Question 1

Capital providers are some of the main users of financial reporting.

Accepted Answer

A) True 
 B)False

Question 2

Predictive value confirms or corrects prior expectations.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements is not true?

Accepted Answer

A)  Consistency means using the same accounting principles from year to year within a company. 
B)  Faithful representation is the quality of information that gives assurance that all amounts reported are known with certainty. 
C)  Relevant accounting information must be capable of making a difference in a decision. 
D)  Accounting standards for private entities have four principal qualitative characteristics. 
A)  Consistency means using the same accounting principles from year to year within a company. 
B)  Faithful representation is the quality of information that gives assurance that all amounts reported are known with certainty. 
C)  Relevant accounting information must be capable of making a difference in a decision. 
D)  Accounting standards for private entities have four principal qualitative characteristics.

Question 4

The cost constraint exists to ensure that the value of the information is more than the cost of providing it.

Accepted Answer

A) True 
 B)False

Question 5

A common application of the cost constraint is I. recording assets at cost.
II) not disclosing information that is immaterial and unnecessary in the notes.
III) use of the FIFO cost flow assumption for inventory valuation.

Accepted Answer

A)  I 
B)  II 
C)  III 
D)  I and II 
A)  I 
B)  II 
C)  III 
D)  I and II

Question 6

Claims on economic resources are defined as assets.

Accepted Answer

A) True 
 B)False

Question 7

Using the contract-based approach to revenue recognition in right of return situations, the entity would record revenue at the amount that it expects to receive.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is a constraint in financial reporting?

Accepted Answer

A)  cost 
B)  comparability 
C)  consistency 
D)  going concern 
A)  cost 
B)  comparability 
C)  consistency 
D)  going concern

Question 9

Confirmatory value helps users forecast future events.

Accepted Answer

A) True 
 B)False

Question 10

There are several ways the recognition and measurement concepts can be violated. Which one of the following would not necessarily be considered a violation?

Accepted Answer

A)  intentional misstatement of estimates 
B)  failure to record a revenue or expense 
C)  recognition of revenue or expense in the incorrect accounting period 
D)  a change in an accounting policy 
A)  intentional misstatement of estimates 
B)  failure to record a revenue or expense 
C)  recognition of revenue or expense in the incorrect accounting period 
D)  a change in an accounting policy

Question 11

The level of disclosure contained in the notes to the financial statements is limited by the

Accepted Answer

A)  cost versus the benefit of providing the disclosures. 
B)  accounting policies selected by the business. 
C)  time period assumption. 
D)  going concern assumption. 
A)  cost versus the benefit of providing the disclosures. 
B)  accounting policies selected by the business. 
C)  time period assumption. 
D)  going concern assumption.

Question 12

Using the earnings approach to revenue recognition, the entity would record a credit to the "refund liability" account for the estimated amount of returned goods.

Accepted Answer

A) True 
 B)False

Question 13

In the conceptual framework for IFRS, which one of the following is not a qualitative characteristic of useful accounting information?

Accepted Answer

A)  relevance 
B)  faithful representation 
C)  conservatism 
D)  comparability 
A)  relevance 
B)  faithful representation 
C)  conservatism 
D)  comparability

Question 14

Information that is prepared free from bias is considered

Accepted Answer

A)  complete. 
B)  neutral. 
C)  comparable. 
D)  verifiable. 
A)  complete. 
B)  neutral. 
C)  comparable. 
D)  verifiable.

Question 15

If it is not possible to determine the future benefits arising from expenditures, then the costs will be capitalized.

Accepted Answer

A) True 
 B)False

Question 16

The cost constraint

Accepted Answer

A)  means that assets and revenues should be estimated at the lower end of their range. 
B)  means that assets and revenues should be estimated at the higher end of their range. 
C)  means the value of the information is not less than the cost to produce the information. 
D)  means the information would influence the decisions of a user of the financial information. 
A)  means that assets and revenues should be estimated at the lower end of their range. 
B)  means that assets and revenues should be estimated at the higher end of their range. 
C)  means the value of the information is not less than the cost to produce the information. 
D)  means the information would influence the decisions of a user of the financial information.

