ACCT ch4 Study Plan - Which of the following is an...

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Which of the following is an objective of financial reporting? Which of the following is an objective of financial reporting? a. To furnish information useful in making investment and credit decisions Correct. Three objectives of financial reporting are to furnish information (1) useful in making investment and credit decisions, (2) useful in assessing cash flow prospects and, (3) about business resources, claims to those resources and changes in those resources. For accounting information to be relevant, it must provide all of the following except For accounting information to be relevant, it must provide all of the following except a.
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Incorrect. Feedback value, along with timeliness and predictive value, must be provided by accounting information in order for it to be r elevan t. Credibility helps ensure accounting information is reliable . Review pp. 234 - 237 Recording expenditures for items that cost a significant amount as expenses rather than long-term assets violates which of the following accounting conventions? Recording expenditures for items that cost a significant amount as expenses rather than long-term assets violates which of the following accounting conventions? a. Correct. Recording expenditures for items that cost a significant amount as expenses rather than long-term assets violates the conservatism accounting convention. The conservatism convention requires that when faced with uncertainties about which accounting procedure to use; the one that is least likely to overstate assets and income should be used. No uncertainty exists here. The consistency convention requires that once a company has adopted an accounting procedure, it must use it from period to period unless a note to the financial statement informs users of a change. The consistency convention requires that once a company has adopted an accounting procedure, it must use it from period to period unless a note to the financial statement informs users of a change.
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Correct. If a change has been made, the note must contain the nature and justification for the change. The normal operating cycle of a business is the average time the company needs to go from spending cash to
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This note was uploaded on 03/28/2011 for the course ACCT 2301 taught by Professor G.a.gross during the Spring '11 term at Richland Community College.

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ACCT ch4 Study Plan - Which of the following is an...

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