FAR Free Dumps Study Materials
Question 13: Financial reporting by a development stage enterprise differs from financial reporting for an
established
operating enterprise in regard to footnote disclosures:
A. Only.
B. And expense recognition principles only.
C. And revenue recognition principles only.
D. And revenue and expense recognition principles.
Correct Answer: A
Explanation:
Choice "a" is correct. Financial reporting by a development stage enterprise differs from financial
reporting for an established operating enterprise in regard to (more extensive) footnote disclosures
only.
Choices "b", "c", and "d" are incorrect. Revenue and expense recognition principles are the same.
Rule:
Development stage enterprises should present financial statements in accordance with GAAP and
make
additional disclosures such as: cumulative net losses, cumulative deficit (as part of equity),
cumulative
sales and expenses (as part of the income statement), cumulative statement of cash flows and
supplementary "shareholders equity."