1. The conceptual framework specifically mentions two underlying assumptions, namely Show
a. accrual and going concern 2. Which of the following terms best describes financial statements whose basis of accounting recognizes transactions and other events when they occur? a. accrual basis of accounting 3. The accrual basis of accounting is based primarily on a. conservatism and revenue realization 4. Which of the following statements best describes the term going concern? a. when current liabilities of an entity exceed current assets 5. Which of the following is not an implication of the going concern assumption? a. the historical cost principle is credible 6.The relatively stable economic, political and social environment supports a. conservatism 7. The financial statements that are prepared for the entity are separate and distinct from the owners according to the a. going concern principle 8. Which underlying concept serves as the basis for preparing financial statements at regular intervals? a. accounting entity 9. Which of the following is not an important characteristic of the financial statements that accountants currently prepare? a. the information in financial statements is expressed in units of money adjusted for changing
purchasing power 10. Which of the following statements is incorrect? a. the accrual method, which builds directly on the revenue and matching
principles, ignores the timing of cash receipts or payments in determining when to recognize revenue or expenses Answer: "Questions are lifted from the following sources: PHICPA, AICPA, AA,ACP,PAS, PFRS, IAS, IFRS 
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ACCOUNTING Suppose you manage Outward Bound, Inc., a Vermont sporting goods store that lost money during the past year. To turn the business around, you must analyze the company and industry data for the current year to learn what is wrong. The company’s data follow: Outward Bound, Inc. Common-Size Balance Sheet Data $$ \begin{matrix} \quad & \text{Outward Bound } & \text{Industry Average}\\ \text{Cash and short-term investments} & \text{3.0\\% } & \text{6.8\\% }\\ \text{Trade receivables, net } & \text{15.2 } & \text{11.0 }\\ \text{Inventory} & \text{64.2 } & \text{60.5 }\\ \text{Prepaid expenses } & \text{1.0 } & \text{0.0 }\\ \text{Total current assets} & \text{83.4\\% } & \text{78.3\\% }\\ \text{Fixed assets, net } & \text{12.6 } & \text{15.2 }\\ \text{Other assets } & \text{4.0 } & \text{6.5 }\\ \text{Total assets} & \text{100.0\\%} & \text{100.0\\%}\\ \quad & \quad & \quad\\ \text{Notes payable, short-term, 12\\% } & \text{17.1\\% } & \text{14.0\\% }\\ \text{Accounts payable } & \text{21.1 } & \text{25.1 }\\ \text{Accrued liabilities } & \text{7.8} & \text{7.9}\\ \text{Total current liabilities } & \text{46.0 } & \text{47.0}\\ \text{Long-term debt, 11\\% } & \text{19.7 } & \text{16.4}\\ \text{Total liabilities } & \text{65.7 } & \text{63.4}\\ \text{Common stockholders’ equity } & \text{34.3 } & \text{36.6}\\ \text{Total liabilities and stockholders’ equity} & \text{100.0\\%} & \text{100.0\\%}\\ \end{matrix} $$ Outward Bound, Inc. Common-Size Income Statement Data $$ \begin{matrix} \quad & \text{Outward Bound } & \text{Industry Average}\\ \text{Net sales } & \text{100.0\\%} & \text{100.0\\%}\\ \text{Cost of sales } & \text{ (68.2) } & \text{ (64.8)}\\ \text{Gross profit} & \text{ 31.8 } & \text{35.2}\\ \text{Operating expense } & \text{(37.1) } & \text{ (32.3) }\\ \text{Operating income (loss) } & \text{(5.3)} & \text{ 2.9 }\\ \text{Interest expense } & \text{(5.8) } & \text{ (1.3) }\\ \text{Other revenue } & \text{1.1} & \text{ 0.3 }\\ \text{Income (loss) before income tax } & \text{ (10.0) } & \text{ 1.9}\\ \text{Income tax (expense) saving } & \text{4.4 } & \text{ (0.8) }\\ \text{Net income (loss)} & \text{ (5.6)\\%} & \text{ 1.1\\%}\\ \end{matrix} $$ On the basis of your analysis of these figures, suggest four courses of action Outward Bound might take to reduce its losses and establish profitable operations. Give your reason for each suggestion. (Challenge) Verified answer
ACCOUNTING Harrison Forklift’s pension expense includes a service cost of $10 million. Harrison began the year with a pension liability of$28 million (underfunded pension plan). Required: Prepare the appropriate general journal entries to record Harrison’s pension expense in each of the following independent situations regarding the other components of pension expense ($in millions): 1. Interest cost,$6; expected return on assets, $4; amortization of net loss,$2. 2. Interest cost, $6; expected return on assets,$4; amortization of net gain, $2. 3. Interest cost,$6; expected return on assets, $4; amortization of net loss,$2; amortization of prior service cost, $3 million. Verified answer
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Other Quizlet setsRelated questionsWhich underlying concepts serves as the basis for preparing the financial statement at regular intervals?This is known as accounting period concept. Thus, this concept requires that a balance sheet and profit and loss account should be prepared at regular intervals.
Which underlying assumption serves as the basis for preparing financial statements at a regular artificial points in time?According to the Framework of IAS/IFRS, the underlying assumptions for the preparation of financial statements are: Accrual basis The financial statements are prepared under the accrual basis.
What is a basic underlying assumption in the preparation of financial statements?There are four basic assumptions of financial accounting: (1) economic entity, (2) fiscal period, (3) going concern, and (4) stable dollar. These assumptions are important because they form the building blocks on which financial accounting measurement is based.
What is the most important concept as used in preparation of financial statements?Prudence – The prudence concept holds that financial statements should err on the side of caution. The concept evolved to counteract the excessive optimism of some managers and owners, which resulted, in the past, in an overstatement of financial position.
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Which underlying concept serve as the basis for preparing financial statements at regular intervals?
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