51. How does financial accounting contribute to the calculation of earnings per share (EPS)?
A. Ignoring Non-Cash Transactions
B. Analyzing Employee Performance
C. Dividing Net Income by the Number of Outstanding Shares
D. Focusing Only on Revenue Transactions
52. What is the purpose of the statement of comprehensive income in financial reporting?
A. Detailing Long-Term Liabilities
B. Summarizing All Changes in Equity, Including Non-Owner Changes
C. Assessing Market Share
D. Ignoring Non-Cash Transactions
53. How does financial accounting handle the recognition of contingent liabilities?
A. Only Focuses on Historical Transactions
B. Discloses Potential Liabilities that Depend on Future Events
C. Ignoring Changes in Equity
D. Setting Advertising Budgets
54. What is the significance of the historical cost principle in asset valuation?
A. Focusing Only on Revenue Transactions
B. Detailing Changes in Cash Position
C. Assets Are Recorded at Their Original Cost
D. Relying Solely on Cash Transactions
55. How does the realization principle guide the recognition of revenue in financial accounting?
A. Only Records Cash Transactions
B. Recognizes Revenue When It Is Earned and Realizable
C. Focusing on Short-Term Liabilities
D. Ignoring Non-Monetary Transactions
56. What is the purpose of the statement of changes in equity in financial reporting?
A. Analyzing Market Trends
B. Focusing on Short-Term Assets
C. Summarizing Changes in Owners’ Equity Over a Period
D. Ignoring Non-Cash Transactions
57. How does financial accounting treat extraordinary items in the income statement?
A. Ignores Long-Term Investments
B. Focusing Only on Short-Term Liabilities
C. Presents Them Separately from Ordinary Business Activities
D. Analyzing Employee Morale
58. What is the purpose of the accounting standard-setting bodies in financial reporting?
A. Setting Employee Compensation
B. Establishing Uniform Standards for the Preparation of Financial Statements
C. Ignoring Non-Cash Transactions
D. Detailing Changes in Equity
59. How does financial accounting contribute to the assessment of a company’s solvency?
A. Analyzing Market Demand
B. Evaluating the Debt Ratio and Interest Coverage Ratio
C. Ignoring Non-Monetary Transactions
D. Reporting Changes in Equity
60. What is the significance of the conservatism principle in financial accounting?
A. Detailing Changes in Cash Position
B. Focusing on Short-Term Assets
C. Errs on the Side of Recognizing Losses Sooner Than Gains
D. Ignoring Non-Cash Transactions
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