Exam 1: Introduction to Business Activities and Overview of Financial Statements and the Reporting Process

_____ items are depicted in words and numbers on the face of the financial statements, with amounts included in the totals.

The managers of a business prepare financial statements to present meaningful information about that business's activities to external users. Who are the external users?

Investments in long-lived assets, with useful lives (or service lives) that can extend for several or many years such as land, buildings, and equipment represent _____ capital.

In 2007 the U.S.SEC adopted new rules that permit _____ that list and trade their securities in the United States to apply IFRS in their financial reports filed with the SEC without any reconciliation to U.S.GAAP.

_____ are economic resources with the potential to provide future economic benefits to a firm.

The historical amount reflects the acquisition cost of assets or the amount of funds originally obtained from creditors or owners.

Which of the following is true regarding the investing activities of charitable organizations?

A _____ item is expected to result in a cash receipt or a cash payment within approximately one year or less.

Briefly list and describe the principal financial statements.

Which of the following is/are true regarding setting goals and strategies for a charitable organization?

Current liabilities represent obligations a firm expects to pay within one year.

The amounts of individual assets that make up total assets, represented by accounts receivable, inventories, equipment, and other assets, reflect a firm's financing decisions, each measured at the balance sheet date.

A natural business year

The cash basis separates the recognition of revenue from the process of earning those revenues.

To assist users of financial reports in making over-time comparisons, both U.S.GAAP and IFRS require firms to include results for multiple reporting periods in each report.

A firm makes investments to obtain productive capacity to carry out its business activities. Investing activities involve acquiring all of the following except:

Current liabilities and shareholders' equity are sources of funds where the supplier of funds does not expect to receive them all back within the next year.

The _____ basis of accounting typically recognizes revenue when a firm sells goods (manufacturing and retailing firms) or renders services (service firms), and recognizes expenses in the period when the firm recognizes the revenues that the costs helped produce.

What are the roles, duties, and responsibilities of the independent auditor?

_____ are the means for achieving goals.