Question 1

Which of the following concepts was referred to as a convention in SFAC No. 2?

Accepted Answer

A) Consistency 
B) Materiality 
C) Comparability 
D) Conservatism 
A) Consistency 
B) Materiality 
C) Comparability 
D) Conservatism

Question 2

Which of the following is not true regarding the FASB's conceptual framework?

Accepted Answer

A) It is supposed to embody a system of interrelated objectives. 
B) It is an attempt to provide a metatheoretical structure for financial accounting. 
C) It establishes generally accepted accounting principles. 
D) It includes seven statements of financial accounting concepts. 
A) It is supposed to embody a system of interrelated objectives. 
B) It is an attempt to provide a metatheoretical structure for financial accounting. 
C) It establishes generally accepted accounting principles. 
D) It includes seven statements of financial accounting concepts.

Question 3

The conceptual framework is an attempt to provide a metatheoretical structure for financial accounting.

Accepted Answer

A) True 
 B)False

Question 4

The indirect costs of information pertain to gathering, preparation, and dissemination of information.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is a true statement?

Accepted Answer

A) SFAC No. 5 makes clear that the concepts discussed in the conceptual framework apply to other means of disclosure in addition to financial statements. 
B) SFAC No. 5 appears to deny one of the main tenets of the efficient markets hypothesis, that disclosure outside of the body of financial statements is as effective as disclosure within statements themselves. 
C) SFAC No. 5 made a clear attempt to resolve the issues of recognition and measurement. 
D) SFAC No. 5 was successful because it addressed measurement prior to discussing recognition. 
A) SFAC No. 5 makes clear that the concepts discussed in the conceptual framework apply to other means of disclosure in addition to financial statements. 
B) SFAC No. 5 appears to deny one of the main tenets of the efficient markets hypothesis, that disclosure outside of the body of financial statements is as effective as disclosure within statements themselves. 
C) SFAC No. 5 made a clear attempt to resolve the issues of recognition and measurement. 
D) SFAC No. 5 was successful because it addressed measurement prior to discussing recognition.

Question 6

Which of the following is a value judgment found in SFAC No. 1?

Accepted Answer

A) Accounting reports should become the only relevant source of information about enterprises. 
B) Cash basis accounting is extremely useful in assessing and predicting earning power and cash flows of an enterprise. 
C) Information is not costless to provide, so benefits of usage should exceed costs of production. 
D) Users of accounting information have limited ability regarding financial information and reporting. 
A) Accounting reports should become the only relevant source of information about enterprises. 
B) Cash basis accounting is extremely useful in assessing and predicting earning power and cash flows of an enterprise. 
C) Information is not costless to provide, so benefits of usage should exceed costs of production. 
D) Users of accounting information have limited ability regarding financial information and reporting.

Question 7

Which statement in the conceptual framework is concerned with the objectives of business financial reporting? Note that SFAC 8 replaces this SFAC.

Accepted Answer

A) SFAC No. 1 
B) SFAC No. 2 
C) SFAC No. 3 
D) SFAC No. 5 
A) SFAC No. 1 
B) SFAC No. 2 
C) SFAC No. 3 
D) SFAC No. 5

Question 8

Opinion is virtually unanimous that SFAC No. 5 on recognition and measurement is the low point of the conceptual framework.

Accepted Answer

A) True 
 B)False

Question 9

The conceptual framework maintains that accounting reports should become the only relevant source of information about enterprises.

Accepted Answer

A) True 
 B)False

Question 10

Timeliness and predictive value are the two main aspect of relevance.

Accepted Answer

A) True 
 B)False

Question 11

SFAC No. 5 makes clear that the concepts discussed in the conceptual framework apply to other means of disclosure in addition to financial statements.

Accepted Answer

A) True 
 B)False

Question 12

The idea that a measurement should correspond with the phenomenon it is attempting to measure is referred to in the conceptual framework as:

Accepted Answer

A) reliability. 
B) relevance. 
C) faithful representation. 
D) understandability. 
A) reliability. 
B) relevance. 
C) faithful representation. 
D) understandability.

Question 13

Which of the following is a true statement?

Accepted Answer

A) Predictive value refers to usefulness of inputs for predictions rather than being an actual prediction itself. 
B) Timeliness complements rather than conflicts with the other aspects of relevance because information is more complete and accurate if it is timely. 
C) The conceptual framework stressed predictive value rather than the importance of decision-making by outside users. 
D) Timeliness and predictive value are the two main aspects of relevance. 
A) Predictive value refers to usefulness of inputs for predictions rather than being an actual prediction itself. 
B) Timeliness complements rather than conflicts with the other aspects of relevance because information is more complete and accurate if it is timely. 
C) The conceptual framework stressed predictive value rather than the importance of decision-making by outside users. 
D) Timeliness and predictive value are the two main aspects of relevance.

Question 14

Relevance and reliability are the primary characteristics that standard setters should be concerned with.

Accepted Answer

A) True 
 B)False

Question 15

The quality of being capable of "making a difference in a decision by helping users to form predictions about the outcomes of past, present, and future events or to confirm or correct expectations" is referred to in the conceptual framework as:

Accepted Answer

A) reliability. 
B) relevance. 
C) representational faithfulness. 
D) understandability. 
A) reliability. 
B) relevance. 
C) representational faithfulness. 
D) understandability.

