Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Phase A of the new conceptual framework focuses on:

Accepted Answer

A) Objective and qualitative characteristics. 
B) Presentation and disclosure. 
C) Recognition and measurement. 
D) Elements of financial statements. 
A) Objective and qualitative characteristics. 
B) Presentation and disclosure. 
C) Recognition and measurement. 
D) Elements of financial statements.

Question 3

Which of the following is not a potential benefit of accrual accounting, compared to cash-basis accounting?

Accepted Answer

A) Timeliness. 
B) Better reflecting economic activity. 
C) Periodicity. 
D) Better matching of revenues and expenses. 
A) Timeliness. 
B) Better reflecting economic activity. 
C) Periodicity. 
D) Better matching of revenues and expenses.

Question 4

Porite Company recognizes revenue in the period in which it records an asset for the related account receivable, rather than in the period in which the account receivable is collected in cash. Porite's practice is an example of:

Accepted Answer

A) Cash basis accounting. 
B) Accrual accounting. 
C) The matching principle. 
D) Economic entity. 
A) Cash basis accounting. 
B) Accrual accounting. 
C) The matching principle. 
D) Economic entity.

Question 5

The primary objective of financial accounting information is to provide useful information to:

Accepted Answer

A) Management. 
B) Capital providers. 
C) Regulators. 
D) None of the above. 
A) Management. 
B) Capital providers. 
C) Regulators. 
D) None of the above.

Question 6

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

Accepted Answer

The conceptual frameworks in U.S. GAAP a

Question 7

Pronouncements issued by the Committee on Accounting Procedures:

Accepted Answer

A) Dealt with specific accounting and reporting problems. 
B) Were based on exposure drafts and public comment letters. 
C) Originated from congressional studies and SEC directives. 
D) Were the outcome of research studies and a theoretical framework. 
A) Dealt with specific accounting and reporting problems. 
B) Were based on exposure drafts and public comment letters. 
C) Originated from congressional studies and SEC directives. 
D) Were the outcome of research studies and a theoretical framework.

Question 8

The Public Reform and Investor Protection Act of 2002 (Sarbanes-Oxley) changed the entity responsible for setting auditing standards in the United States.

Accepted Answer

A) True 
 B)False

Question 9

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 10

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

Accepted Answer

a. Historical cost: the amount given or

Question 11

The main issue in the debate over accounting for employee stock options was:

Accepted Answer

A) Which employees should receive options. 
B) The amount of compensation expense that a company should recognize. 
C) How many options should be granted to key executives. 
D) The tax consequences of employee stock options. 
A) Which employees should receive options. 
B) The amount of compensation expense that a company should recognize. 
C) How many options should be granted to key executives. 
D) The tax consequences of employee stock options.

Question 12

CPAs are licensed by:

Accepted Answer

A) The AICPA. 
B) The SEC. 
C) The federal government. 
D) State governments. 
A) The AICPA. 
B) The SEC. 
C) The federal government. 
D) State governments.

Question 13

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 14

What are the key provisions of the Public Company Accounting Reform and Investor Protection (Sarbanes-Oxley) Act of 2002?

Accepted Answer

The Act requires the regulation of audit

Question 15

Which of the following is not an identified valuation technique in GAAP regarding fair value measurement?

Accepted Answer

A) Cost approach. 
B) Market approach. 
C) Cost-benefit approach. 
D) Income approach. 
A) Cost approach. 
B) Market approach. 
C) Cost-benefit approach. 
D) Income approach.

Question 16

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:

Accepted Answer

A) Conservatism. 
B) The matching principle. 
C) Realization principle. 
D) Economic entity. 
A) Conservatism. 
B) The matching principle. 
C) Realization principle. 
D) Economic entity.

Question 17

The revenue/expense approach emphasizes determining the appropriate amounts of revenue and expense in each reporting period.

Accepted Answer

A) True 
 B)False

Question 18

According to the conceptual framework, verifiability implies:

Accepted Answer

A) Legal evidence. 
B) Logic. 
C) Consensus. 
D) Legal verdict. 
A) Legal evidence. 
B) Logic. 
C) Consensus. 
D) Legal verdict.

Question 19

Contrast the asset/liability and revenue/expense approaches to accounting standard setting.

Accepted Answer

Under the revenue/expense approach, we e

Question 20

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

Accepted Answer

A) Predictive value. 
B) Neutrality. 
C) Confirmatory value. 
D) Timeliness. 
A) Predictive value. 
B) Neutrality. 
C) Confirmatory value. 
D) Timeliness.

Exam 1: Environment and Theoretical Structure of Financial Accounting

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

Phase A of the new conceptual framework focuses on:

Which of the following is not a potential benefit of accrual accounting, compared to cash-basis accounting?

Porite Company recognizes revenue in the period in which it records an asset for the related account receivable, rather than in the period in which the account receivable is collected in cash. Porite's practice is an example of:

The primary objective of financial accounting information is to provide useful information to:

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

Pronouncements issued by the Committee on Accounting Procedures:

The Public Reform and Investor Protection Act of 2002 (Sarbanes-Oxley) changed the entity responsible for setting auditing standards in the United States.

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

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

The main issue in the debate over accounting for employee stock options was:

CPAs are licensed by:

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

What are the key provisions of the Public Company Accounting Reform and Investor Protection (Sarbanes-Oxley) Act of 2002?

Which of the following is not an identified valuation technique in GAAP regarding fair value measurement?

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:

The revenue/expense approach emphasizes determining the appropriate amounts of revenue and expense in each reporting period.

According to the conceptual framework, verifiability implies:

Contrast the asset/liability and revenue/expense approaches to accounting standard setting.

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

Review of the Accounting Process

The Balance Sheet and Financial Disclosures

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

Income Measurement and Profitability Analysis

Time Value of Money Concepts

Cash and Receivables

Inventories: Measurement

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

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 Key

Share-Based Compensation and Earnings Per Share

Accounting Changes and Error Corrections

The Statement of Cash Flows Revisited

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