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Page 6

Test Bank for Intermediate Accounting: IFRS Edition, 2e

47. 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 enterprises, industries, and an economy as a whole, rather than to

members of society as consumers.
d. an economy as a whole and to members of society as consumers, rather than to

individual enterprises or industries.

48. What is the major objective of financial reporting?
a. Provide information that is useful to management in making decisions.
b. Provide information that clearly portray nonfinancial transactions.
c. Provide information that is useful to present and potential equity investors, lenders,

and other creditors in making decisions..
d. Provide information that excludes claims to the resources.

49. Which of the following statements 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.

50. Accrual accounting is used because
a. cash flows are considered less important.
b. it provides a better indication of ability to generate cash flows than the cash basis.
c. it recognizes revenues when cash is received and expenses when cash is paid.
d. None of these answers are correct.

51. One element of the objective of financial reporting is to provide
a. information about the investors in the business entity.
b. information about the liquidation values of the resources held by the enterprise.
c. information that is useful in assessing cash flow prospects.
d. information that will attract new investors.

52. As part of the objective of general-purpose financial reporting, there is an emphasis on
“assessing cash flow prospects.” Under International Financial Reporting Standards (IFRS)
this is interpreted to mean:
a. Cash basis accounting is preferred over accrual based accounting.
b. Information about the financial effects of cash receipts and cash payments is generally

considered the best indicator of a company’s present and continuing ability to
generate favorable cash flows.

c. Over the long run, trends in revenues and expenses are generally more meaningful
than trends in cash receipts and disbursements.

d. All of the choices are correct regarding “assessing cash flow prospects” under IFRS.

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