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1. True or False.

Financial accounting focuses on the


preparation and presentation of general
purpose reports known as financial
statements.
2. True or False.

Managerial accounting is the area of
accounting that emphasizes developing
accounting information for use within an
entity.
3. Identification.

These users are interested in the allocation
of resources and activities of enterprises,
and therefore require information to
regulate the activities of enterprises,
determine taxation policies and as a basis
for national income and similar statistics.
4. Identification.

These users require information on risk and
return provided by their investment.
5. Identification.

These users are interested in information
about the profitability and stability of the
entity in order to assess the ability of entity
to provide remuneration and retirement
benefits.
6. Identification.

These users are interested in information
that enables them to assess whether their
loans, the related interest, and amounts
owing to them will be paid when due.
7. Identification.

These users are interested in information
about the continuance of an entity,
especially when they have a long-term
involvement with or are dependent on the
entity.
8. Identification.

These users need information on trends
and recent developments where an entity
makes a substantial contribution to the
local economy providing employment and
using local suppliers.
9. True or False.

Financial accounting is the area of
accounting that emphasizes reporting
primarily to creditors and investors.
10. Identify the characteristic of a useful
information that is being described.

Preparers of statements should not try to
increase the usefulness of the information
to a few users to the detriment of others
who may have opposing interests.
11. Identify the characteristic of a useful
information that is being described.

The description and numbers or figures
must watch what really existed or
happened.
12. Identify the characteristic of a useful
information that is being described.

The older the information, the less useful.
13. Identify the characteristic of a useful
information that is being described.

It requires that users have some knowledge
of the complex economic activities of
entities, the accounting process and the
technical terminology in the statements.
14. Identify the characteristic of a useful
information that is being described.

It is the ability to bring together for the
purpose of noting points of likeness and
differences.
15. Identify the characteristic of a useful
information that is being described.

The financial statements should be
accompanied by notes to the financial
statements.
16. Identify the characteristic of a useful
information that is being described.

This implies consensus.
17. True or False

To be faithfully represented, an information
must be predictive and confirmatory.
18. Identify the convention/assumption
that is being described or violated.

The owners of a five star hotel base its
accounting records on the assumption that
the hotel might close any time.
19. Identify the convention/assumption
that is being described or violated.

This assumption is used as basis for
preparing financial statements at regular
artificial points in time.
20. Identify the convention/assumption
that is being described or violated.

When in doubt, recognize all losses and
dont recognize gains.
21. Identify the convention/assumption
that is being described or violated.

An entity records sales after inventory has
been produced but before it is sold.
22. Identify the convention/assumption
that is being described or violated.

An accounting practitioner mixes his
personal accounting records with his
accounting practice.
23. Identify the convention/assumption
that is being described or violated.

An entity reports property, plant and
equipment at current cost at the end of
reporting period.
24. Identify the convention/assumption
that is being described or violated.

Associating effort with accomplishment.
25. Fill in the blank.

Generally, recognition criteria are met and
revenue is recognized at _____.
Ans: TRUE
1. True or False.

Financial accounting focuses on the
preparation and presentation of general
purpose reports known as financial
statements.
Ans: TRUE
2. True or False.

Managerial accounting is the area of
accounting that emphasizes developing
accounting information for use within an
entity.
Ans: Government
3. Identification.

These users are interested in the allocation
of resources and activities of enterprises,
and therefore require information to
regulate the activities of enterprises,
determine taxation policies and as a basis
for national income and similar statistics.
Ans: Equity investor group
4. Identification.

These users require information on risk and
return provided by their investment.
Ans: Employees
5. Identification.

These users are interested in information
about the profitability and stability of the
entity in order to assess the ability of entity
to provide remuneration and retirement
benefits.
Ans: Loan creditor group
6. Identification.

These users are interested in information
that enables them to assess whether their
loans, the related interest, and amounts
owing to them will be paid when due.
Ans: Customers
7. Identification.

These users are interested in information
about the continuance of an entity,
especially when they have a long-term
involvement with or are dependent on the
entity.
Ans: Public
8. Identification.

These users need information on trends
and recent developments where an entity
makes a substantial contribution to the
local economy providing employment and
using local suppliers.
Ans: TRUE
9. True or False.

Financial accounting is the area of
accounting that emphasizes reporting
primarily to creditors and investors.
Ans: Neutrality/Objectivity
10. Identify the characteristic of a useful
information that is being described.

Preparers of statements should not try to
increase the usefulness of the information
to a few users to the detriment of others
who may have opposing interests.
Ans: Faithful Rrepresentation or
Reliability
11. Identify the characteristic of a useful
information that is being described.

The description and numbers or figures
must watch what really existed or
happened.
Ans: Timeliness
12. Identify the characteristic of a useful
information that is being described.

The older the information, the less useful.
Ans: Understandability
13. Identify the characteristic of a useful
information that is being described.

It requires that users have some knowledge
of the complex economic activities of
entities, the accounting process and the
technical terminology in the statements.
Ans: Comparability
14. Identify the characteristic of a useful
information that is being described.

It is the ability to bring together for the
purpose of noting points of likeness and
differences.
Ans: Completeness
15. Identify the characteristic of a useful
information that is being described.

The financial statements should be
accompanied by notes to the financial
statements.
Ans: Verifiability
16. Identify the characteristic of a useful
information that is being described.

This implies consensus.
Ans: FALSE
17. True or False

To be faithfully represented, an information
must be predictive and confirmatory.
Ans: Going concern or Continuity
18. Identify the convention/assumption of a
that is being described or violated.

The owners of a five star hotel base its
accounting records on the assumption that
the hotel might close any time.
Ans: Accounting period or
Periodicity
19. Identify the convention/assumption of a
that is being described or violated.

This assumption is used as basis for
preparing financial statements at regular
artificial points in time.
Ans: Prudence or Conservatism
20. Identify the convention/assumption of a
that is being described or violated.

When in doubt, recognize all losses and
dont recognize gains.
Ans: Revenue Recognition /
Realization
21. Identify the convention/assumption of a
that is being described or violated.

An entity records sales after inventory has
been produced but before it is sold.
Ans: Business entity
22. Identify the convention/assumption of a
that is being described or violated.

An accounting practitioner mixes his
personal accounting records with his
accounting practice.
Ans: Cost principle
23. Identify the convention/assumption of a
that is being described or violated.

An entity reports property, plant and
equipment at current cost at the end of
reporting period.
Ans: Matching principle
24. Identify the convention/assumption of a
that is being described or violated.

Associating effort with accomplishment.
Ans: point of sale
25. Fill in the blank.

Generally, recognition criteria are met and
revenue is recognized at _____.