1. True or False.

“Financial accounting focuses on the preparation and presentation of general purpose reports known as financial statements.”

2. True or False.

“Managerial accounting is the area of accounting that emphasizes developing accounting information for use within an entity.”

3. Identification.

These users are interested in the allocation of resources and activities of enterprises, and therefore require information to regulate the activities of enterprises, determine taxation policies and as a basis for national income and similar statistics.

4. Identification.

These users require information on risk and return provided by their investment.

5. Identification.

These users are interested in information about the profitability and stability of the entity in order to assess the ability of entity to provide remuneration and retirement benefits.

6. Identification.

These users are interested in information that enables them to assess whether their loans, the related interest, and amounts owing to them will be paid when due.

7. Identification.

These users are interested in information about the continuance of an entity, especially when they have a long-term involvement with or are dependent on the entity.

8. Identification.

These users need information on trends and recent developments where an entity makes a substantial contribution to the local economy providing employment and using local suppliers.

9. True or False.

Financial accounting is the area of accounting that emphasizes reporting primarily to creditors and investors.

10. Identify the characteristic of a useful information that is being described.

Preparers of statements should not try to increase the usefulness of the information to a few users to the detriment of others who may have opposing interests.

11. Identify the characteristic of a useful information that is being described.

The description and numbers or figures must watch what really existed or happened.

12. Identify the characteristic of a useful information that is being described.

The older the information, the less useful.

13. Identify the characteristic of a useful information that is being described.

It requires that users have some knowledge of the complex economic activities of entities, the accounting process and the technical terminology in the statements.

14. Identify the characteristic of a useful information that is being described.

It is the ability to bring together for the purpose of noting points of likeness and differences.

15. Identify the characteristic of a useful information that is being described.

The financial statements should be accompanied by notes to the financial statements.

16. Identify the characteristic of a useful information that is being described.

This implies consensus.

17. True or False

To be faithfully represented, an information must be predictive and confirmatory.

18. Identify the convention/assumption that is being described or violated.

The owners of a five star hotel base its accounting records on the assumption that the hotel might close any time.

19. Identify the convention/assumption that is being described or violated.

This assumption is used as basis for preparing financial statements at regular artificial points in time.

20. Identify the convention/assumption that is being described or violated.

When in doubt, recognize all losses and don’t recognize gains.

21. Identify the convention/assumption that is being described or violated.

An entity records sales after inventory has been produced but before it is sold.

22. Identify the convention/assumption that is being described or violated.

An accounting practitioner mixes his personal accounting records with his accounting practice.

23. Identify the convention/assumption that is being described or violated.

An entity reports property, plant and equipment at current cost at the end of reporting period.

24. Identify the convention/assumption that is being described or violated.

Associating effort with accomplishment.

25. Fill in the blank.

Generally, recognition criteria are met and revenue is recognized at _____.

Ans: TRUE

1. True or False.

“Financial accounting focuses on the preparation and presentation of general purpose reports known as financial statements.”

Ans: TRUE

2. True or False.

“Managerial accounting is the area of accounting that emphasizes developing accounting information for use within an entity.”

Ans: Government

3. Identification.

These users are interested in the allocation of resources and activities of enterprises, and therefore require information to regulate the activities of enterprises, determine taxation policies and as a basis for national income and similar statistics.

Ans: Equity investor group

4. Identification.

These users require information on risk and return provided by their investment.

Ans: Employees

5. Identification.

These users are interested in information about the profitability and stability of the entity in order to assess the ability of entity to provide remuneration and retirement benefits.

Ans: Loan creditor group

6. Identification.

These users are interested in information that enables them to assess whether their loans, the related interest, and amounts owing to them will be paid when due.

Ans: Customers

7. Identification.

These users are interested in information about the continuance of an entity, especially when they have a long-term involvement with or are dependent on the entity.

Ans: Public

8. Identification.

These users need information on trends and recent developments where an entity makes a substantial contribution to the local economy providing employment and using local suppliers.

Ans: TRUE

9. True or False.

Financial accounting is the area of accounting that emphasizes reporting primarily to creditors and investors.

Ans: Neutrality/Objectivity

10. Identify the characteristic of a useful information that is being described.

Preparers of statements should not try to increase the usefulness of the information to a few users to the detriment of others who may have opposing interests.

Ans: Faithful Rrepresentation or Reliability

11. Identify the characteristic of a useful information that is being described.

The description and numbers or figures must watch what really existed or happened.

Ans: Timeliness

12. Identify the characteristic of a useful information that is being described.

The older the information, the less useful.

Ans: Understandability

13. Identify the characteristic of a useful information that is being described.

It requires that users have some knowledge of the complex economic activities of entities, the accounting process and the technical terminology in the statements.

Ans: Comparability

14. Identify the characteristic of a useful information that is being described.

It is the ability to bring together for the purpose of noting points of likeness and differences.

Ans: Completeness

15. Identify the characteristic of a useful information that is being described.

The financial statements should be accompanied by notes to the financial statements.

Ans: Verifiability

16. Identify the characteristic of a useful information that is being described.

This implies consensus.

Ans: FALSE

17. True or False

To be faithfully represented, an information must be predictive and confirmatory.

Ans: Going concern or Continuity

18. Identify the convention/assumption of a that is being described or violated.

The owners of a five star hotel base its accounting records on the assumption that the hotel might close any time.

Ans: Accounting period or Periodicity

19. Identify the convention/assumption of a that is being described or violated.

This assumption is used as basis for preparing financial statements at regular artificial points in time.

Ans: Prudence or Conservatism

20. Identify the convention/assumption of a that is being described or violated.

When in doubt, recognize all losses and don’t recognize gains.

Ans: Revenue Recognition / Realization

21. Identify the convention/assumption of a that is being described or violated.

An entity records sales after inventory has been produced but before it is sold.

Ans: Business entity

22. Identify the convention/assumption of a that is being described or violated.

An accounting practitioner mixes his personal accounting records with his accounting practice.

Ans: Cost principle

23. Identify the convention/assumption of a that is being described or violated.

An entity reports property, plant and equipment at current cost at the end of reporting period.

Ans: Matching principle

24. Identify the convention/assumption of a that is being described or violated.

Associating effort with accomplishment.

Ans: point of sale

25. Fill in the blank.

Generally, recognition criteria are met and revenue is recognized at _____.