Question 1

Verifiability and predictive value are two ingredients of reliability.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following serves as the justification for the periodic recording of depreciation expense?

Accepted Answer

A) Association of efforts (expense) with accomplishments (revenue) 
B) Systematic and rational allocation of cost over the periods benefited 
C) Immediate recognition of an expense 
D) Minimization of income tax liability 
A) Association of efforts (expense) with accomplishments (revenue) 
B) Systematic and rational allocation of cost over the periods benefited 
C) Immediate recognition of an expense 
D) Minimization of income tax liability

Question 3

"When products (goods or services), merchandise, or other assets are exchanged for cash or claims to cash" is a definition of

Accepted Answer

A) allocated. 
B) realized. 
C) realizable. 
D) earned. 
A) allocated. 
B) realized. 
C) realizable. 
D) earned.

Question 4

Which of the following is an implication of the going concern assumption?

Accepted Answer

A) The historical cost principle is credible. 
B) Depreciation and amortization policies are justifiable and appropriate. 
C) The current-noncurrent classification of assets and liabilities is justifiable and signify-cant. 
D) All of these. 
A) The historical cost principle is credible. 
B) Depreciation and amortization policies are justifiable and appropriate. 
C) The current-noncurrent classification of assets and liabilities is justifiable and signify-cant. 
D) All of these.

Question 5

Decision makers vary widely in the types of decisions they make, the methods of decision making they employ, the information they already possess or can obtain from other sources, and their ability to process information.Consequently, for information to be useful there must be a linkage between these users and the decisions they make.This link is

Accepted Answer

A) relevance. 
B) reliability. 
C) understandability. 
D) materiality. 
A) relevance. 
B) reliability. 
C) understandability. 
D) materiality.

Question 6

In the conceptual framework for financial reporting, what provides "the why"--the goals and purposes of accounting?

Accepted Answer

A) Measurement and recognition concepts such as assumptions, principles, and constraints 
B) Qualitative characteristics of accounting information 
C) Elements of financial statements 
D) Objectives of financial reporting 
A) Measurement and recognition concepts such as assumptions, principles, and constraints 
B) Qualitative characteristics of accounting information 
C) Elements of financial statements 
D) Objectives of financial reporting

Question 7

Companies consider only quantitative factors in determining whether an item is material.

Accepted Answer

A) True 
 B)False

Question 8

Under current GAAP, inflation is ignored in accounting due to the

Accepted Answer

A) economic entity assumption. 
B) going concern assumption. 
C) monetary unit assumption. 
D) periodicity assumption. 
A) economic entity assumption. 
B) going concern assumption. 
C) monetary unit assumption. 
D) periodicity assumption.

Question 9

In matters of doubt and great uncertainty, accounting issues should be resolved by choosing the alternative that has the least favorable effect on net income, assets, and owners' equity.This guidance comes from the

Accepted Answer

A) materiality constraint. 
B) industry practices constraint. 
C) conservatism constraint. 
D) full disclosure principle. 
A) materiality constraint. 
B) industry practices constraint. 
C) conservatism constraint. 
D) full disclosure principle.

Question 10

Under Statement of Financial Accounting Concepts No.5, which of the following, in the most precise sense, means the process of converting noncash resources and rights into cash or claims to cash?

Accepted Answer

A) Recognition 
B) Measurement 
C) Realization 
D) Allocation 
A) Recognition 
B) Measurement 
C) Realization 
D) Allocation

Question 11

According to Statement of Financial Accounting Concepts No.2, predictive value is an ingredient of the primary quality of $$\begin{array} { l c c } &\text { Relevance } & \text { Reliability }\
\text { a. } & \text { Yes } & \text { No } \
\text { b. } & \text { Yes } & \text { Yes } \
\text { c. } & \text { No } & \text { No } \
\text { d. } & \text { No } & \text { Yes }
\end{array}$$

Accepted Answer

The answer of According to Statement of Financial Accounting Concepts...

Question 12

The IASB has issued a conceptual framework that is broadly consistent with that of the United States.

Accepted Answer

A) True 
 B)False

Question 13

Decision Usefulness is the underlying theme of the conceptual framework.

Accepted Answer

A) True 
 B)False

Question 14

The economic entity assumption

Accepted Answer

A) is inapplicable to unincorporated businesses. 
B) recognizes the legal aspects of business organizations. 
C) requires periodic income measurement. 
D) is applicable to all forms of business organizations. 
A) is inapplicable to unincorporated businesses. 
B) recognizes the legal aspects of business organizations. 
C) requires periodic income measurement. 
D) is applicable to all forms of business organizations.

Question 15

Which of the following basic accounting assumptions is threatened by the existence of severe inflation in the economy?

Accepted Answer

A) Monetary unit assumption. 
B) Periodicity assumption. 
C) Going-concern assumption. 
D) Economic entity assumption. 
A) Monetary unit assumption. 
B) Periodicity assumption. 
C) Going-concern assumption. 
D) Economic entity assumption.

Question 16

The conceptual framework for accounting has been discovered through empirical research.

Accepted Answer

A) True 
 B)False

Question 17

The objectives of financial reporting include all of the following except to provide information that

Accepted Answer

A) is useful to the Internal Revenue Service in allocating the tax burden to the business community. 
B) is useful to those making investment and credit decisions. 
C) is helpful in assessing future cash flows. 
D) identifies the economic resources (assets), the claims to those resources (liabilities), and the changes in those resources and claims. 
A) is useful to the Internal Revenue Service in allocating the tax burden to the business community. 
B) is useful to those making investment and credit decisions. 
C) is helpful in assessing future cash flows. 
D) identifies the economic resources (assets), the claims to those resources (liabilities), and the changes in those resources and claims.

