Exam 1: Environment and Theoretical Structure of Financial Accounting

The possibility that the capital markets' focus on periodic profits may tempt a company's management to bend or even break accounting rules to inflate reported net income is an example of:

Land was acquired in 2018 for a future building site at a cost of $40,000. The assessed valuation for tax purposes is $27,000, a qualified appraiser placed its value at $48,000, and a recent firm offer for the land was for a cash payment of $46,000. The land should be reported in the financial statements at:

Contrast the role of the conceptual framework in U.S. GAAP and IFRS.

Accounting for stock-based compensation is an area in which the FASB has received little political interference.

Listed below are ten organizations followed by a list of phrases that describe or characterize the organizations. Match each phrase with the correct organization. -APB

Which of the following groups is not among financial intermediaries?

Mega Loan Company has very stringent credit requirements and, accordingly, has negligible losses from uncollectible accounts. The company's independent accountants did not protest when, contrary to GAAP, the company recorded bad debt expense only when specific accounts were determined to be uncollectible, rather than use an allowance for uncollectible accounts. The concept demonstrated is:

The conceptual framework's qualitative characteristic of faithful representation includes:

Surefeet Corporation changed its inventory valuation method. Which characteristic is jeopardized by this change?

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Revenues

The primary focus for financial accounting information is to provide information useful for:

Auditors play an important role in the resource allocation process by adding credibility to financial statements.

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Conservatism

The conceptual framework's recognition and measurement concepts recognize which one of the following as an assumption?

SFAC 8 of the conceptual framework focuses on:

The matching principle is:

In IFRS, the conceptual framework indicates appropriate accounting when a more specific accounting standard does not apply.

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Verifiability

List and briefly describe the five measurement attributes used commonly in current GAAP.

In a recent annual report, Apple Computer reported the following in one of its disclosure notes: "Warranty Expense: The Company provides currently for the estimated cost for product warranties at the time the related revenue is recognized." This note exemplifies Apple's use of: