Chapter 1-4 Essay Example
TRUE-FALSE—Conceptual (1 POINT EACH)
1. Financial accounting is the process of identifying, measuring, analyzing, and communicating financial information needed by management to plan, evaluate, and control an organiza-tion's operations. False
2. Financial statements are the principal means through which financial information is communicated to those outside an enterprise. True
3. Users of the financial information provided by a company use that information to make capital allocation decisions. True
4. An effective process of capital allocation promotes productivity and provides an efficient market for buying and selling securities and obtaining and granting credit. True
5. Financial reports in the early 21st century did not provide any information about a company’s soft assets. False
6. The conceptual framework for accounting has been discovered through empirical research. False
7. A conceptual framework is a coherent system of interrelated objectives and fundamentals that can lead to consistent standards. True
8. The first level of the conceptual framework identifies the recognition and measurement concepts used in establishing accounting standards. False
9. The IASB has issued a conceptual framework that is broadly consistent with that of the United States. True
10. Although the FASB intends to develop a conceptual framework, no Statements of Financial Accounting Concepts have been issued to date. False
11. A ledger is where the company initially records transactions and selected other events. False
12. Nominal (temporary) accounts are revenue, expense, and dividend accounts and are periodically closed. True
13. All liability and stockholders’ equity accounts are increased on the credit side and decreased on the debit side. False
14. The first step in the accounting cycle is the journalizing of transactions and selected other events. False
1. Financial accounting is the process of identifying, measuring, analyzing, and communicating financial information needed by management to plan, evaluate, and control an organiza-tion's operations. False
2. Financial statements are the principal means through which financial information is communicated to those outside an enterprise. True
3. Users of the financial information provided by a company use that information to make capital allocation decisions. True
4. An effective process of capital allocation promotes productivity and provides an efficient market for buying and selling securities and obtaining and granting credit. True
5. Financial reports in the early 21st century did not provide any information about a company’s soft assets. False
6. The conceptual framework for accounting has been discovered through empirical research. False
7. A conceptual framework is a coherent system of interrelated objectives and fundamentals that can lead to consistent standards. True
8. The first level of the conceptual framework identifies the recognition and measurement concepts used in establishing accounting standards. False
9. The IASB has issued a conceptual framework that is broadly consistent with that of the United States. True
10. Although the FASB intends to develop a conceptual framework, no Statements of Financial Accounting Concepts have been issued to date. False
11. A ledger is where the company initially records transactions and selected other events. False
12. Nominal (temporary) accounts are revenue, expense, and dividend accounts and are periodically closed. True
13. All liability and stockholders’ equity accounts are increased on the credit side and decreased on the debit side. False
14. The first step in the accounting cycle is the journalizing of transactions and selected other events. False