Question 18

The matching principle states that debits must equal credits in each transaction.

Accepted Answer

A) True 
 B)False

Question 19

Revenue is generally recognized when realized or realizable and earned.This statement describes the

Accepted Answer

A) consistency characteristic. 
B) matching principle. 
C) revenue recognition principle. 
D) relevance characteristic. 
A) consistency characteristic. 
B) matching principle. 
C) revenue recognition principle. 
D) relevance characteristic.

Question 20

According to Statement of Financial Accounting Concepts No.2, verifiability is an ingredient of the primary quality of $$\begin{array} { l c c } &\text { Relevance } & \text { Reliability }\
\text { a. } & \text { Yes } & \text { No } \
\text { b. } & \text { Yes } & \text { Yes } \
\text { c. } & \text { No } & \text { No } \
\text { d. } & \text { No } & \text { Yes }
\end{array}$$

Accepted Answer

The answer of According to Statement of Financial Accounting Concepts...

Verifiability and predictive value are two ingredients of reliability.

Which of the following serves as the justification for the periodic recording of depreciation expense?

"When products (goods or services), merchandise, or other assets are exchanged for cash or claims to cash" is a definition of

Which of the following is an implication of the going concern assumption?

In the conceptual framework for financial reporting, what provides "the why"--the goals and purposes of accounting?

Companies consider only quantitative factors in determining whether an item is material.

Under current GAAP, inflation is ignored in accounting due to the

In matters of doubt and great uncertainty, accounting issues should be resolved by choosing the alternative that has the least favorable effect on net income, assets, and owners' equity.This guidance comes from the

Under Statement of Financial Accounting Concepts No.5, which of the following, in the most precise sense, means the process of converting noncash resources and rights into cash or claims to cash?

According to Statement of Financial Accounting Concepts No.2, predictive value is an ingredient of the primary quality of Relevance Reliability a. Yes No b. Yes Yes c. No No d. No Yes

The IASB has issued a conceptual framework that is broadly consistent with that of the United States.

Decision Usefulness is the underlying theme of the conceptual framework.

The economic entity assumption

Which of the following basic accounting assumptions is threatened by the existence of severe inflation in the economy?

The conceptual framework for accounting has been discovered through empirical research.

The objectives of financial reporting include all of the following except to provide information that

The matching principle states that debits must equal credits in each transaction.

Revenue is generally recognized when realized or realizable and earned.This statement describes the

According to Statement of Financial Accounting Concepts No.2, verifiability is an ingredient of the primary quality of Relevance Reliability a. Yes No b. Yes Yes c. No No d. No Yes

Financial Accounting and Accounting Standards

The Accounting Information System

Income Statement and Related Information

Balance Sheet and Statement of Cash Flows

Accounting and the Time Value of Money

Cash and Receivables

Valuation of Inventories: a Cost-Basis Approach

Inventories: Additional Valuation Issues

Acquisition and Disposition of Property, Plant, and Equipment

Depreciation, Impairments, and Depletion

Intangible Assets

Current Liabilities and Contingencies

Filters

Exam 2: Conceptual Framework Underlying Financial Accounting

Verifiability and predictive value are two ingredients of reliability.

Which of the following serves as the justification for the periodic recording of depreciation expense?

"When products (goods or services), merchandise, or other assets are exchanged for cash or claims to cash" is a definition of

Which of the following is an implication of the going concern assumption?

In the conceptual framework for financial reporting, what provides "the why"--the goals and purposes of accounting?

Companies consider only quantitative factors in determining whether an item is material.

Under current GAAP, inflation is ignored in accounting due to the

In matters of doubt and great uncertainty, accounting issues should be resolved by choosing the alternative that has the least favorable effect on net income, assets, and owners' equity.This guidance comes from the

Under Statement of Financial Accounting Concepts No.5, which of the following, in the most precise sense, means the process of converting noncash resources and rights into cash or claims to cash?

According to Statement of Financial Accounting Concepts No.2, predictive value is an ingredient of the primary quality of Relevance Reliability a. Yes No b. Yes Yes c. No No d. No Yes

The IASB has issued a conceptual framework that is broadly consistent with that of the United States.

Decision Usefulness is the underlying theme of the conceptual framework.

The economic entity assumption

Which of the following basic accounting assumptions is threatened by the existence of severe inflation in the economy?

The conceptual framework for accounting has been discovered through empirical research.

The objectives of financial reporting include all of the following except to provide information that

The matching principle states that debits must equal credits in each transaction.

Revenue is generally recognized when realized or realizable and earned.This statement describes the

According to Statement of Financial Accounting Concepts No.2, verifiability is an ingredient of the primary quality of Relevance Reliability a. Yes No b. Yes Yes c. No No d. No Yes

Financial Accounting and Accounting Standards

The Accounting Information System

Income Statement and Related Information

Balance Sheet and Statement of Cash Flows

Accounting and the Time Value of Money

Cash and Receivables

Valuation of Inventories: a Cost-Basis Approach

Inventories: Additional Valuation Issues

Acquisition and Disposition of Property, Plant, and Equipment

Depreciation, Impairments, and Depletion

Intangible Assets

Current Liabilities and Contingencies

Filters