Question 1

Generally, revenue from sales should be recognized at a point when

Accepted Answer

A) management decides it is appropriate to do so. 
B) the product is available for sale to the ultimate consumer. 
C) the entire amount receivable has been collected from the customer and there remains no further warranty liability. 
D) none of these. 
A) management decides it is appropriate to do so. 
B) the product is available for sale to the ultimate consumer. 
C) the entire amount receivable has been collected from the customer and there remains no further warranty liability. 
D) none of these.

Question 2

Financial information exhibits the characteristic of consistency when

Accepted Answer

A) expenses are reported as charges against revenue in the period in which they are paid. 
B) accounting entities give accountable events the same accounting treatment from period to period. 
C) extraordinary gains and losses are not included on the income statement. 
D) accounting procedures are adopted which give a consistent rate of net income. 
A) expenses are reported as charges against revenue in the period in which they are paid. 
B) accounting entities give accountable events the same accounting treatment from period to period. 
C) extraordinary gains and losses are not included on the income statement. 
D) accounting procedures are adopted which give a consistent rate of net income.

Question 3

According to the FASB Conceptual Framework, the elements-assets, liabilities, and equity-describe amounts of resources and claims to resources at/during a 
$\begin{array}{lcc} 
& {\text { Moment in Time }} & \text { Period of Time } \
\text { a. } & \text { Yes } & \text { No } \
\text { b. } & \text { Yes } & \text { Yes } \
\text { c. } & \text { No } & \text { Yes } \
\text { d. } & \text { No } & \text { No }
\end{array}$

Accepted Answer

The answer of According to the FASB Conceptual Framework, the...

Question 4

During the lifetime of an entity, accountants produce financial statements at arbitrary points in time in accordance with which basic accounting concept?

Accepted Answer

A) Cost/benefit constraint 
B) Periodicity assumption 
C) Conservatism constraint 
D) Matching principle 
A) Cost/benefit constraint 
B) Periodicity assumption 
C) Conservatism constraint 
D) Matching principle

Question 5

Supplementary information may include details or amounts that present a different perspective from that adopted in the financial statements.

Accepted Answer

A) True 
 B)False

Question 6

According to the FASB's conceptual framework, predictive value is an ingredient of $\begin{array}{lcc} 
& \text { Relevance } & \text { Reliability } \
\text { a. } & \text { Yes } & \text { No } \
\text { b. } & \text { Yes } & \text { Yes } \
\text { c. } & \text { No } & \text { Yes } \
\text { d. } & \text { No } & \text { No }
\end{array}$

Accepted Answer

The answer of According to the FASB's conceptual framework, predictive...

Question 7

Valuing assets at their liquidation values rather than their cost is inconsistent with the

Accepted Answer

A) periodicity assumption. 
B) matching principle. 
C) materiality constraint. 
D) historical cost principle. 
A) periodicity assumption. 
B) matching principle. 
C) materiality constraint. 
D) historical cost principle.

Question 8

Which of the following is not a benefit associated with the FASB Conceptual Framework Project?

Accepted Answer

A) A conceptual framework should increase financial statement users' understanding of and confidence in financial reporting. 
B) Practical problems should be more quickly solvable by reference to an existing conceptual framework. 
C) A coherent set of accounting standards and rules should result. 
D) Business entities will need far less assistance from accountants because the financial reporting process will be quite easy to apply. 
A) A conceptual framework should increase financial statement users' understanding of and confidence in financial reporting. 
B) Practical problems should be more quickly solvable by reference to an existing conceptual framework. 
C) A coherent set of accounting standards and rules should result. 
D) Business entities will need far less assistance from accountants because the financial reporting process will be quite easy to apply.

Question 9

According to the FASB conceptual framework, earnings

Accepted Answer

A) are the same as comprehensive income. 
B) exclude certain gains and losses that are included in comprehensive income. 
C) include certain gains and losses that are excluded from comprehensive income. 
D) include certain losses that are excluded from comprehensive income. 
A) are the same as comprehensive income. 
B) exclude certain gains and losses that are included in comprehensive income. 
C) include certain gains and losses that are excluded from comprehensive income. 
D) include certain losses that are excluded from comprehensive income.

Question 10

Under Statement of Financial Accounting Concepts No.2, representational faithfulness is an ingredient of the primary quality of $\begin{array}{llc} 
& \text { Reliability } & \text { Relevance } \
\text { a. } & \text { Yes } & \text { Yes } \
\text { b. } & \text { No } & \text { Yes } \
\text { c. } & \text { Yes } & \text { No } \
\text { d. } & \text { No } & \text { No }
\end{array}$

Accepted Answer

The answer of Under Statement of Financial Accounting Concepts No.2,...

Question 11

Information about different entities and about different periods of the same entity can be prepared and presented in a similar manner.Comparability and consistency are related to which of these objectives? $\begin{array}{lll} 
& \text { Comparability } & \text { Consistency } \
\text { a. } & \text { Entities } & \text { Entities } \
\text { b. } & \text { Entities } & \text { Periods } \
\text { c. } & \text { Periods } & \text { Entities } \
\text { d. } & \text { Periods } & \text { Periods }
\end{array}$

Accepted Answer

The answer of Information about different entities and about different...

Question 12

The first level of the conceptual framework identifies the recognition and measurement concepts used in establishing accounting standards.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

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

Question 14

The historical cost principle would be of limited usefulness if not for the going concern assumption.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following are considered pervasive constraints by Statement of Financial Accounting Concepts No.2?

