Question 1

All of the following represent costs of providing financial information except

Accepted Answer

A)  preparing. 
B)  disseminating. 
C)  accessing capital. 
D)  auditing. 
A)  preparing. 
B)  disseminating. 
C)  accessing capital. 
D)  auditing. C

Question 2

Which of the following is a constraint in presenting financial information?

Accepted Answer

A)  Cost-benefit relationship. 
B)  Full disclosure. 
C)  Relevance. 
D)  Consistency. 
A)  Cost-benefit relationship. 
B)  Full disclosure. 
C)  Relevance. 
D)  Consistency. A

Question 3

Comprehensive income includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.

Accepted Answer

A) True 
 B)False  True

Question 4

Prudence or conservatism means when in doubt, choose the solution that will be least likely to overstate liabilities or expenses.

Accepted Answer

A) True 
 B)False

Question 5

The IASB and the FASB are working on a joint project to develop a common conceptual framework.

Accepted Answer

A) True 
 B)False

Question 6

Which accounting assumption or principle is being violated if a company provides financial reports only when it introduces a new product?

Accepted Answer

A)  Economic entity. 
B)  Periodicity. 
C)  Revenue recognition. 
D)  Full disclosure. 
A)  Economic entity. 
B)  Periodicity. 
C)  Revenue recognition. 
D)  Full disclosure.

Question 7

Which of the following is a component of the revenue recognition principle?

Accepted Answer

A)  Cash is received and the amount is material. 
B)  Recognition occurs when the performance obligation is satisfied. 
C)  Production is complete and there is an active market for the product. 
D)  Cash is realized or realizable and production is complete. 
A)  Cash is received and the amount is material. 
B)  Recognition occurs when the performance obligation is satisfied. 
C)  Production is complete and there is an active market for the product. 
D)  Cash is realized or realizable and production is complete.

Question 8

According to the FASB's conceptual framework, the calculation of comprehensive income includes which of the following?

Accepted Answer

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

Question 9

A company incorporated in Japan uses the dollar as its unit of measurement.

Accepted Answer

A) True 
 B)False

Question 10

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 11

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

Accepted Answer

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

Question 12

Proponents of historical cost ordinarily maintain that in comparison with all other valuation alternatives for general purpose financial reporting, statements prepared using historical costs are more

Accepted Answer

A)  verifiable. 
B)  relevant. 
C)  indicative of the entity's purchasing power. 
D)  conservative. 
A)  verifiable. 
B)  relevant. 
C)  indicative of the entity's purchasing power. 
D)  conservative.

Question 13

The number of financial statement elements in the IFRS conceptual framework is equal to those in GAAP.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements concerning the cost-benefit relationship is not true?

Accepted Answer

A)  Business reporting should exclude information outside of management's expertise. 
B)  Management should not be required to report information that would significantly harm the company's competitive position. 
C)  Management should not be required to provide forecasted financial information. 
D)  If needed by financial statement users, management should gather information not included in the financial statements that would not otherwise be gathered for internal use. 
A)  Business reporting should exclude information outside of management's expertise. 
B)  Management should not be required to report information that would significantly harm the company's competitive position. 
C)  Management should not be required to provide forecasted financial information. 
D)  If needed by financial statement users, management should gather information not included in the financial statements that would not otherwise be gathered for internal use.

Question 15

When is revenue generally recognized?

Accepted Answer

A)  When cash is received. 
B)  When the warranty expires. 
C)  When production is completed. 
D)  When the company satisfies the performance obligation. 
A)  When cash is received. 
B)  When the warranty expires. 
C)  When production is completed. 
D)  When the company satisfies the performance obligation.

Question 16

GAAP has a concept statement to guide estimation of fair values when market-related data is not available.

Accepted Answer

A) True 
 B)False

Question 17

One of the elements of financial statements is comprehensive income. As described in Statement of Financial Accounting Concepts No. 6, "Elements of Financial Statements," comprehensive income is equal to

Accepted Answer

A)  revenues minus expenses plus gains minus losses. 
B)  revenues minus expenses plus gains minus losses plus investments by owners minus distributions to owners. 
C)  revenues minus expenses plus gains minus losses plus investments by owners minus distributions to owners plus assets minus liabilities. 
D)  None of these answer choices are correct. 
A)  revenues minus expenses plus gains minus losses. 
B)  revenues minus expenses plus gains minus losses plus investments by owners minus distributions to owners. 
C)  revenues minus expenses plus gains minus losses plus investments by owners minus distributions to owners plus assets minus liabilities. 
D)  None of these answer choices are correct.

Question 18

In order to justify requiring a particular measurement or disclosure, the benefits to be derived from it must equal the costs associated with it.

Accepted Answer

A) True 
 B)False

Question 19

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 20

According to the FASB Conceptual Framework, the elements-assets, liabilities, and equity-describe amounts of resources and claims to resources at/during a

Accepted Answer

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

Exam 2: Conceptual Framework for Financial Reporting

All of the following represent costs of providing financial information except

Which of the following is a constraint in presenting financial information?

Comprehensive income includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.

Prudence or conservatism means when in doubt, choose the solution that will be least likely to overstate liabilities or expenses.

The IASB and the FASB are working on a joint project to develop a common conceptual framework.

Which accounting assumption or principle is being violated if a company provides financial reports only when it introduces a new product?

Which of the following is a component of the revenue recognition principle?

According to the FASB's conceptual framework, the calculation of comprehensive income includes which of the following?

A company incorporated in Japan uses the dollar as its unit of measurement.

The economic entity assumption

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

Proponents of historical cost ordinarily maintain that in comparison with all other valuation alternatives for general purpose financial reporting, statements prepared using historical costs are more

The number of financial statement elements in the IFRS conceptual framework is equal to those in GAAP.

Which of the following statements concerning the cost-benefit relationship is not true?

When is revenue generally recognized?

GAAP has a concept statement to guide estimation of fair values when market-related data is not available.

One of the elements of financial statements is comprehensive income. As described in Statement of Financial Accounting Concepts No. 6, "Elements of Financial Statements," comprehensive income is equal to

In order to justify requiring a particular measurement or disclosure, the benefits to be derived from it must equal the costs associated with it.

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

According to the FASB Conceptual Framework, the elements-assets, liabilities, and equity-describe amounts of resources and claims to resources at/during a

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

Long-Term Liabilities

Stockholders Equity

Dilutive Securities and Earnings Per Share

Investments

Revenue Recognition

Accounting for Income Taxes

Accounting for Pensions and Postretirement Benefits

Accounting for Leases

Accounting Changes and Error Analysis

Statement of Cash Flows

Full Disclosure in Financial Reporting

Appendix

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