Solved by verified expert :Grade Details – All Questions 1. Question : A decrease in the profit margin of a company might mean that: Student Answer: the company’s sales are decreasing. the company’s costs are increasing. the company’s net income is decreasing. the company’s net income relative to sales is decreasing. 2. Question : Regulation S-X is issued by the ________. Student Answer: APB SEC FASB SFAS 3. Question : For financial information to be considered material, it must: Student Answer: show value of more than $1 million. make a difference to the judgment of the decision makers. be at least 10% of the total value of the company. affect the company’s net income. 4. Question : The accounting equation could be expressed as: Student Answer: Liabilities + Stockholders’ Equity = Assets. Assets – Stockholders’ Equity = Revenues. Assets – Liabilities = Operating Income. Assets + Liabilities = Stockholders’ Equity. 5. Question : Which of the following statements is false? Student Answer: Financial statements are prepared by management. External users have access to the detailed records of the company. Internal users of financial information include management of the company. A secondary objective of financial reporting includes determining prospective cash flows. 6. Question : Dividends are: Student Answer: an expense on the income statement. an account in stockholders’ equity. added on the retained earnings statement. a distribution of earnings to stockholders. 7. Question : The practice of using the least optimistic estimate when two estimates are possible is called: Student Answer: relevance. conservatism. materiality. reliability. 8. Question : You will find information about the revenues and expenses for a period of time in the: Student Answer: balance sheet. income statement. statement of cash flows. notes to the financial statements. 9. Question : The annual report on internal control systems which must be filed by many companies includes: Student Answer: a statement that the auditors have issued an audit report on management’s assessment. a reference to the auditor’s opinion on the company’s financial statements. a management discussion and analysis of results. a section on the disposition of the previous year’s internal control weaknesses. 10. Question : Verifiability is part of the primary decision-specific quality of ________. Student Answer: relevance timeliness materiality reliability
