11. When assessing general purpose financial statements, the financial analyst takes into consideration the fact that many important assets may not be included in the company's statement of financial position, such as human resource capital, intellectual property and social responsibility. This limitation is the result of applying which of the following characteristics of financial information?
A. Entity concept
B. Unit-of-measure assumption
C. Going-concern assumption
D. Periodic-reporting assumption
12. Which of the following statements about general purpose financial statements is correct?
A. General purpose financial statements are designed to meet the information needs of
B. every stakeholder in every situation.
C. General purpose financial statements provide information to all stakeholders.
D. General purpose financial statements are intended for specific use only.
E. The financial statements of non-public companies are general purpose financial statements.
13. How often do companies prepare general purpose financial statements?
A. At least once a year.
B. Only when asked for by a stakeholder.
C. Every time management needs to make a financial decision.
D. As often as GAAP requires.
14. The best description of the financial statements that a public company prepares is:
A. tax-based financial statements.
B. specific purpose financial statements.
C. general principle financial statements.
D. general purpose financial statements.
15. General purpose financial statements include which of the following sets of statements?
A. Balance statement, income statement, statement of long-term debt, cash flow statement
B. Balance sheet, income statement, statement of shareholders' equity, cash flow statement
C. Balance sheet, income statement, statement of shareholders' equity, statement of long-term debt
D. Balance statement, income statement, statement of retained earnings, cash balance
16. What does the term "consolidated" mean when used to describe financial statements?
A. Consolidated means that financial statements are presented for two years.
B. Consolidated means that the financial statements have been approved by an auditor.
C. Consolidated means that the five financial statements have been totalled together.
D. Consolidated means that the financial statements contain the information of more than one company.
17. Sun Company owns 75% of Moon Inc., how would Sun's financial statements be prepared?
A. On a consolidated basis.
B. On a specific purpose basis.
C. On a subsidiary basis.
D. On a financial basis.
18. Why are financial statements prepared on a comparative basis?
A. To provide users with easy comparison with the industry.
B. To provide users with a perspective on the economy.
C. Because making comparisons using accounting information can be difficult and misleading.
D. Because making comparisons significantly contributes to the interpretation of accounting information.
19. Which of the following statements about a fiscal year is true?
A. It is the same for all companies in the same industry.
B. It is the financial accounting term used to describe the calendar year.
C. It is a month period ending any time in the calendar year.
D. It is the period covered by the balance sheet.
20. Which financial statement is a snapshot at a point in time?
A. Balance sheet
B. Income statement
C. Statement of changes in equity
D. Cash flow statement