EXAM 1 Review (C)

FALSE

An Accounting Standards Update requires a unanimous vote of all seven FASB board members to be issued.

TRUE

The two fundamental qualitative characteristics of useful accounting information are relevance and faithful representation.

FALSE

Assets, liabilities, and stockholders' equity are temporary accounts that are closed at the end of each period.

TRUE

The SEC has the legal authority to set accounting standards for public companies but has largely delegated rule-writing to the FASB.

FALSE

Dividends are an expense reported on the income statement.

TRUE

Sales Returns & Allowances and Sales Discounts are contra-revenue accounts with a normal debit balance.

FALSE

Debits always increase an account and credits always decrease it.

TRUE

Receiving cash in advance from a customer for services to be performed later creates an unearned (deferred) revenue, which is a liability.

FALSE

A trial balance that balances proves that no errors were made in recording transactions.

TRUE

Every adjusting entry affects at least one income-statement account and one balance-sheet account.

FALSE

The conceptual framework (SFAC) is authoritative GAAP that overrides FASB standards.

TRUE

The balance sheet reports a company's financial position at a specific point in time.

TRUE

If a company fails to record an accrued expense, both expenses and liabilities will be understated.

FALSE

Recording depreciation expense reflects the current market value of the asset.

TRUE

Under accrual accounting, revenue is recognized when the performance obligation is satisfied, not necessarily when cash is received.