Question 1

Match the following characteristics with the statements about each qualitative characteristic's importance.
-Accounting information must be verifiable and faithfully represent actual transactions.

Accepted Answer

Verifiability and faithful representation are both characteristics of reliability. Reliability is important because users of financial statements rely on it for decision-making purposes.

Question 2

Match the following characteristics with the statements about each qualitative characteristic's importance.
-This quality allows users to analyze two or more companies and look for similarities and differences.

Accepted Answer

Comparability allows users to compare financial information between different companies or time periods.

Question 3

For each item listed, select the section of the balance sheet in which the item would be reported.
-Capital stock

Accepted Answer

Capital stock represents the amount of money that a company has received from issuing and selling its stock to investors. This is a component of stockholders' equity on the balance sheet.

Question 4

For each item listed, select the section of the balance sheet in which the item would be reported.
-Land

Accepted Answer

Land is a long-term asset and is reported under the section of Property, Plant, and Equipment on the balance sheet.

Question 5

Match the following characteristics with the statements about each qualitative characteristic's importance.
-This quality refers to an amount large enough to affect a decision.

Accepted Answer

Materiality refers to an amount or information being large enough to affect a decision.

Question 6

Match the following characteristics with the statements about each qualitative characteristic's importance.
-Those willing to spend the time should be provided with comprehensible accounting information.

Accepted Answer

The statement emphasizes the importance of providing accounting information in a way that is understandable to those who spend the time to review it, suggesting that the qualitative characteristic of understandability is important.

Question 7

For each item listed, select the section of the balance sheet in which the item would be reported.
-Accounts receivable

Accepted Answer

Accounts receivable is a current asset, as it represents money that a company is owed and expects to receive in the near future.

Question 8

Match the following characteristics with the statements about each qualitative characteristic's importance.
-Accounting information should use the least optimistic estimate.

Accepted Answer

Conservatism requires that when there are two acceptable alternatives for measuring an item, the one that is least likely to overstate assets or income should be chosen. This helps to ensure that financial statements do not overstate the financial position or performance of a company.

Answer: E 
 Reliability requires that accounting information be free from bias and error, and that it can be depended upon by users to faithfully represent what it purports to represent. Using the least optimistic estimate helps to improve the reliability of accounting information by reducing the likelihood of overstating assets, income, or gains.

Question 9

Identify whether the following investor questions are associated with a primary or b secondary financial reporting objectives.
-How much has Apple invested in research and development projects?

Accepted Answer

The answer of Identify whether the following investor questions are...

Question 10

For each item listed, select the section of the balance sheet in which the item would be reported.
-Notes payable--due within one year

Accepted Answer

Notes payable due within one year are considered a current liability and would be reported in the current liabilities section of the balance sheet.

Question 11

Identify whether the following investor questions are associated with a primary or b secondary financial reporting objectives.
-If I buy 50 shares of Apple, how much cash will I receive in dividends each year?

Accepted Answer

The question is related to the primary financial reporting objective of providing information about the cash flows of the company, specifically regarding dividends paid to investors.

Question 12

Match the following characteristics with the statements about each qualitative characteristic's importance.
-Users must be able to compare accounting information of a firm with its prior year information.

Accepted Answer

The answer of Match the following characteristics with the statements...

Question 13

For each item listed, select the section of the balance sheet in which the item would be reported.
-Retained earnings

Accepted Answer

Retained earnings are part of the stockholders' equity section of the balance sheet as they represent the portion of earnings that have been reinvested into the company rather than distributed as dividends.

Question 14

For each item listed, select the section of the balance sheet in which the item would be reported.
-Accounts payable

Accepted Answer

Accounts payable is a liability that arises from purchasing goods or services on credit from suppliers. It represents the amount that the company owes to its suppliers and is expected to be paid within a short period of time, usually within 30-90 days. Therefore, it would be reported in the current liabilities section of the balance sheet.

Question 15

Identify whether the following investor questions are associated with a primary or b secondary financial reporting objectives.
-Based on the financial information, should I sell my shares of Apple next quarter?

Accepted Answer

The answer of Identify whether the following investor questions are...

