Question 1 The assumption of going concern is the assumption that an entity will

Question

Question 1

The assumption of going concern is the assumption that an entity will continue operating indefinitely into the future.

True or False

Question 2

The issuance of treasury stock will increase earnings per share.

True or False

Question 3

The indirect method of reporting the statement of cash flows is essentially a reconciliation between accrual based income to actual cash flow for the period.

True or False

Question 4

The recognition of gross receipts on the income statement when the amount and timing of the revenue are reasonably determinable and the earnings process is complete is related to

Revenue realization principle

Periodicity assumption of financial reporting

Deferred revenue assumption of financial reporting

Cash basis of financial reporting

Revenue realization principle

Periodicity assumption of financial reporting

Deferred revenue assumption of financial reporting

Cash basis of financial reporting

Explanation / Answer

Question 1: FALSE. The assumption of going concern is the assumption that an entity will continue operating indefinitely into the future not indefinite in the future.

Question 2: TRUE. Since treasury stocks are stocks issued but are not outstanding(which means it won't be included in the calculation of EPS), hence, true.

Question 3: TRUE. It is inherent in the very process of indirect method.

Question 4: Revenue realization principle . It is the concept that revenue can only be recorded once the underlying good/service has been served and then, revenue can be recognized on the income statement when the amount and timing of the revenue are reasonably determinable.

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