Question 1

Elements of financial statements do not include:

Accepted Answer

A) Monetary unit. 
B) Investments by owners. 
C) Comprehensive income. 
D) Losses. 
A) Monetary unit. 
B) Investments by owners. 
C) Comprehensive income. 
D) Losses.

Question 2

The conceptual framework's qualitative characteristic of relevance includes:

Accepted Answer

A) Predictive value. 
B) Verifiability. 
C) Completeness. 
D) Neutrality. 
A) Predictive value. 
B) Verifiability. 
C) Completeness. 
D) Neutrality.

Question 3

Gains are:

Accepted Answer

A) Inflows from selling a product or service to a customer. 
B) Increases in equity resulting from transfers of assets to the company from owners. 
C) Increases in equity from peripheral transactions of an entity. 
D) None of the above is correct. 
A) Inflows from selling a product or service to a customer. 
B) Increases in equity resulting from transfers of assets to the company from owners. 
C) Increases in equity from peripheral transactions of an entity. 
D) None of the above is correct.

Question 4

GAAP is an abbreviation for:

Accepted Answer

A) Generally authorized accounting procedures. 
B) Generally applied accounting procedures. 
C) Generally accepted auditing practices. 
D) Generally accepted accounting principles. 
A) Generally authorized accounting procedures. 
B) Generally applied accounting procedures. 
C) Generally accepted auditing practices. 
D) Generally accepted accounting principles.

Question 5

The matching principle is:

Accepted Answer

A) A valuation method. 
B) An expense recognition accounting principle. 
C) A cash basis reporting principle. 
D) An asset classification procedure. 
A) A valuation method. 
B) An expense recognition accounting principle. 
C) A cash basis reporting principle. 
D) An asset classification procedure.

Question 6

With respect to the financial statements,what is the value of an audit?

Accepted Answer

Outside auditors add credibility to fina

Question 7

Give an example of a violation of the stable monetary unit assumption.How would it affect the quality of financial statement information?

Accepted Answer

If a country experiences severe inflatio

Question 8

Which of the following is not a concern expressed by the SEC regarding IFRS adoption by the U.S.?

Accepted Answer

A) Need for the U.S.to have strong influence on the standard-setting process and ensure that standards meet U.S.needs. 
B) The language barriers associated with cooperation among many countries in developing IFRS. 
C) The high costs to companies of converting to IFRS. 
D) The fact that many laws,regulations and private contracts reference U.S.GAAP. 
A) Need for the U.S.to have strong influence on the standard-setting process and ensure that standards meet U.S.needs. 
B) The language barriers associated with cooperation among many countries in developing IFRS. 
C) The high costs to companies of converting to IFRS. 
D) The fact that many laws,regulations and private contracts reference U.S.GAAP.

Question 9

Use the following to answer questions
The following information ($ in millions)comes from a recent annual report of Amazon.com,Inc.:
  
-Compute Amazon's total liabilities at the end of the year.

Accepted Answer

Total assets = Total liabiliti

Question 10

Which of the following is not a provision of the Public Company Accounting Reform and Investor Protection Act of 2002 (Sarbanes-Oxley)? The Act:

Accepted Answer

A) Changed the entity responsible for setting auditing standards. 
B) Increased corporate executive responsibility for financial statements. 
C) Limited nonaudit services that can be performed by auditors for audit clients. 
D) Changed the entity responsible for setting accounting standards. 
A) Changed the entity responsible for setting auditing standards. 
B) Increased corporate executive responsibility for financial statements. 
C) Limited nonaudit services that can be performed by auditors for audit clients. 
D) Changed the entity responsible for setting accounting standards.

Question 11

The most likely important flaw leading to the demise of the APB was the perceived lack of:

Accepted Answer

A) Confidence. 
B) Competence. 
C) Independence. 
D) Importance. 
A) Confidence. 
B) Competence. 
C) Independence. 
D) Importance.

Question 12

Explain and show an example of how the FASB's conceptual framework is needed in formulating standards on controversial topics.

