Question 1

A separate section of the income statement reporting information about discontinued operations is included

Accepted Answer

A) only if the sale resulted in a loss. 
B) in every income statement prepared in accordance with the GAAP. 
C) any time a major business asset is sold. 
D) if a firm sells, during the period, or plans to sell, during the next period, a major division or segment of its business. 
E) if a firm has sold during the previous period, or plans to sell during the next period, a major division or segment of its business. 
A) only if the sale resulted in a loss. 
B) in every income statement prepared in accordance with the GAAP. 
C) any time a major business asset is sold. 
D) if a firm sells, during the period, or plans to sell, during the next period, a major division or segment of its business. 
E) if a firm has sold during the previous period, or plans to sell during the next period, a major division or segment of its business.

Question 2

Which of the following is not true concerning conceptual frameworks?

Accepted Answer

A) The FASB, but not the IASB, relies on a conceptual framework to guide their standard-setting decisions. 
B) The conceptual framework is not a rigorous set of principles from which standard setters can logically deduce appropriate financial reporting standards. 
C) The purpose of a conceptual framework is to guide standard-setting decisions in order to enhance the quality and consistency of those decisions. 
D) The FASB and the IASB have separately developed their conceptual frameworks, and those frameworks are similar. 
E) The FASB and the IASB are currently working to develop a common conceptual framework for financial reporting. 
A) The FASB, but not the IASB, relies on a conceptual framework to guide their standard-setting decisions. 
B) The conceptual framework is not a rigorous set of principles from which standard setters can logically deduce appropriate financial reporting standards. 
C) The purpose of a conceptual framework is to guide standard-setting decisions in order to enhance the quality and consistency of those decisions. 
D) The FASB and the IASB have separately developed their conceptual frameworks, and those frameworks are similar. 
E) The FASB and the IASB are currently working to develop a common conceptual framework for financial reporting.

Question 3

Which of the following is/are not true?

Accepted Answer

A) U.S.GAAP and IFRS require firms to recognize the cost of retirement benefits (pensions, health care, life insurance) as an expense while employees work, not when they receive payments or other benefits during retirement. 
B) Employers often contribute cash to a trust, an entity legally separate from the employer, to fund their retirement obligations. 
C) The accounting records of the trust established to fund the retirement obligations are separate from the accounting records of the employer, and the amounts on the two sets of books usually differ. 
D) Payments to employees come from both the employer's contributions and investment returns of the firm's long term investment assets established to fund the retirement obligations. 
E) all of the above 
A) U.S.GAAP and IFRS require firms to recognize the cost of retirement benefits (pensions, health care, life insurance) as an expense while employees work, not when they receive payments or other benefits during retirement. 
B) Employers often contribute cash to a trust, an entity legally separate from the employer, to fund their retirement obligations. 
C) The accounting records of the trust established to fund the retirement obligations are separate from the accounting records of the employer, and the amounts on the two sets of books usually differ. 
D) Payments to employees come from both the employer's contributions and investment returns of the firm's long term investment assets established to fund the retirement obligations. 
E) all of the above

Question 4

Discuss the definition, recognition, and measurement of revenue.

Accepted Answer

Revenue
The FASB's conceptual framework

Question 5

Authoritative guidance classifies gains and losses from the remeasurement of certain assets and liabilities as either net income or other comprehensive income.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not true?

Accepted Answer

A) Acquisition cost for a merchandising firm includes the costs incurred to purchase and transport the inventory prior to sale. 
B) Acquisition cost for a manufacturing firm includes the direct material, direct labor, and manufacturing overhead cost to produce the inventory. 
C) If the market values of inventory items decline below acquisition cost prior to sale, firms must reduce their balance sheet carrying values using the lower of cost or market method. 
D) U.S.GAAP uses a combination of replacement cost and net realizable values to measure market value. 
E) U.S.GAAP and IFRS permits firms to remeasure inventories upward when market value exceeds acquisition cost. 
A) Acquisition cost for a merchandising firm includes the costs incurred to purchase and transport the inventory prior to sale. 
B) Acquisition cost for a manufacturing firm includes the direct material, direct labor, and manufacturing overhead cost to produce the inventory. 
C) If the market values of inventory items decline below acquisition cost prior to sale, firms must reduce their balance sheet carrying values using the lower of cost or market method. 
D) U.S.GAAP uses a combination of replacement cost and net realizable values to measure market value. 
E) U.S.GAAP and IFRS permits firms to remeasure inventories upward when market value exceeds acquisition cost.

Question 7

Which of the following is not true concerning the FASB and the IASB conceptual frameworks?

