Question 1

The International Accounting Standards Board's (IASB's) Conceptual Framework includes the elements of financial statements.

Accepted Answer

A) True 
 B)False

Question 2

Not adjusting the amounts reported in the financial statements for inflation is an example of which basic principle of accounting?

Accepted Answer

A) Economic entity. 
B) Going concern. 
C) Historical cost. 
D) Full disclosure. 
A) Economic entity. 
B) Going concern. 
C) Historical cost. 
D) Full disclosure.

Question 3

Which of the following is not a basic element of financial statements?

Accepted Answer

A) Assets. 
B) Statement of financial position. 
C) Equity. 
D) Income. 
A) Assets. 
B) Statement of financial position. 
C) Equity. 
D) Income.

Question 4

Which of the following are the two components of the revenue recognition principle?

Accepted Answer

A) Cash is received and the amount is material. 
B) It is probable that future economic benefits will flow to the company and it is possible to reliably measure the amount. 
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) It is probable that future economic benefits will flow to the company and it is possible to reliably measure the amount. 
C) Production is complete and there is an active market for the product. 
D) Cash is realized or realizable and production is complete.

Question 5

One of the challenges in developing a common conceptual framework will be to agree on how the framework should be organized since the FASB and IASB conceptual frameworks are organized in very different ways.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following basic assumptions of accounting (used by the International Accounting Standards Board) makes depreciation and amortization policies justifiable and appropriate?

Accepted Answer

A) Periodicity. 
B) Decision usefulness 
C) Monetary unit. 
D) Going concern. 
A) Periodicity. 
B) Decision usefulness 
C) Monetary unit. 
D) Going concern.

Question 7

Which of the following is a fundamental quality of useful accounting information?

Accepted Answer

A) Conservatism. 
B) Comparability. 
C) Faithful representation. 
D) Consistency. 
A) Conservatism. 
B) Comparability. 
C) Faithful representation. 
D) Consistency.

Question 8

In the International Accounting Standards Board's (IASB's) Conceptual Framework, an ingredient of a fundamental qualitative characteristic is understandability.

Accepted Answer

A) True 
 B)False

Question 9

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 10

The International Accounting Standards Board's (IASB's) Conceptual Framework includes supplementary information.

Accepted Answer

A) True 
 B)False

Question 11

In the International Accounting Standards Board's (IASB's) Conceptual Framework, qualitative characteristics

Accepted Answer

A) Are considered either fundamental or enhancing. 
B) Contribute to the decision-usefulness of financial reporting information. 
C) Distinguish better information from inferior information for decision-making purposes. 
D) All of the choices are correct. 
A) Are considered either fundamental or enhancing. 
B) Contribute to the decision-usefulness of financial reporting information. 
C) Distinguish better information from inferior information for decision-making purposes. 
D) All of the choices are correct.

Question 12

Erin Company applies the same accounting treatment to similar events from period to period.Erin Company is exhibiting which of the following qualities as described by the International Accounting Standards Board's (IASB's) Conceptual Framework?

Accepted Answer

A) Verifiability. 
B) Consistency. 
C) Predictive value. 
D) All of the choices are correct.
S1U1P1S88.According to the IASB Conceptual Framework, the elementsF1F1F1S1assets, liabilities, and equityF1F1F1S1describe amounts of resources and claims to resources at\during a
  
A) Verifiability. 
B) Consistency. 
C) Predictive value. 
D) All of the choices are correct.
S1U1P1S88.According to the IASB Conceptual Framework, the elementsF1F1F1S1assets, liabilities, and equityF1F1F1S1describe amounts of resources and claims to resources at\during a

Question 13

The International Accounting Standards Board's (IASB) definition of retained earnings is "the residual interest in the assets of the entity after deducting all its liabilities."

Accepted Answer

A) True 
 B)False

Question 14

Under current IFRS, 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 15

When should an expenditure be recorded as an asset rather than an expense?

Accepted Answer

A) Never. 
B) Always. 
C) If the amount is material. 
D) When future benefit exits. 
A) Never. 
B) Always. 
C) If the amount is material. 
D) When future benefit exits.

Question 16

Which of the following ingredients of fundamental qualities is part of faithful representation?

Accepted Answer

A) Neutrality. 
B) Productive value. 
C) Confirmatory value. 
D) Timeliness. 
A) Neutrality. 
B) Productive value. 
C) Confirmatory value. 
D) Timeliness.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Financial information does not demonstrate consistency when

Accepted Answer

A) firms in the same industry use different accounting methods to account for the same type of transaction. 
B) a company changes its estimate of the salvage value of a fixed asset. 
C) a company fails to adjust its financial statements for changes in the value of the measuring unit. 
D) none of these. 
A) firms in the same industry use different accounting methods to account for the same type of transaction. 
B) a company changes its estimate of the salvage value of a fixed asset. 
C) a company fails to adjust its financial statements for changes in the value of the measuring unit. 
D) none of these.

Question 19

The assumption that a business enterprise will not be sold or liquidated in the near future is known as the

Accepted Answer

A) economic entity assumption. 
B) monetary unit assumption. 
C) materiality assumption. 
D) none of these. 
A) economic entity assumption. 
B) monetary unit assumption. 
C) materiality assumption. 
D) none of these.

Question 20

Revenue generally should be recognized

Accepted Answer

A) at the end of production. 
B) at the time of cash collection. 
C) when realized. 
D) when a sale occurs. 
A) at the end of production. 
B) at the time of cash collection. 
C) when realized. 
D) when a sale occurs.

Exam 2: Conceptual Framework Underlying Financial Accounting

The International Accounting Standards Board's (IASB's) Conceptual Framework includes the elements of financial statements.

Not adjusting the amounts reported in the financial statements for inflation is an example of which basic principle of accounting?

Which of the following is not a basic element of financial statements?

Which of the following are the two components of the revenue recognition principle?

One of the challenges in developing a common conceptual framework will be to agree on how the framework should be organized since the FASB and IASB conceptual frameworks are organized in very different ways.

Which of the following basic assumptions of accounting (used by the International Accounting Standards Board) makes depreciation and amortization policies justifiable and appropriate?

Which of the following is a fundamental quality of useful accounting information?

In the International Accounting Standards Board's (IASB's) Conceptual Framework, an ingredient of a fundamental qualitative characteristic is understandability.

The economic entity assumption

The International Accounting Standards Board's (IASB's) Conceptual Framework includes supplementary information.

In the International Accounting Standards Board's (IASB's) Conceptual Framework, qualitative characteristics

Erin Company applies the same accounting treatment to similar events from period to period.Erin Company is exhibiting which of the following qualities as described by the International Accounting Standards Board's (IASB's) Conceptual Framework?

The International Accounting Standards Board's (IASB) definition of retained earnings is "the residual interest in the assets of the entity after deducting all its liabilities."

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

When should an expenditure be recorded as an asset rather than an expense?

Which of the following ingredients of fundamental qualities is part of faithful representation?

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

Financial information does not demonstrate consistency when

The assumption that a business enterprise will not be sold or liquidated in the near future is known as the

Revenue generally should be recognized

Financial Accounting and Accounting Standards

The Accounting Information System

Income Statement and Related Information

Statement of Financial Position 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, Provisions, and Contingencies

Non-Current Liabilities

Equity

Dilutive Securities and Earnings Per Share

Investments

Revenue

Accounting for Income Taxes

Accounting for Pensions and Postretirement Benefits

Accounting for Leases

Accounting Changes and Error Analysis

Statement of Cash Flows

Presentation and Disclosure in Financial Reporting

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