Accepted Answer

A) Cost-benefit relationship and conservatism 
B) Timeliness and feedback value 
C) Conservatism and verifiability 
D) Materiality and cost-benefit relationship 
A) Cost-benefit relationship and conservatism 
B) Timeliness and feedback value 
C) Conservatism and verifiability 
D) Materiality and cost-benefit relationship

Question 16

During the lifetime of an entity accountants produce financial statements at artificial points in time in accordance with the concept of $$\begin{array} { l c c } 
& \text { Objectivity } & \text { Periodicity } \
\hline a.&\text {  No } & \text { No } \
\text { b. } & \text { Yes } & \text { No } \
\text { c. } & \text { No } & \text { Yes } \
\text { d. } & \text { Yes } & \text { Yes }
\end{array}$$

Accepted Answer

The answer of During the lifetime of an entity accountants...

Question 17

The idea of consistency does not mean that companies cannot switch from one accounting method to another.

Accepted Answer

A) True 
 B)False

Question 18

According to the FASB's conceptual framework, earnings

Accepted Answer

A) is the same as comprehensive income. 
B) excludes certain gains and losses that are included in comprehensive income. 
C) includes certain gains and losses that are excluded from comprehensive income. 
D) includes certain losses that are excluded from comprehensive income. 
A) is the same as comprehensive income. 
B) excludes certain gains and losses that are included in comprehensive income. 
C) includes certain gains and losses that are excluded from comprehensive income. 
D) includes certain losses that are excluded from comprehensive income.

Question 19

Which of the following best illustrates the accounting concept of conservatism?

Accepted Answer

A) Use of the allowance method to recognize bad debt losses from credit sales 
B) Use of the lower of cost or market approach in valuing inventories. 
C) Use of the same accounting method from one period to the next in computing depreciation expense 
D) Utilization of a policy of deliberate understatement of asset values in order to present a conservative net income figure 
A) Use of the allowance method to recognize bad debt losses from credit sales 
B) Use of the lower of cost or market approach in valuing inventories. 
C) Use of the same accounting method from one period to the next in computing depreciation expense 
D) Utilization of a policy of deliberate understatement of asset values in order to present a conservative net income figure

Question 20

Users of financial statements are assumed to have no knowledge of business and financial accounting matters by financial statement preparers.

Accepted Answer

A) True 
 B)False

Generally, revenue from sales should be recognized at a point when

Financial information exhibits the characteristic of consistency when

According to the FASB Conceptual Framework, the elements-assets, liabilities, and equity-describe amounts of resources and claims to resources at/during a Moment in Time Period of Time a. Yes No b. Yes Yes c. No Yes d. No No

During the lifetime of an entity, accountants produce financial statements at arbitrary points in time in accordance with which basic accounting concept?

Supplementary information may include details or amounts that present a different perspective from that adopted in the financial statements.

According to the FASB's conceptual framework, predictive value is an ingredient of Relevance Reliability a. Yes No b. Yes Yes c. No Yes d. No No

Valuing assets at their liquidation values rather than their cost is inconsistent with the

Which of the following is not a benefit associated with the FASB Conceptual Framework Project?

According to the FASB conceptual framework, earnings

Under Statement of Financial Accounting Concepts No.2, representational faithfulness is an ingredient of the primary quality of Reliability Relevance a. Yes Yes b. No Yes c. Yes No d. No No

The first level of the conceptual framework identifies the recognition and measurement concepts used in establishing accounting standards.

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

The historical cost principle would be of limited usefulness if not for the going concern assumption.

Which of the following are considered pervasive constraints by Statement of Financial Accounting Concepts No.2?

During the lifetime of an entity accountants produce financial statements at artificial points in time in accordance with the concept of Objectivity Periodicity a. No No b. Yes No c. No Yes d. Yes Yes

The idea of consistency does not mean that companies cannot switch from one accounting method to another.

According to the FASB's conceptual framework, earnings

Which of the following best illustrates the accounting concept of conservatism?

Users of financial statements are assumed to have no knowledge of business and financial accounting matters by financial statement preparers.

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

Generally, revenue from sales should be recognized at a point when

Financial information exhibits the characteristic of consistency when

According to the FASB Conceptual Framework, the elements-assets, liabilities, and equity-describe amounts of resources and claims to resources at/during a Moment in Time Period of Time a. Yes No b. Yes Yes c. No Yes d. No No

During the lifetime of an entity, accountants produce financial statements at arbitrary points in time in accordance with which basic accounting concept?

Supplementary information may include details or amounts that present a different perspective from that adopted in the financial statements.

According to the FASB's conceptual framework, predictive value is an ingredient of Relevance Reliability a. Yes No b. Yes Yes c. No Yes d. No No

Valuing assets at their liquidation values rather than their cost is inconsistent with the

Which of the following is not a benefit associated with the FASB Conceptual Framework Project?

According to the FASB conceptual framework, earnings

Under Statement of Financial Accounting Concepts No.2, representational faithfulness is an ingredient of the primary quality of Reliability Relevance a. Yes Yes b. No Yes c. Yes No d. No No

The first level of the conceptual framework identifies the recognition and measurement concepts used in establishing accounting standards.

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

The historical cost principle would be of limited usefulness if not for the going concern assumption.

Which of the following are considered pervasive constraints by Statement of Financial Accounting Concepts No.2?

During the lifetime of an entity accountants produce financial statements at artificial points in time in accordance with the concept of Objectivity Periodicity a. No No b. Yes No c. No Yes d. Yes Yes

The idea of consistency does not mean that companies cannot switch from one accounting method to another.

According to the FASB's conceptual framework, earnings

Which of the following best illustrates the accounting concept of conservatism?

Users of financial statements are assumed to have no knowledge of business and financial accounting matters by financial statement preparers.

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