Question 17

Which of the following is a term that best describes the influence an item has on the decision of a reasonably careful investor or creditor?

Accepted Answer

A)  verifiability 
B)  relevance 
C)  understandability 
D)  materiality 
A)  verifiability 
B)  relevance 
C)  understandability 
D)  materiality

Question 18

Consistency occurs when companies with similar circumstances use the same accounting principles.

Accepted Answer

A) True 
 B)False

Capital providers are some of the main users of financial reporting.

Predictive value confirms or corrects prior expectations.

Which of the following statements is not true?

The cost constraint exists to ensure that the value of the information is more than the cost of providing it.

A common application of the cost constraint is I. recording assets at cost. II) not disclosing information that is immaterial and unnecessary in the notes. III) use of the FIFO cost flow assumption for inventory valuation.

Claims on economic resources are defined as assets.

Using the contract-based approach to revenue recognition in right of return situations, the entity would record revenue at the amount that it expects to receive.

Which of the following is a constraint in financial reporting?

Confirmatory value helps users forecast future events.

There are several ways the recognition and measurement concepts can be violated. Which one of the following would not necessarily be considered a violation?

The level of disclosure contained in the notes to the financial statements is limited by the

Using the earnings approach to revenue recognition, the entity would record a credit to the "refund liability" account for the estimated amount of returned goods.

In the conceptual framework for IFRS, which one of the following is not a qualitative characteristic of useful accounting information?

Information that is prepared free from bias is considered

If it is not possible to determine the future benefits arising from expenditures, then the costs will be capitalized.

The cost constraint

Which of the following is a term that best describes the influence an item has on the decision of a reasonably careful investor or creditor?

Consistency occurs when companies with similar circumstances use the same accounting principles.

Long-Lived Assets

Current Liabilities and Payroll

Accounting for Partnerships

Introduction to Corporations

Corporations: Additional Topics and IFRS

Non-Current Liabilities

Investments

The Cash Flow Statement

Financial Statement Analysis

Understanding Interest, Annuities, and Bond Valuation

Filters

Exam 3: Financial Reporting Concepts

Capital providers are some of the main users of financial reporting.

Predictive value confirms or corrects prior expectations.

Which of the following statements is not true?

The cost constraint exists to ensure that the value of the information is more than the cost of providing it.

A common application of the cost constraint is I. recording assets at cost. II) not disclosing information that is immaterial and unnecessary in the notes. III) use of the FIFO cost flow assumption for inventory valuation.

Claims on economic resources are defined as assets.

Using the contract-based approach to revenue recognition in right of return situations, the entity would record revenue at the amount that it expects to receive.

Which of the following is a constraint in financial reporting?

Confirmatory value helps users forecast future events.

There are several ways the recognition and measurement concepts can be violated. Which one of the following would not necessarily be considered a violation?

The level of disclosure contained in the notes to the financial statements is limited by the

Using the earnings approach to revenue recognition, the entity would record a credit to the "refund liability" account for the estimated amount of returned goods.

In the conceptual framework for IFRS, which one of the following is not a qualitative characteristic of useful accounting information?

Information that is prepared free from bias is considered

If it is not possible to determine the future benefits arising from expenditures, then the costs will be capitalized.

The cost constraint

Which of the following is a term that best describes the influence an item has on the decision of a reasonably careful investor or creditor?

Consistency occurs when companies with similar circumstances use the same accounting principles.

Long-Lived Assets

Current Liabilities and Payroll

Accounting for Partnerships

Introduction to Corporations

Corporations: Additional Topics and IFRS

Non-Current Liabilities

Investments

The Cash Flow Statement

Financial Statement Analysis

Understanding Interest, Annuities, and Bond Valuation

Filters