Accepted Answer

In order to provide consistency,a concep

Question 13

Use the following to answer questions
The following information ($ in millions)comes from a recent annual report of Amazon.com,Inc.:
  
-Compute the income before income tax for Amazon.

Accepted Answer

Net income = Gross profit - Op

Question 14

The assumption that in the absence of contrary information a business entity will continue indefinitely is the:

Accepted Answer

A) Periodicity assumption. 
B) Entity assumption. 
C) Going concern assumption. 
D) Historical cost assumption. 
A) Periodicity assumption. 
B) Entity assumption. 
C) Going concern assumption. 
D) Historical cost assumption.

Question 15

Identify or define the following terms: economic entity,going concern.

Accepted Answer

Economic entity:All economic events can

Question 16

The asset/liability approach emphasizes:

Accepted Answer

A) Whether amounts on the balance sheet meet the definitions of assets and liabilities. 
B) A close relation between the balance sheet and the statement of cash flows. 
C) The distinction between net assets and gross assets. 
D) All of the above are correct. 
A) Whether amounts on the balance sheet meet the definitions of assets and liabilities. 
B) A close relation between the balance sheet and the statement of cash flows. 
C) The distinction between net assets and gross assets. 
D) All of the above are correct.

Question 17

Accounting standard-setting has been characterized as a political process.Discuss this proposition giving an example.

Accepted Answer

Changes in GAAP can have significant dif

Question 18

Compute net income for the first year for Alpaca Corporation.

Accepted Answer

The answer of Compute net income for the first year...

Question 19

The FASB's framework for measuring fair value doesn't change the situations in which fair value is used under current GAAP.

Accepted Answer

A) True 
 B)False

Question 20

Briefly describe how materiality is featured in the conceptual framework.

Accepted Answer

Materiality-Information is material if i

Exam 1: Environment and Theoretical Structure of Financial Accounting

Elements of financial statements do not include:

The conceptual framework's qualitative characteristic of relevance includes:

Gains are:

GAAP is an abbreviation for:

The matching principle is:

With respect to the financial statements,what is the value of an audit?

Give an example of a violation of the stable monetary unit assumption.How would it affect the quality of financial statement information?

Which of the following is not a concern expressed by the SEC regarding IFRS adoption by the U.S.?

Use the following to answer questions The following information ($ in millions)comes from a recent annual report of Amazon.com,Inc.: -Compute Amazon's total liabilities at the end of the year.

Which of the following is not a provision of the Public Company Accounting Reform and Investor Protection Act of 2002 (Sarbanes-Oxley)? The Act:

The most likely important flaw leading to the demise of the APB was the perceived lack of:

Explain and show an example of how the FASB's conceptual framework is needed in formulating standards on controversial topics.

Use the following to answer questions The following information ($ in millions)comes from a recent annual report of Amazon.com,Inc.: -Compute the income before income tax for Amazon.

The assumption that in the absence of contrary information a business entity will continue indefinitely is the:

Identify or define the following terms: economic entity,going concern.

The asset/liability approach emphasizes:

Accounting standard-setting has been characterized as a political process.Discuss this proposition giving an example.

Compute net income for the first year for Alpaca Corporation.

The FASB's framework for measuring fair value doesn't change the situations in which fair value is used under current GAAP.

Briefly describe how materiality is featured in the conceptual framework.

Review of the Accounting Process

The Balance Sheet and Financial Disclosures

The Income Statement, comprehensive Income, and the Statement of Cash Flows

Income Measurement

Time Value of Money Concepts

Cash and Receivables

Inventories: Measurement

Inventories: Additional Issues

Property, plant, and Equipment and Intangible Assets: Acquisition and Disposition

Property, plant, and Equipment and Intangible Assets: Utilization and Impairment

Investments

Current Liabilities and Contingencies

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Pensions and Other Postretirement Benefits

Shareholders Equity

Share-Based Compensation and Earnings Per Share

Accounting Changes

The Statement of Cash Flows

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