Podcast
Questions and Answers
Which of the following is not an example of a decision of informed judgement that a potential investor would make from accounting information?
Which of the following is not an example of a decision of informed judgement that a potential investor would make from accounting information?
What is an object of financial reporting by business enterprises?
What is an object of financial reporting by business enterprises?
Financial reporting should provide information about the economic resources of an enterprise, the claims to those resources, and changes in those resources and claims to them.
Examples of how investors, predictors, and others commonly use reported earnings figures and related information include all of the following except:
Examples of how investors, predictors, and others commonly use reported earnings figures and related information include all of the following except:
What is most true about the origins and traditions of auditing?
What is most true about the origins and traditions of auditing?
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Major classifications of accounting activity would not include:
Major classifications of accounting activity would not include:
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What does the ethical concept of independence mean for an accountant employed?
What does the ethical concept of independence mean for an accountant employed?
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Which of the following is not required of an accounting entity related to financial reporting?
Which of the following is not required of an accounting entity related to financial reporting?
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Who is qualified to express an auditor's opinion about an entity's financial statements?
Who is qualified to express an auditor's opinion about an entity's financial statements?
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Which of the following is not an objective of financial reporting described in FASB Concepts Statement No. 1?
Which of the following is not an objective of financial reporting described in FASB Concepts Statement No. 1?
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What statement about the Financial Accounting Standards Board is correct?
What statement about the Financial Accounting Standards Board is correct?
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Study Notes
Decision Making and Accounting Information
- Investors make informed judgments based on accounting information, except for evaluating the probability of success for new product development.
Financial Reporting Objectives
- Financial reporting aims to provide insights into an enterprise's economic resources, claims to those resources, and any changes to these.
Use of Reported Earnings
- Investors and analysts utilize reported earnings to make various assessments, but estimating future employee hires is not common.
Origins of Auditing
- Auditing originated from the necessity of absentee owners of large corporations seeking assurance about the management of their funds.
Classifications of Accounting Activity
- Major classifications of accounting include financial accounting, national accounting, and cost accounting.
Ethical Independence in Accounting
- The ethical principle of independence requires auditors not to hold stock in the companies they audit to maintain objectivity.
Requirements of Accounting Entities
- Accounting entities are not required to present forecasts of expected earnings in their financial statements.
Auditor Qualifications
- Certified Public Accountants (CPAs) are authorized to express opinions on the financial statements of entities.
Financial Reporting Objectives According to FASB
- FASB Concepts Statement No. 1 does not aim to measure the current market value of a business enterprise as part of financial reporting objectives.
FASB Procedure for Standards
- The Financial Accounting Standards Board (FASB) adheres to a due process that includes gathering input from stakeholders before issuing new standards.
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Description
This quiz covers fundamental concepts in accounting, including decision making based on accounting information, financial reporting objectives, and the classifications of accounting activities. It also delves into the ethical considerations auditors must follow to maintain independence. Test your understanding of these critical accounting principles.
