Name: Test 1 Intermediate Accounting True or false to financial statements busin

Question

Name: Test 1 Intermediate Accounting True or false to financial statements business. A-True, B-False 1. Auditors pla y an important role in the resource allocation process by adding credibility 2. Equity is a residual amount representing the owner's interest in the assets of the 3. The values used are based on utility to an ongoing enterprise and not sale value on 4. Th 5. Adjusting entries are a bookkeeper's tool for correcting mistakes on original recording e accountants are responsible to the company that hired them, not the outside public. A of debits and credits A 6. Owners' equity can be expressed as assets minus liabilities. 7. Debits increase asset accounts and decrease liability accounts. A A 8. Adjusting entries do not reflect any money changing hands. A 9. A reversing entry at the beginning of a period for salaries would include a debit to 10. Prepaid expenses are classified as current assets if the services purchased are expected salaries expense to expire within 12 months or the operating cycle, whichever is longer. 611. Loans receivable from officers of a company must be reported separately from loans receivable from non-related entities expected within 120 days. It would be reported as a "current asset" in the balance sheet included as current or long term assets. A 12. Land held for investment for ten years is currently under contract of sale with closing 13. Decision of management to hold a security long term or sell it soon determines if it is R14. Income statements prepared according to both U.S. GAAP and International Financial ing Standards (IFRS) require the separate reporting of discontinued operations. 15. In preparing balance sheets and income statements accountants try to arrange information to stress success and hide loss or weakness. 16. Interest is not reported on a balance sheet until it becomes payable. 17. While accountants should be exact, in some cases the value of exact numbers or reports outweighs the cost of getting the exact numbers and estimates are acceptable b 18. All US companies that own foreign subsidiaries must report foreign activity in US dollars, not local currency TAC 19. The assets listed irst on balance sheet are the ones that are cash or will be converted to cash soonest. A20. While an income statement reflects activity during the year, if there are significant events that occurred between the close of the year and issue of the income statement, they would be included in the income for the period.

Explanation / Answer

As per Chegg policy only 4 MCQ are required to be answered so i am solving the first four.

Ans 21: b) accrual concept

Reason: accrual concept is based on the concept that transaction should be recorded in the period in which it takes plaxce irrespective of when the money is realsied.

Ans 22: Option D

Reason: GAAP stands for generally accepted accounting principiles. it is the standard used by FASB for recognising uniform accounting transactions.

Ans 23: Option A

FASB stands for Financial Accounting Standards Board is a independent organisation which is bestowed with the autonomy to design accounting standards to govern the business.

Ans 24: Option A

Reason: Financial statement are porepared to give an idea of business to outsiders so they can take investment related decisions,.

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