Exam 14: Accounting Principles and Reporting Standards

An accountant generally assumes that a firm is a(n) ____________________ and will continue to operate indefinitely.

Accounting information that is capable of making a difference in a decision by the user of the report is

The ____________________ assumption permits the costs of assets purchased many years ago to be added to the costs of newly purchased assets for financial statement reporting.

Investors and creditors expect to receive a cash flow from the business entity

Recording land at its cost rather than its appraisal value illustrates

The matching principle requires that all known costs be charged to the current period of operations.

Match the qualitative characteristics of accounting information with the descriptions.

Paige Turner Publishing paid cash in advance for a one year insurance policy. According to the matching principle, Paige Turner Publishing should recognize the policy as insurance expense

A firm is following generally accepted accounting principles if it reports merchandise inventory on the balance sheet at its expected selling price.

The Financial Accounting Standards Board is

Why is the cost principle dependent on the going concern assumption?

The SEC's 2003 report to the Congress on "principles-based" accounting observed that the first characteristic of objectives-based standards, as dictated by the Sarbanes-Oxley Act, is that any standard must be based on

Paige Turner Publishing receives cash from its subscribers in advance for a one year subscription. Under the revenue recognition principle, Paige Turner Publishing should recognize the revenue from the subscriptions

In its conceptual framework, the FASB concluded that financial reporting rules should concentrate on providing information that is helpful to

The four assumptions financial statement users should be able to assume that preparers of the statements have made in preparing the statements that are listed by the FASB's conceptual framework are

Hour Place Clock Repair paid $1,800 cash in advance for a one year insurance policy. According to the matching principle, if 4 months of the policy has expired by the balance sheet date, how much should Hour Place Clock Repair report as Prepaid Insurance?

The Statements of Financial Accounting Standards that automatically become generally accepted accounting principles are issued by

Which of the following is allowed under generally accepted accounting principles?

Each year there was an increase in the market value of some stock owned by the Mudstream Company, but the accountant did not record the increase in asset value and equity until the stock was sold. In this situation, the accountant

In recent years, it has been reported that several large companies have manipulated business transactions and accounting records to change the net income reported on their income statements. Suggest five concepts, assumptions, principles, or conventions that such manipulation would violate.