Under GAAP, which principle requires that financial statements should provide all necessary information to understand the business's financial position and performance?a.Materiality principleb.Consistency principlec.Full disclosure principled.Conservatism principle

Required informationSkip to questionCatching Up on Financials for Board Oversight This activity is important because, as a manager, it is important that you understand the financial language used to describe components of the business. While different businesses may approach their financials slightly differently, there are certain rules upon which the accounting profession has generally agreed. These are called generally accepted accounting principles (GAAP). Becoming familiar with the GAAP will be important for you throughout your career, no matter your industry or position. The goal of this exercise is to demonstrate your understanding of basic concepts associated with GAAP and apply the concepts in a broad level to an organization. Read the case and answer the questions that follow. All through Cori’s business program in college, she avoided accounting and finance classes. Her passion was in logistics and marketing. Cori always recognized that she would need to understand the numbers but always relied on members of her team to take responsibility for the details driving the financials. Recently, Cori has been asked to serve on the board of a privately held organization. Even for a privately owned organization (vs. a publically traded firm), serving on the board is a big responsibility. The board often sets the firm's strategic agenda, recognizes opportunities to gain advantage, and advises ownership if anything looks improper with the financial information. In general, the board looks at big picture information to make recommendations to help the organization. While Cori was not invited to serve on the board based on her financial expertise, she also feels a sense of responsibility to the company. She recognizes that she needs to quickly become familiar with the generally accepted accounting principles for the industry, and recognize variations in the associated numbers. In addition, she does not want to be embarrassed at the first meeting if she fails to recognize a commonly known term! Cori has been given the opportunity to ask for information prior to the meeting, and she is considering what she will need to know before the meeting to prepare herself for discussion.Which of the following should Cori not expect to see counted as one of the firm’s assets?Multiple Choicecashloanspropertyinventoryequipment

Which accounting principle states that financial statements should reflect the assumption that the business will continue to operate indefinitely?a.Materiality principleb.Going concern principlec.Consistency principled.Conservatism principle

The use of GAAP facilitates agreement on the method of measurement in financial statements to enable:Group of answer choicesanalysing the owner’s personal transactionsmaking comparisons between the financial information of different entitiesmaking comparisons between an entity’s budgeted and actual resultsinterpreting bank statements

For 5 points, discuss which among the financial statements is/are more important.

Which of the following statements about management accounting is true?It is governed by generally accepted accounting principles (GAAP).It is primarily concerned with external reporting.It focuses on past performance.It involves the preparation of detailed plans and forecasts.