Test 1 review

Question 1

Which of the following is not an objective of financial reporting?

a. Provide information that is useful in investment and credit decisions.
b. Provide information about enterprise resources, claims to those resources, and changes to them.
c. Provide information on the liquidation value of an enterprise.
d. Provide information that is useful in assessing cash flow prospects.
e. None of the above.

Answer 1

c. Provide information on the liquidation value of an enterprise.

Question 2

2. The primary accounting standard-setting body in the United States is the
   a. Securities and Exchange Commission.
   b. Internal Revenue Service.
   c. Corporate Board of Directors.
   d. International Accounting Standards Board
   e. Governmental Accounting Standards Board
   f. Financial Accounting Standards Board.
   g. Financial Accounting Standards Advisory Council
   h. None of the above

Answer 2

f. Financial Accounting Standards Board.

Question 3

Changes in accounting estimates are reported:

a. Currently and prospectively.
b. Retrospectively and currently.
c. Retrospectively, currently, and prospectively.
d. By restating prior one year.
e. By restating Prior two years.
f. None of the above

Answer 3

a. Currently and prospectively.