1. Financial accounting information is characterized by all of the following except:

It is historical in nature.

It is used mainly by creditors, investors, and potential creditors and investors.

It emphasizes the future.

It is prepared in accordance with generally accepted accounting principles.

2. According to the conceptual framework for financial reporting, ensuring that information represents what it purports to represent is termed

comparability.

timeliness.

verifiability.

understandability.

3. Compared to International Financial Reporting Standards (IFRS), U.S. GAAP

Is more prone to legal difficulty because U.S. GAAP is principles-based, while IFRS is rule-based.

Is less prone to legal difficulty because U.S. GAAP is principles-based, while IFRS is rule-based.

Is less prone to legal difficulty because U.S. GAAP is rules-based, while IFRS is principles-based.

Is more prone to legal difficulty because U.S. GAAP is rules-based, while IFRS is principles-based.

4. The basic financial statement which is prepared as of a specific date is the

a. income statement.

b. statement of cash flows.

c. statement of financial position (Balance Sheet).

d. statement of retained earnings.

5. As of December 31, 20X7, ABC Co. had total assets of $18,000,000, total owners’ equity of $6,000,000. During 20X7, ABC Co. had total revenues of $4,000,000 and total expenses of $3,400,000. As of December 31, 20X7, what were ABC Co.’s total liabilities?

$12,000,000.

$12,600,000.

$600,000.

$11,400,000.