate to Gorr Company for the year ended December 31, 2012.Gorr Company uses the accrual basis. Sales for cash \ 200,000 Sales for credit 220,000 Cost of inventory sold 180,000 Collections from customers 300,000 Purchases of inventory on credit 190,000 Payment for purchases 180,000 Selling expenses (accrual basis) 50,000 Payment for selling expenses 60,000 Which of the following represents income for Gorr Company for the year ended December 31, 2010?

The accounting principle that assumes that inflation will not take place or will be immaterial is:

A loss in value of money is called inflation.

Match the letter of each phrase with the appropriate definition. -Issued by the SEC and give the SEC's official position on matters relating to financial reports.

The 1933 and 1934 U.S.federal securities laws virtually gave the Securities and Exchange Commission (SEC) authority and responsibility for the development of generally accepted accounting principles.