ANSWER KEY TO REVIEW QUESTIONS AND CASE STUDIES

CHAPTER 1

Review Questions:

1. a.

2. False. A material error is an error that’s significant enough to cause someone to make a different decision than he would if he had the correct information.

3. True.

4. False. Nearly all reports of business income should be prepared on a accrual basis.

5. True.

6. c.

7. False. External financial reports are prepared according to the rules of GAAP for people outside of the company, such as bankers or investors.

Case Study Qaestion:

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CHAPTER 2

Review Qaestions:

1. d.

2. a. or b. The terms are interchangeable.

3. b.

4. True.

5. False. Most companies freqaently encounter ...

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