Question 16

The benefits of accounting information pertain to how useful the accounting information is relative to the capital maintenance and accountability objectives.

Accepted Answer

A) True 
 B)False

Question 17

The discussion memorandum that preceded the conceptual framework was perhaps the most extensive ever published by the FASB.

Accepted Answer

A) True 
 B)False

Question 18

Timeliness is an enhancing qualitative characteristic of information about economic phenomenon.

Accepted Answer

A) True 
 B)False

Question 19

According to SFAC No. 4, "earnings" is the indicator of a non-business organization's performance that is comparable to "income" in the profit sector.

Accepted Answer

A) True 
 B)False

Question 20

The most important new issue brought up in the discussion memorandum that preceded the conceptual framework was predictive ability.

Accepted Answer

A) True 
 B)False

Which of the following concepts was referred to as a convention in SFAC No. 2?

Which of the following is not true regarding the FASB's conceptual framework?

The conceptual framework is an attempt to provide a metatheoretical structure for financial accounting.

The indirect costs of information pertain to gathering, preparation, and dissemination of information.

Which of the following is a true statement?

Which of the following is a value judgment found in SFAC No. 1?

Which statement in the conceptual framework is concerned with the objectives of business financial reporting? Note that SFAC 8 replaces this SFAC.

Opinion is virtually unanimous that SFAC No. 5 on recognition and measurement is the low point of the conceptual framework.

The conceptual framework maintains that accounting reports should become the only relevant source of information about enterprises.

Timeliness and predictive value are the two main aspect of relevance.

SFAC No. 5 makes clear that the concepts discussed in the conceptual framework apply to other means of disclosure in addition to financial statements.

The idea that a measurement should correspond with the phenomenon it is attempting to measure is referred to in the conceptual framework as:

Which of the following is a true statement?

Relevance and reliability are the primary characteristics that standard setters should be concerned with.

The quality of being capable of "making a difference in a decision by helping users to form predictions about the outcomes of past, present, and future events or to confirm or correct expectations" is referred to in the conceptual framework as:

The benefits of accounting information pertain to how useful the accounting information is relative to the capital maintenance and accountability objectives.

The discussion memorandum that preceded the conceptual framework was perhaps the most extensive ever published by the FASB.

Timeliness is an enhancing qualitative characteristic of information about economic phenomenon.

According to SFAC No. 4, "earnings" is the indicator of a non-business organization's performance that is comparable to "income" in the profit sector.

The most important new issue brought up in the discussion memorandum that preceded the conceptual framework was predictive ability.

An Introduction to Accounting Theory

Accounting Theory and Accounting Research

Development of Institutional Structure of Financial Accounting

The Economics of Financial Reporting Regulation

Postulates, Principles, and Concepts

The Search for Objectives

Usefulness of Accounting Information to Investors and Creditors

Uniformity and Disclosure: Some Policy-Making Directions

International Accounting

The Balance Sheet

The Income Statement

Statement of Cash Flows

Income Taxes and Financial Accounting

Pensions and Other Postretirement Benefits

Leases

Intercorporate Equity Investments

Filters

Exam 7: The Fasbs Conceptual Framework

Which of the following concepts was referred to as a convention in SFAC No. 2?

Which of the following is not true regarding the FASB's conceptual framework?

The conceptual framework is an attempt to provide a metatheoretical structure for financial accounting.

The indirect costs of information pertain to gathering, preparation, and dissemination of information.

Which of the following is a true statement?

Which of the following is a value judgment found in SFAC No. 1?

Which statement in the conceptual framework is concerned with the objectives of business financial reporting? Note that SFAC 8 replaces this SFAC.

Opinion is virtually unanimous that SFAC No. 5 on recognition and measurement is the low point of the conceptual framework.

The conceptual framework maintains that accounting reports should become the only relevant source of information about enterprises.

Timeliness and predictive value are the two main aspect of relevance.

SFAC No. 5 makes clear that the concepts discussed in the conceptual framework apply to other means of disclosure in addition to financial statements.

The idea that a measurement should correspond with the phenomenon it is attempting to measure is referred to in the conceptual framework as:

Which of the following is a true statement?

Relevance and reliability are the primary characteristics that standard setters should be concerned with.

The quality of being capable of "making a difference in a decision by helping users to form predictions about the outcomes of past, present, and future events or to confirm or correct expectations" is referred to in the conceptual framework as:

The benefits of accounting information pertain to how useful the accounting information is relative to the capital maintenance and accountability objectives.

The discussion memorandum that preceded the conceptual framework was perhaps the most extensive ever published by the FASB.

Timeliness is an enhancing qualitative characteristic of information about economic phenomenon.

According to SFAC No. 4, "earnings" is the indicator of a non-business organization's performance that is comparable to "income" in the profit sector.

The most important new issue brought up in the discussion memorandum that preceded the conceptual framework was predictive ability.

An Introduction to Accounting Theory

Accounting Theory and Accounting Research

Development of Institutional Structure of Financial Accounting

The Economics of Financial Reporting Regulation

Postulates, Principles, and Concepts

The Search for Objectives

Usefulness of Accounting Information to Investors and Creditors

Uniformity and Disclosure: Some Policy-Making Directions

International Accounting

The Balance Sheet

The Income Statement

Statement of Cash Flows

Income Taxes and Financial Accounting

Pensions and Other Postretirement Benefits

Leases

Intercorporate Equity Investments

Filters