1.Financial accounting is the process of identifying, measuring, analyzing, and communicating financial information needed by management to plan, evaluate, and control an organiza-tion's operations. False
2.Financial statements are the principal means through which financial information is communicated to those outside an enterprise. True
3.Users of the financial information provided by a company use that information to make capital allocation decisions. True
4.An effective process of capital allocation promotes productivity and provides an efficient market for buying and selling securities and obtaining and granting credit. True
5.Financial reports in the early 21st century did not provide any information about a company’s soft assets. False
6.The conceptual framework for accounting has been discovered through empirical research. False
7.A conceptual framework is a coherent system of interrelated objectives and fundamentals that can lead to consistent standards. True
8.The first level of the conceptual framework identifies the recognition and measurement concepts used in establishing accounting standards. False
9.The IASB has issued a conceptual framework that is broadly consistent with that of the United States. True
10.Although the FASB intends to develop a conceptual framework, no Statements of Financial Accounting Concepts have been issued to date. False
11. A ledger is where the company initially records transactions and selected other events. False
12. Nominal (temporary) accounts are revenue, expense, and dividend accounts and are periodically closed. True
13. All liability and stockholders’ equity accounts are increased on the credit side and decreased on the debit side. False
14. The first step in the accounting cycle is the journalizing of transactions and selected other events. False
15. A general journal chronologically lists transactions and other events, expressed in terms of debits and credits to accounts. True
16. The income statement is useful for helping to assess the risk or uncertainty of achieving future cash flows.True
17. A strength of the income statement as compared to the balance sheet is that items that cannot be measured reliably can be reported in the income statement. False
18. Earnings management generally makes income statement information more useful for predicting future earnings and cash flows. True
19. The transaction approach of income measurement focuses on the income-related activities that have occurred during the period. True
20. Companies frequently report income tax expense as the last item before net income on a single-step income statement. True
MULTIPLE CHOICE—Conceptual (2 POINTS EACH)
21.General-purpose financial statements are the product of a.financial accounting.
c.both financial and managerial accounting.
d.neither financial nor managerial accounting.
22.Users of financial reports include all of the following except a.creditors.
d.All of these are users.
23.The financial statements most frequently provided include all of the following except the a.balance sheet.
c.statement of cash flows.
d.statement of retained earnings.
24.The information provided by financial reporting pertains to a.individual business enterprises, rather than to industries or an economy as a whole or to members of society as consumers. b.business industries, rather than to individual enterprises or an economy as a whole or to members of society as consumers. c.individual business...