Intermidate Acct Review - Chapter 1 Environmental and...

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Chapter 1 Environmental and Theoretical Structure of Financial Accounting 48-52. Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the correct term by placing the letter designating the best term in the space provided by the phrase. Terms : A. Assets B. Comprehensive income C. Distributions to owners D. Equity E. Expenses F. Gains G. Investments by owners H. Liabilities I. Losses J. Revenues Phrases: 48. ____Net outflows from peripheral transactions. 49. ____Increases in equity from the sale of goods and/or services. 50. ____Net inflows generally reported as part of nonoperating income. 51. ____All changes in equity except owner transactions. 52. ____Probable future economic benefits controlled by an entity. Answer: 48-I; 49-J; 50-F; 51-B; 52-A Multiple Choice Questions 53. Decision makers would not look primarily to financial accounting information to assist them in making decisions on: A) Granting credit. B) Capital budgeting. C) Selecting stocks. D) Mergers and acquisitions. Answer: B Learning Objective: 1 Level of Learning: 2 54. Corporations issue their shares to the investing public in the: Primary market Secondary market A) Yes Yes B) No Yes C) Yes No D) No No Answer: C Learning Objective: 1 Level of Learning: 1 8 Spiceland/Sepe/Tomassini, Intermediate Accounting, Fourth Edition
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Chapter 1 Environmental and Theoretical Structure of Financial Accounting 55. The primary focus for financial accounting information is to provide information useful for: Investing decisions Credit decisions A) Yes Yes B) Yes No C) No Yes D) No No Answer: A Learning Objective: 1 Level of Learning: 1 56. Financial accounting information should help users evaluate: A) Various opportunities to purchase equipment. B) Decisions made by the Human Resources Department. C) Make versus buy decisions. D) Future cash flows. Answer: D Learning Objective: Level of Learning: 2 57. Which of the following is not true about net operating cash flow? A) It is the difference between cash receipts and cash disbursements from providing goods and services. B) It is a measure used in accrual accounting and is recognized as the best predictor of future operating cash flows. C) Over short periods of time, it may not be indicative of long-run cash-generating ability. D) It is easy to understand and all information required to measure it is factual. Answer: B Learning Objective: 1 Level of Learning: 2 58. Which of the following does not apply to secondary markets? A) Transactions are important to the efficient allocation of resources in our economy. B) New resources are provided when shares of stock are sold by the corporation to the initial owners. C)
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Intermidate Acct Review - Chapter 1 Environmental and...

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