Quiz AC-15 - 21. Question: A company's _ decides when and...

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21. Question: A company's __________ decides when and how much will be paid in dividends. Your Answer: upper level management ( Incorrect. A corporation's management has no authority over the declaration of dividends. ) independent auditors ( Incorrect. Independent auditors are not involved in making operating, investing, or financing decisions for a company. They may, however, make recommendations on such matters. ) board of directors ( CORRECT. Only the board of directors has the legal authority to declare dividends. ) CORRECT stockholders Instructor Explanation: Remember that cash dividends are a form of return on investment to shareholders. Also, consider that the dividend decision affects strategic planning for the organization. Points Received: 1 of 1 Comments: 22. Question: The matching concept addresses the matching of __________. Your Answer: assets and liabilities ( Incorrect. The matching concept applies to income measurement which does not involve matching assets and liabilities. ) product costs and period costs ( Incorrect. The matching concept applies to income measurement which does not involve matching product costs and period costs. ) revenues and expenses ( CORRECT. The matching concept applies to income measurement which involves the matching of revenues with associated expenses. ) CORRECT cash inflows and cash outflows ( Incorrect. The matching concept applies to income measurement under the accrual basis and, therefore, does not involve the matching of cash inflows and cash outflows. ) Instructor Explanation: Remember that the matching concept is fundamental to the accrual basis of accounting. Points Received: 1 of 1 Comments: 23. Question: The __________ basis of accounting requires that revenues be recognized when earned and expenses be recognized when incurred. Your Answer: fiscal ( Incorrect. This is not the name of a basis of accounting. ) cost recovery ( Incorrect. This is not the name of a basis of accounting. ) cash ( Incorrect. The cash basis requires that revenues be recognized when cash is received and expenses be recognized when cash is paid. )
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accrual ( CORRECT. The accrual basis leads to a proper matching of revenues and expenses by focusing on fundamental economic activities. ) CORRECT Instructor Explanation: Remember that one of the bases of accounting focuses on underlying economic activity while the other one does not. Points Received:
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This note was uploaded on 06/20/2010 for the course FINA 6266 taught by Professor Burt during the Spring '10 term at University of Arkansas for Medical Sciences.

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Quiz AC-15 - 21. Question: A company's _ decides when and...

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