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Flashcards in Chapter 1 Final Exam Study Deck (17):

The type of financial information to external decision makers is referred to as:

Financial Accounting


Financial statements generally include all of the following except:
-Income statement
-Federal income tax return
-Balance sheet
-Statement of cash flows

Federal Income Tax Return


The primary objective of financial reporting is to provide information:

That is useful in decision making


GAAP includes the following pronouncements:

-Statements of Financial Accounting Standards.
-Accounting Research Bulletins.
-Accounting Principles Board Opinions.


The SEC exerts a continuing influence on the establishment of accounting standards. It does so primarily by:

Monitoring the development of GAAP within the accounting profession and using its stature to influence that development.


The documents that set forth fundamental concepts on which financial accounting and reporting standards will be based are:

Statements of Financial Accounting Concepts.


The two primary decision-specific qualities that make accounting information useful are:

Relevance and faithful representation.


Relevance requires that information possess predictive and/or:

Confirmatory value.


The qualitative characteristic that means there is agreement between a measure and a real-world phenomenon is:

Representational faithfulness.


Which of the following is considered a practical constraint on the qualitative characteristics?
-Cost effectiveness

Cost effectiveness


Which of the following characteristics does not describe an asset?
-Probable future economic benefits.
-Controlled by an entity.
-requires the receipt of cash.
-Result of a past transaction.

Requires the receipt of cash.


Which of the following characteristics does not describe a liability?
-Result of a past transaction.
-Probable future sacrifices
-Present obligation
-Must be legally enforceable.

Must be legally enforceable.


The underlying assumption that presumes a company will continue indefinitely is:

Going concern


The underlying assumption that assumes that the life of a company can be divided into artificial time periods is:



In general, revenue is recognized when the earnings process is virtually complete and:

Goods or services are transferred to the customer.


The primary objective of matching is to:

Recognize expenses in the same period as the related revenue.


The main objective of the IASB is to:

Develop a single set of global accounting standards.