Accepted Answer

A) Both the FASB and the IASB rely on a conceptual framework to guide their standard-setting decisions. 
B) The conceptual framework is not a rigorous set of principles from which standard setters can logically deduce appropriate financial reporting standards. 
C) The purpose of a conceptual framework is to guide standard-setting decisions in order to enhance the quality and consistency of those decisions. 
D) The FASB and the IASB have separately developed their conceptual frameworks, and those frameworks are similar. 
E) The two standard-setting bodies are refusing to develop a common conceptual framework for financial reporting. 
A) Both the FASB and the IASB rely on a conceptual framework to guide their standard-setting decisions. 
B) The conceptual framework is not a rigorous set of principles from which standard setters can logically deduce appropriate financial reporting standards. 
C) The purpose of a conceptual framework is to guide standard-setting decisions in order to enhance the quality and consistency of those decisions. 
D) The FASB and the IASB have separately developed their conceptual frameworks, and those frameworks are similar. 
E) The two standard-setting bodies are refusing to develop a common conceptual framework for financial reporting.

Question 8

Recent changes in the financial reporting environment include which of the following?

Accepted Answer

A) The adoption or planned adoption of IFRS, or standards based on IFRS, for financial reporting in over 100 countries. 
B) The willingness of the Securities and Exchange Commission in the United States to permit non-U.S.firms that list and trade their securities in the United States to report using IFRS without a reconciliation to U.S.GAAP. 
C) The requirement to measure certain assets and liabilities at fair value instead of acquisition cost, and in some cases, to include the changes in fair value in net income instead of other comprehensive income. 
D) The codification of U.S.GAAP into a single body of literature. 
E) all of the above 
A) The adoption or planned adoption of IFRS, or standards based on IFRS, for financial reporting in over 100 countries. 
B) The willingness of the Securities and Exchange Commission in the United States to permit non-U.S.firms that list and trade their securities in the United States to report using IFRS without a reconciliation to U.S.GAAP. 
C) The requirement to measure certain assets and liabilities at fair value instead of acquisition cost, and in some cases, to include the changes in fair value in net income instead of other comprehensive income. 
D) The codification of U.S.GAAP into a single body of literature. 
E) all of the above

Question 9

Describe the conceptual framework used by FASB and the IASB to guide their standard-setting decisions.

Accepted Answer

CONCEPTUAL FRAMEWORK
Both the FASB and t

Question 10

How do firms account for inventories?

Accepted Answer

INVENTORIES
Firms initially record inven

Question 11

Firms initially record property, plant, and equipment, sometimes referred to as fixed assets, at acquisition cost, the cash paid or the fair value of other consideration given in exchange for the asset. Which of the following is/are true?

Accepted Answer

A) Acquisition cost includes all costs necessary to prepare the asset for its intended use. 
B) Firms capitalize into the asset's carrying amount subsequent expenditures that extend the service life or increase the benefits of a fixed asset beyond those initially anticipated. 
C) Buildings and equipment have a finite life, so firms must depreciate their acquisition cost less estimated salvage over the expected service life. 
D) Firms may use a straight-line method or accelerated depreciation methods. 
E) all of the above 
A) Acquisition cost includes all costs necessary to prepare the asset for its intended use. 
B) Firms capitalize into the asset's carrying amount subsequent expenditures that extend the service life or increase the benefits of a fixed asset beyond those initially anticipated. 
C) Buildings and equipment have a finite life, so firms must depreciate their acquisition cost less estimated salvage over the expected service life. 
D) Firms may use a straight-line method or accelerated depreciation methods. 
E) all of the above

Question 12

Which of the following is true regarding the price-earnings ratio?

Accepted Answer

A) price-earnings ratio = market price per share/earnings per share 
B) tables of stock prices and financial periodicals often present price-earnings ratios 
C) P/E ratios should use normal, ongoing earnings data in the denominator 
D) the analyst must interpret the published P/E ratios cautiously if the firm's net income includes unusual, nonrecurring gains and losses 
E) all of the above 
A) price-earnings ratio = market price per share/earnings per share 
B) tables of stock prices and financial periodicals often present price-earnings ratios 
C) P/E ratios should use normal, ongoing earnings data in the denominator 
D) the analyst must interpret the published P/E ratios cautiously if the firm's net income includes unusual, nonrecurring gains and losses 
E) all of the above

Question 13

Which of the following is not true concerning the FASB and the IASB conceptual frameworks?

