Acct 301A Exam 1 CSUF – Questions With Correct Solutions Role of SEC, FASB, AICPA, and IASB Right Ans - They are the major standard-setting bodies that establish generally accepted accounting principles (GAAP).FASB due process Right Ans - It is the process through which the FASB develops and issues accounting standards, involving research, public comment, and revisions before finalizing standards.Fundamental qualities of accounting information Right Ans - Relevance and faithful representation.Basic assumptions in accounting Right Ans - Economic entity, going concern, monetary unit, and periodicity.Measurement principle in accounting Right Ans - It dictates that certain assets and liabilities are measured using historical cost or fair value.Comprehensive income vs. net income Right Ans - Comprehensive income includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.Methods of preparing an income statement Right Ans - Single-step and multiple-step income statements.Components of stockholders' equity Right Ans - Common stock, retained earnings, additional paid-in capital, and accumulated other comprehensive income.Categories of cash flows in the statement of cash flows Right Ans - Operating activities, investing activities, and financing activities.Time value of money Right Ans - The concept that money today is worth more than the same amount in the future due to its potential earning capacity.
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