Financial accounting can be broadly defined as the area of accounting that prepares

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CHAPTER 1-Framework Accounting

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Financial accounting can be broadly defined as the area of accounting that prepares financial statements to be usedby investors only.by parties both internal and external to the business enterprise.primarily by external users and Canada Revenue Agency.by parties internal to the business enterprise only.

Whether a business is successful and thrives is determined by

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Stakeholders who help in the efficient allocation of resources include

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management and auditors.Audited financial statements are prepared byauditors.Canada Revenue Agency.management.financialanalysts.Objectives of financial reporting donotincludeproviding information about the liquidation value of an enterprise.providing information that is useful to users in making resource allocation decisions.providing information about an entity’s economic resources, obligations, and equity/net assets.providing information about changes in an entity’s economic resources, obligations, and equity/net assets.Which of the following isnottrue regarding accrual-basis accounting?

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It has greater potential to depict meaningful trends in revenues and expenses.A company records events that change its financial statements in the periods in which the events occur.Revenues and expenses are recognized in the periods in which the company receives or pays cash.The problem of information asymmetry can be reduced byaccountingstandards.adverseselection.only focusing on positive events.aggressiveaccounting.In the United States, the body that has the final authority over accounting standards is theInternational Accounting Standards Board (IASB).Accounting Standards Oversight Council (AcSOC).Financial Accounting Standards Board (FASB).Securities Exchange Commission (SEC).

Under ASPE, the primary sources of GAAP includethe CPA Handbook and appendices.research studies.accounting textbooks and journals.International Financial Reporting Standards.The exercise of professional judgement doesnotinvolvethe use of ethical decision making.aggressiveaccounting.the use of knowledge gained through education.the application of knowledge gained throughexperience.Indicate the qualitative characteristic of financial information being described in each item below:(a)Financial statements should include all information necessary to portraythe underlying transactions.(b)Financial information should make a difference in a user’s decision-making.

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1.Financial accounting can be broadly defined as the area of accounting that preparesa. General purpose financial statements to be used by parties internal to the entity.b. Financial statements to be used by investors.c. General purpose financial statements to be used by parties both internal and externalto the entity.d. Financial statements to be used primarily by management.

2. Which statement best describes the term "going concern”?

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3.What is the only underlying assumption mentioned in the Conceptual Framework forFinancial Reporting?

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4. The relatively stable economic, political, and social environment supports

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5.Which basic accounting assumption is threatened by the existence of severe inflationin an economy?a. Monetary unit assumptionb. Periodicity assumptionc. Going concern assumptiond. Economic entity assumption

How can financial accounting be defined?

What are the broad areas of accounting?

Who is financial accounting prepared for?

What are the three broad areas of accounting?