Podcast
Questions and Answers
What is the main objective of general purpose financial reporting?
What is the main objective of general purpose financial reporting?
- To show the value of a reporting entity
- To make decisions about buying, selling, or holding equity and debt instruments
- To provide information that helps existing and potential investors, lenders, and other creditors to estimate the value of the reporting entity (correct)
- To influence management’s actions that affect the use of the entity’s economic resources
What are the decisions that existing and potential investors, lenders, and other creditors need to make based on financial reporting?
What are the decisions that existing and potential investors, lenders, and other creditors need to make based on financial reporting?
- Decisions about exercising rights to vote on management’s actions
- Decisions about providing or settling loans and other forms of credit (correct)
- Decisions about buying luxury items
- Decisions about expanding their social network
According to the passage, what do general purpose financial reports provide information about?
According to the passage, what do general purpose financial reports provide information about?
- The value of a reporting entity
- How efficiently and effectively the entity’s management and governing Board have discharged their responsibilities
- The economic resources of the entity and changes in those resources (correct)
- The social media activities of the entity
What is the purpose of showing information about the economic resources of the entity and claims against the entity?
What is the purpose of showing information about the economic resources of the entity and claims against the entity?
What is the primary outcome that existing and potential investors, lenders, and other creditors expect to depend on for their decisions?
What is the primary outcome that existing and potential investors, lenders, and other creditors expect to depend on for their decisions?
According to the passage, what are general purpose financial reports not designed to show?
According to the passage, what are general purpose financial reports not designed to show?
What type of users are primarily directed to general purpose financial reports?
What type of users are primarily directed to general purpose financial reports?
How can information about the nature and amounts of a reporting entity’s economic resources and claims help users?
How can information about the nature and amounts of a reporting entity’s economic resources and claims help users?
Why do users of financial reports need to know the nature and amount of resources available for use in a reporting entity’s operations?
Why do users of financial reports need to know the nature and amount of resources available for use in a reporting entity’s operations?
What can help users to understand the return that a reporting entity has produced on its economic resources?
What can help users to understand the return that a reporting entity has produced on its economic resources?
Why is information about the variability and components of a reporting entity’s return important?
Why is information about the variability and components of a reporting entity’s return important?
Who primarily relies on general purpose financial reports for obtaining financial information about a reporting entity?
Who primarily relies on general purpose financial reports for obtaining financial information about a reporting entity?
What type of financial performance information helps users to understand the return that a reporting entity has produced on its economic resources?
What type of financial performance information helps users to understand the return that a reporting entity has produced on its economic resources?
What helps users to assess management’s stewardship of a reporting entity’s economic resources?
What helps users to assess management’s stewardship of a reporting entity’s economic resources?
How do changes in a reporting entity’s financial performance and from other events or transactions affect users?
How do changes in a reporting entity’s financial performance and from other events or transactions affect users?
What kind of cash flows result from using several resources in combination to produce and market goods or services to customers?
What kind of cash flows result from using several resources in combination to produce and market goods or services to customers?
Which of the following is an example of a right that corresponds to an obligation of another party?
Which of the following is an example of a right that corresponds to an obligation of another party?
What is an example of a right that does not correspond to an obligation of another party?
What is an example of a right that does not correspond to an obligation of another party?
What represents a right that exists momentarily until the entity consumes the goods or services?
What represents a right that exists momentarily until the entity consumes the goods or services?
Which of the following is an example of a right to use a physical object?
Which of the following is an example of a right to use a physical object?
What type of rights correspond to an obligation of another party in financial reporting?
What type of rights correspond to an obligation of another party in financial reporting?
Which example represents a right over physical objects in financial reporting?
Which example represents a right over physical objects in financial reporting?
What is required for a right to be considered an asset of an entity?
What is required for a right to be considered an asset of an entity?
Why are debt instruments or equity instruments repurchased and held by the reporting entity not considered economic resources of that entity?
Why are debt instruments or equity instruments repurchased and held by the reporting entity not considered economic resources of that entity?
How are related rights often treated for accounting purposes?
How are related rights often treated for accounting purposes?
What is the economic resource according to the passage?
What is the economic resource according to the passage?
When is it uncertain whether an asset exists?
When is it uncertain whether an asset exists?
What entitles an economic resource to produce economic benefits for an entity?
What entitles an economic resource to produce economic benefits for an entity?
How does legal ownership of a physical object account for the set of rights according to the passage?
How does legal ownership of a physical object account for the set of rights according to the passage?
In what circumstance does an economic resource have the potential to produce economic benefits?
In what circumstance does an economic resource have the potential to produce economic benefits?
How can information about the nature and amounts of a reporting entity’s economic resources and claims help users?
How can information about the nature and amounts of a reporting entity’s economic resources and claims help users?
What is necessary for an asset to exist?
What is necessary for an asset to exist?
