Exam 1: Environment and Theoretical Structure of Financial Accounting

Auditors play an important role in the resource allocation process by adding credibility to financial statements.

Identify or define the following terms: economic entity, going concern.

Constraints on qualitative characteristics of accounting information include:

Over time, accounting standards have developed to reflect changes in the business world as well as changes in our ability to account for such changes. Using the example of marking assets and liabilities to their fair value, explain why you would expect accounting standards to change.

The conceptual framework's qualitative characteristic of relevance includes:

Disclosure notes to a company's financial statements:

A rules-based approach to standard setting stresses professional judgment as opposed to following a list of rules.

The FASB's conceptual framework's qualitative characteristics of accounting information include:

One of the elements that many believe distinguishes a profession from other occupations is the acceptance of responsibility by its members for the interests of those it serves, which is often articulated in:

The FASB's conceptual framework's qualitative characteristics of accounting information include:

The FASB's due process invites various interested parties to indicate their opinions about whether financial accounting standards should be changed.

Which of the following is not true about net operating cash flow?

Compute the income before income tax for Amazon.

Which of the following is typically characterized as a principle, rather than an assumption?

Independent auditors express an opinion on the:

Comprehensive income is another term for net income.

Compute net income for the first year for Tri Fecta.

Revenue should not be recognized until:

Compute Amazon's total liabilities at the end of the year.

Compute net income for the first year for Alpaca Corporation.