Accepted Answer

A) Both the FASB and the IASB rely on a conceptual framework to guide their standard-setting decisions. 
B) The conceptual framework is not a rigorous set of principles from which standard setters can logically deduce appropriate financial reporting standards. 
C) The purpose of a conceptual framework is to guide standard-setting decisions in order to enhance the quality and consistency of those decisions. 
D) The FASB and the IASB have separately developed their conceptual frameworks, and those frameworks are very different. 
E) The two standard-setting bodies are currently working to develop a common conceptual framework for financial reporting. 
A) Both the FASB and the IASB rely on a conceptual framework to guide their standard-setting decisions. 
B) The conceptual framework is not a rigorous set of principles from which standard setters can logically deduce appropriate financial reporting standards. 
C) The purpose of a conceptual framework is to guide standard-setting decisions in order to enhance the quality and consistency of those decisions. 
D) The FASB and the IASB have separately developed their conceptual frameworks, and those frameworks are very different. 
E) The two standard-setting bodies are currently working to develop a common conceptual framework for financial reporting.

Question 14

The FASB's conceptual framework does not include which of the following as financial reporting objectives?

Accepted Answer

A) Provide information useful for making rational investment and credit decisions. 
B) Provide information to help current and potential investors and creditors assess the amount, timing, and uncertainty of future cash flows. 
C) Provide information about the economic resources of a firm and the claims on those resources. 
D) Provide information about a firm's expected operating performance during the next period. 
E) Provide information about how an enterprise obtains and uses cash. 
A) Provide information useful for making rational investment and credit decisions. 
B) Provide information to help current and potential investors and creditors assess the amount, timing, and uncertainty of future cash flows. 
C) Provide information about the economic resources of a firm and the claims on those resources. 
D) Provide information about a firm's expected operating performance during the next period. 
E) Provide information about how an enterprise obtains and uses cash.

Question 15

Discuss the definition, recognition, and measurement of liabilities.

Accepted Answer

Liability
The FASB's conceptual framewor

Question 16

The FASB's conceptual framework does not include which of the following as financial reporting objectives?

Accepted Answer

A) Provide information useful for making rational investment and credit decisions. 
B) Provide information to help current and potential investors and creditors assess the amount, timing, and uncertainty of past cash flows. 
C) Provide information about the economic resources of a firm and the claims on those resources. 
D) Provide information about a firm's operating performance during a period. 
E) Provide information about how an enterprise obtains and uses cash. 
A) Provide information useful for making rational investment and credit decisions. 
B) Provide information to help current and potential investors and creditors assess the amount, timing, and uncertainty of past cash flows. 
C) Provide information about the economic resources of a firm and the claims on those resources. 
D) Provide information about a firm's operating performance during a period. 
E) Provide information about how an enterprise obtains and uses cash.

Question 17

Firms account for leases using either the operating lease method or the capital (finance) lease method.Which of the following is not true?

Accepted Answer

A) The operating lease method treats leases as executory contracts. 
B) The operating lease method does not recognize a leased asset on the lessee's balance sheet. 
C) The operating lease method does not recognize a lease liability on the lessee's balance sheet. 
D) Under the operating lease method, the lessor does not recognize rent revenue as the lessee uses the leased asset over time. 
E) Under the operating lease method, the lessee recognizes rent expense as the lessee uses the leased asset over time. 
A) The operating lease method treats leases as executory contracts. 
B) The operating lease method does not recognize a leased asset on the lessee's balance sheet. 
C) The operating lease method does not recognize a lease liability on the lessee's balance sheet. 
D) Under the operating lease method, the lessor does not recognize rent revenue as the lessee uses the leased asset over time. 
E) Under the operating lease method, the lessee recognizes rent expense as the lessee uses the leased asset over time.

Question 18

A _____ is used to record properly the effects of an event or transaction that was improperly recorded during the accounting period.

Accepted Answer

A) reversing entry 
B) preliminary entry 
C) closing entry 
D) correcting entry 
E) none of the above 
A) reversing entry 
B) preliminary entry 
C) closing entry 
D) correcting entry 
E) none of the above

Question 19

One firm may have a lower earnings per share simply because it has a

Accepted Answer

A) smaller dollar amount of common and preferred shares outstanding. 
B) smaller number of common shares outstanding. 
C) larger number of common shares outstanding. 
D) smaller number of common and preferred shares outstanding. 
E) larger number of common and preferred shares outstanding. 
A) smaller dollar amount of common and preferred shares outstanding. 
B) smaller number of common shares outstanding. 
C) larger number of common shares outstanding. 
D) smaller number of common and preferred shares outstanding. 
E) larger number of common and preferred shares outstanding.

Question 20

Firms often acquire derivative instruments to hedge interest rate, exchange rate, commodity price, and other risks.

