The utilization of a prior period adjustment is appropriate for:

correction of an error    Correct or    an appropriationIncorrect

 

Which of the following would precede the other on a detailed corporate income statement?

discontinued operations   Correct or    extraordinary itemsIncorrect

 

To report an event as an extraordinary item, how many of the criteria (unusual in nature and infrequent in occurrence) must be satisfied?

at least one   Incorrect or    bothCorrect

 

Continuing operations, discontinued operations, extraordinary items, and prior period adjustments should all be reported net of their related tax effect.

true   Correct or    falseIncorrect

 

Changing from one generally accepted accounting method to another one should be accounted for via:

retrospective adjustment    Correct or    restatementIncorrect

 

Earnings per share is a popular measure of corporate book value.

true   Incorrect or    falseCorrect

 

The calculation of earnings per share is based on:

weighted-average common shares outstanding   Correct or    shares outstanding at the end of an accounting periodIncorrect

 

Which of the following takes into account potential dilution from convertible securities?

basic earnings per share   Incorrect or    diluted earnings per shareCorrect

 

Book value per share is the same as fair value per share.

true   Incorrect or    falseCorrect

 

When two classes of stock are outstanding, the book value per share computation involves dividing total stockholders' equity by the sum of the number of common and preferred shares outstanding.

true    Incorrect or    falseCorrect

 

The dividend payout ratio is calculated by dividing dividends per share by:

earnings per share   Correct or    stock price per shareIncorrect

 

An objective of accounting information is to provide information that is useful in the decision-making process of both investors and creditors.

true   Correct or   falseIncorrect

 

One specific objective of financial accounting is to provide information useful in assessing the amounts, timing, and uncertainty of an organization's:

cash flows    Correct or   sales projectionsIncorrect

 

Financial statements are generally regarded as:

general purpose   Correct or    special purposeIncorrect

 

Which characteristic of financial accounting pertains to the degree to which information bears on the decision-making process?

relevancy    Correct or    reliabilityIncorrect

 

To be reliable, accounting information must display the characteristic of:

freedom from bias   Correct or   understandabilityIncorrect

 

To be understandable, accounting information must be comprehensible to those who (1) have a reasonable understanding of business and economic activities and (2) are willing to study the information with reasonable diligence.

correct    Correct or    incorrectIncorrect

 

The establishment of generally accepted accounting principles means that all organizations record and measure financial activity in the same manner.

true   Incorrect or   falseCorrect

 

The private sector group responsible for the establishment of financial accounting rules is the:

Securities and Exchange Commission   Incorrect or    Financial Accounting Standards BoardCorrect

 

A presumption that a business will continue to operate for an indefinite period of time unless there is substantial evidence to the contrary is the:

going-concern assumption   Correct or    periodicity assumptionIncorrect

 

The revenue realization principle holds that expenses should be recognized in the same period as the revenues that they helped to produce.

true   Incorrect or   falseCorrect

 

The consistency principle is based on the idea that businesses should employ the same accounting practices in each reporting period to improve the:

monetary unit of financial statements    Incorrect or    comparability of financial statementsCorrect

 

The idea that corporations should expense the cost of small items of equipment relates to the concept of:

materiality   Correct or    conservatismIncorrect

 

The Financial Accounting Standards Board currently requires all companies to report supplemental information on the effects of inflation.

true   Incorrect or   falseCorrect

 

To date, no attempt has been made to establish uniformity for international accounting standards.

true   Incorrect or    falseCorrect

 

If a foreign currency account payable is established in the accounts at $0.50 per unit, and the exchange rate subsequently changes to $0.60 per unit, then which of the following will result?

exchange gain   Incorrect or    exchange lossCorrect

 

Exchange gains and losses should be recognized on the date of settlement of the foreign currency payable or receivable, and also:

at the end of each accounting period   Correct or    on the day the transaction creating the payable or receivable occursIncorrect