Financial Mid Term Exam

Front

The Financial Accounting Standards Board (FASB) is the authoritative body that has primary responsibility for developing accounting principles.

Back

true

Front

The cost concept is the basis for entering the purchase price into the accounting records.

Back

true

Front

The unit of measurement concept requires that economic data be recorded in dollars.

Back

true

Front

If a building is appraised for $85,000 offered for sale at $90,000, and the buyer pays $80,000 cash for it, the buyer would record the building at $85,000.

Back

false

Front

A statement of owner's equity reports the changes in the owner's equity for a period of time.

Back

true

Front

The statement of cash flows consists of three sections: cash flows from operating activities, cash flows from income activities, and cash flows from equity activities.

Back

false

Front

Which of the following best describes accounting? Options: Records economic but does not communicate the data to users according to any specific rules. Is an information system that provides reports to users regarding economic activities and condition of a business. Is of no use by individuals outside of the business. Is used only for filling out tax returns and for financial statements for various type of governmental reporting requirements.

Back

Is an information system that provides reports to users regarding economic activities and condition of a business.

Front

The initials GAAP stand for

Back

Generally Accepted Accounting Principles

Front

The business entity concept means that

Back

the entity is an individual economic unit for which data are recorded, analyzed, and reported

Front

the objectivity concept requires that

Back

amounts recorded in the financial statements be based on independently verifiable evidence