Accepted Answer

A) True 
 B)False

A separate section of the income statement reporting information about discontinued operations is included

Which of the following is not true concerning conceptual frameworks?

Which of the following is/are not true?

Discuss the definition, recognition, and measurement of revenue.

Authoritative guidance classifies gains and losses from the remeasurement of certain assets and liabilities as either net income or other comprehensive income.

Which of the following is not true?

Which of the following is not true concerning the FASB and the IASB conceptual frameworks?

Recent changes in the financial reporting environment include which of the following?

Describe the conceptual framework used by FASB and the IASB to guide their standard-setting decisions.

How do firms account for inventories?

Firms initially record property, plant, and equipment, sometimes referred to as fixed assets, at acquisition cost, the cash paid or the fair value of other consideration given in exchange for the asset. Which of the following is/are true?

Which of the following is true regarding the price-earnings ratio?

Which of the following is not true concerning the FASB and the IASB conceptual frameworks?

The FASB's conceptual framework does not include which of the following as financial reporting objectives?

Discuss the definition, recognition, and measurement of liabilities.

The FASB's conceptual framework does not include which of the following as financial reporting objectives?

Firms account for leases using either the operating lease method or the capital (finance) lease method.Which of the following is not true?

A _____ is used to record properly the effects of an event or transaction that was improperly recorded during the accounting period.

One firm may have a lower earnings per share simply because it has a

Firms often acquire derivative instruments to hedge interest rate, exchange rate, commodity price, and other risks.

Introduction to Business Activities and Overview of Financial Statements and the Reporting Process

The Basics of Record Keeping and Financial Statement Preparation: Balance Sheet

The Basics of Record Keeping and Financial Statement Preparation: Income Statement

Balance Sheet: Presenting and Analyzing Resources and Financing

Income Statement: Reporting Results of Operating Activities

Statement of Cash Flows

Introduction to Financial Statement Analysis

Revenue Recognition, Receivables, and Advances From Customers

Working Capital

Long-Lived Tangible and Intangible Assets

Notes, Bonds, and Leases

Liabilities: Off-Balance Sheet Financing, Retirement Benefits, and Income Taxes

Marketable Securities and Derivatives

Intercorporate Investments in Common Stock

Shareholders Equity: Capital Contributions and Distributions

Statement of Cash Flows: Another Look

Filters

Exam 17: Synthesis and Extensions

A separate section of the income statement reporting information about discontinued operations is included

Which of the following is not true concerning conceptual frameworks?

Which of the following is/are not true?

Discuss the definition, recognition, and measurement of revenue.

Authoritative guidance classifies gains and losses from the remeasurement of certain assets and liabilities as either net income or other comprehensive income.

Which of the following is not true?

Which of the following is not true concerning the FASB and the IASB conceptual frameworks?

Recent changes in the financial reporting environment include which of the following?

Describe the conceptual framework used by FASB and the IASB to guide their standard-setting decisions.

How do firms account for inventories?

Firms initially record property, plant, and equipment, sometimes referred to as fixed assets, at acquisition cost, the cash paid or the fair value of other consideration given in exchange for the asset. Which of the following is/are true?

Which of the following is true regarding the price-earnings ratio?

Which of the following is not true concerning the FASB and the IASB conceptual frameworks?

The FASB's conceptual framework does not include which of the following as financial reporting objectives?

Discuss the definition, recognition, and measurement of liabilities.

The FASB's conceptual framework does not include which of the following as financial reporting objectives?

Firms account for leases using either the operating lease method or the capital (finance) lease method.Which of the following is not true?

A _____ is used to record properly the effects of an event or transaction that was improperly recorded during the accounting period.

One firm may have a lower earnings per share simply because it has a

Firms often acquire derivative instruments to hedge interest rate, exchange rate, commodity price, and other risks.

Introduction to Business Activities and Overview of Financial Statements and the Reporting Process

The Basics of Record Keeping and Financial Statement Preparation: Balance Sheet

The Basics of Record Keeping and Financial Statement Preparation: Income Statement

Balance Sheet: Presenting and Analyzing Resources and Financing

Income Statement: Reporting Results of Operating Activities

Statement of Cash Flows

Introduction to Financial Statement Analysis

Revenue Recognition, Receivables, and Advances From Customers

Working Capital

Long-Lived Tangible and Intangible Assets

Notes, Bonds, and Leases

Liabilities: Off-Balance Sheet Financing, Retirement Benefits, and Income Taxes

Marketable Securities and Derivatives

Intercorporate Investments in Common Stock

Shareholders Equity: Capital Contributions and Distributions

Statement of Cash Flows: Another Look

Filters