Question 16

Identify whether the following investor questions are associated with a primary or b secondary financial reporting objectives.
-How much revenue will Apple generate during the time period in which I own the shares?

Accepted Answer

The answer of Identify whether the following investor questions are...

Question 17

For each item listed, select the section of the balance sheet in which the item would be reported.
-Equipment

Accepted Answer

Equipment is a long-term asset and would be reported under Property, Plant, and Equipment section of the balance sheet.

Question 18

Identify whether the following investor questions are associated with a primary or b secondary financial reporting objectives.
-Based on the financial information, should I buy shares of Apple?

Accepted Answer

This question is associated with the primary financial reporting objective, which is to provide relevant financial information that is useful for investors in making decisions about buying, holding or selling securities.

Question 19

For each item listed, select the section of the balance sheet in which the item would be reported.
-Cash

Accepted Answer

Cash is a current asset and is reported under the current assets section of the balance sheet.

Question 20

Match the following characteristics with the statements about each qualitative characteristic's importance.
-The accounting information must be information that could affect a decision.

Accepted Answer

Relevance is the qualitative characteristic that requires accounting information to be capable of influencing a decision.

Answer: B 
 Materiality is important because it helps users of financial statements assess the significance of a particular item or event.

Answer: E 
 Reliability is important because it ensures that accounting information is free from errors and bias, and can be depended on by users to make decisions.

Answer: D 
 Comparability is important because it ensures that users can compare financial information across different time periods or entities.

Answer: G 
 Understandability is important because it requires accounting information to be presented in a clear and concise manner that can be easily comprehended by its users.

Answer: C 
 Conservatism is a principle rather than a qualitative characteristic, and it requires that uncertainties should be resolved in a way that is more likely to result in a lower asset valuation or a higher liability valuation rather than the opposite.

Quiz 2: Financial Statements and the Annual Report

Match the following characteristics with the statements about each qualitative characteristic's importance. -Accounting information must be verifiable and faithfully represent actual transactions.

Match the following characteristics with the statements about each qualitative characteristic's importance. -This quality allows users to analyze two or more companies and look for similarities and differences.

For each item listed, select the section of the balance sheet in which the item would be reported. -Capital stock

For each item listed, select the section of the balance sheet in which the item would be reported. -Land

Match the following characteristics with the statements about each qualitative characteristic's importance. -This quality refers to an amount large enough to affect a decision.

Match the following characteristics with the statements about each qualitative characteristic's importance. -Those willing to spend the time should be provided with comprehensible accounting information.

For each item listed, select the section of the balance sheet in which the item would be reported. -Accounts receivable

Match the following characteristics with the statements about each qualitative characteristic's importance. -Accounting information should use the least optimistic estimate.

Identify whether the following investor questions are associated with a primary or b secondary financial reporting objectives. -How much has Apple invested in research and development projects?

For each item listed, select the section of the balance sheet in which the item would be reported. -Notes payable--due within one year

Identify whether the following investor questions are associated with a primary or b secondary financial reporting objectives. -If I buy 50 shares of Apple, how much cash will I receive in dividends each year?

Match the following characteristics with the statements about each qualitative characteristic's importance. -Users must be able to compare accounting information of a firm with its prior year information.

For each item listed, select the section of the balance sheet in which the item would be reported. -Retained earnings

For each item listed, select the section of the balance sheet in which the item would be reported. -Accounts payable

Identify whether the following investor questions are associated with a primary or b secondary financial reporting objectives. -Based on the financial information, should I sell my shares of Apple next quarter?

Identify whether the following investor questions are associated with a primary or b secondary financial reporting objectives. -How much revenue will Apple generate during the time period in which I own the shares?

For each item listed, select the section of the balance sheet in which the item would be reported. -Equipment

Identify whether the following investor questions are associated with a primary or b secondary financial reporting objectives. -Based on the financial information, should I buy shares of Apple?

For each item listed, select the section of the balance sheet in which the item would be reported. -Cash

Match the following characteristics with the statements about each qualitative characteristic's importance. -The accounting information must be information that could affect a decision.