Question 1

A conceptual framework of accounting should

Accepted Answer

A)  lead to uniformity of financial statements among companies within the same industry. 
B)  eliminate alternative accounting principles and methods. 
C)  guide the AICPA in developing generally accepted auditing standards. 
D)  define the basic objectives, terms, and concepts of accounting. 
A)  lead to uniformity of financial statements among companies within the same industry. 
B)  eliminate alternative accounting principles and methods. 
C)  guide the AICPA in developing generally accepted auditing standards. 
D)  define the basic objectives, terms, and concepts of accounting.

Question 2

The Financial Accounting Foundation oversees the

Accepted Answer

A)  operations of the AICPA. 
B)  operations of the FASB. 
C)  AAA. 
D)  financial reporting arm of the SEC. 
A)  operations of the AICPA. 
B)  operations of the FASB. 
C)  AAA. 
D)  financial reporting arm of the SEC.

Question 3

Which of the following is a characteristic of the Financial Accounting Standards Board?

Accepted Answer

A)  The FASB is composed of five members. 
B)  FASB members must come from CPA firms. 
C)  FASB members are part-time. 
D)  FASB members may retain their positions with previous employers. 
A)  The FASB is composed of five members. 
B)  FASB members must come from CPA firms. 
C)  FASB members are part-time. 
D)  FASB members may retain their positions with previous employers.

Question 4

The primary measurement basis currently used to value assets in external financial statements of an enterprise is the

Accepted Answer

A)  current market price if the assets currently held by an enterprise were sold on the open market. 
B)  current market price if the assets held by an enterprise were purchased on the open market. 
C)  present value of the cash flows the assets are expected to generate over their remaining useful lives. 
D)  market price of the assets held by an enterprise at the date the assets were acquired (although some assets may be valued at their current selling price or net realizable value). 
A)  current market price if the assets currently held by an enterprise were sold on the open market. 
B)  current market price if the assets held by an enterprise were purchased on the open market. 
C)  present value of the cash flows the assets are expected to generate over their remaining useful lives. 
D)  market price of the assets held by an enterprise at the date the assets were acquired (although some assets may be valued at their current selling price or net realizable value).

Question 5

According to the FASB's conceptual framework, predictive and feedback values are ingredients of
$\text { Relevance } \quad \underline{\text { Reliability }}$
A. $\quad$Yes $\quad$$\quad$$\quad$$\quad$No
B.$\quad$ Yes$\quad$$\quad$$\quad$$\quad$ Yes
C. $\quad$No$\quad$$\quad$$\quad$$\quad$ Yes
D. $\quad$No$\quad$$\quad$$\quad$$\quad$ No

Accepted Answer

The answer of According to the FASB's conceptual framework, predictive...

Question 6

The Journal of Accountancy is published by the

Accepted Answer

A)  American Accounting Association. 
B)  American Institute of Certified Public Accountants. 
C)  Financial Executives Institute. 
D)  Financial Accounting Standards Board. 
A)  American Accounting Association. 
B)  American Institute of Certified Public Accountants. 
C)  Financial Executives Institute. 
D)  Financial Accounting Standards Board.

Question 7

Which of the following qualitative characteristics of financial information requires that information not be biased in favor of one group of users to the detriment of others?

Accepted Answer

A)  Relevance 
B)  Reliability 
C)  Verifiability 
D)  Neutrality 
A)  Relevance 
B)  Reliability 
C)  Verifiability 
D)  Neutrality

Question 8

Which is the correct historical sequence of accounting rule-making bodies?

Accepted Answer

A)  CAP, FASB, APB 
B)  CAP, APB, FASB 
C)  FASB, APB, CAP 
D)  APB, CAP, FASB 
A)  CAP, FASB, APB 
B)  CAP, APB, FASB 
C)  FASB, APB, CAP 
D)  APB, CAP, FASB

Question 9

The primary purpose of the Securities and Exchange Commission is to

Accepted Answer

A)  regulate the issuance and trading of securities. 
B)  issue accounting and auditing regulations for publicly held companies. 
C)  prevent the trading of speculative securities. 
D)  enforce generally accepted accounting principles. 
A)  regulate the issuance and trading of securities. 
B)  issue accounting and auditing regulations for publicly held companies. 
C)  prevent the trading of speculative securities. 
D)  enforce generally accepted accounting principles.

Question 10

Accounting for inventories by applying the lower-of-cost-or-market is an example of the application of

Accepted Answer

A)  conservatism. 
B)  comparability. 
C)  consistency. 
D)  materiality. 
A)  conservatism. 
B)  comparability. 
C)  consistency. 
D)  materiality.

Question 11

Documents issued by the FASB include all of the following except

Accepted Answer

A)  Statements of Financial Accounting Standards. 
B)  Interpretations of Statements of Financial Accounting Standards. 
C)  Statements of Financial Accounting Concepts. 
D)  Financial Reporting Releases. 
A)  Statements of Financial Accounting Standards. 
B)  Interpretations of Statements of Financial Accounting Standards. 
C)  Statements of Financial Accounting Concepts. 
D)  Financial Reporting Releases.

Question 12

Users require a variety of information about the financial position and performance of a firm in order to make decisions. Users cannot wait until the life of the business is completed. Accordingly, the accounting period assumption requires that financial reports depicting changes in wealth of an enterprise be prepared periodically.
Required:
Explain the relationship between the accounting period assumption and accrual basis accounting.

Accepted Answer

The accounting period assumption states

Question 13

The normal order followed by the FASB in publishing its standards is

Accepted Answer

A)  statement, discussion memorandum, opinion. 
B)  discussion memorandum, interpretation, exposure draft, statement. 
C)  exposure draft, discussion memorandum, statement. 
D)  discussion memorandum, exposure draft, statement. 
A)  statement, discussion memorandum, opinion. 
B)  discussion memorandum, interpretation, exposure draft, statement. 
C)  exposure draft, discussion memorandum, statement. 
D)  discussion memorandum, exposure draft, statement.

Question 14

According to Statement of Financial Accounting Concepts No. 2, neutrality is an ingredient of
$\text { Relevance } \quad \underline{\text { Reliability }}$
$\begin{array}{ll}
\text { A. Yes } \quad\quad& \text { Yes } \
\text { B. Yes } & \text { No } \
\text { C. No } & \text { No } \
\text { D. No } & \text { Yes }
\end{array}$

Accepted Answer

The answer of According to Statement of Financial Accounting Concepts...

Question 15

In Statement of Financial Accounting Concepts No. 1, "Objectives of Financial Reporting by Business Enterprises," the Financial Accounting Standards Board presents the objectives of financial reporting.
Required:
Identify the three major objectives of financial reporting and explain the interrelationships that exist between these objectives.

Accepted Answer

The three major objectives of financial

Question 16

Pronouncements issued by the SEC include

Accepted Answer

A)  Accounting Research Bulletins. 
B)  Statements on Accounting Principles. 
C)  Financial Accounting Standards. 
D)  Financial Reporting Releases. 
A)  Accounting Research Bulletins. 
B)  Statements on Accounting Principles. 
C)  Financial Accounting Standards. 
D)  Financial Reporting Releases.

Question 17

The financial statements that are prepared for the business are separate and distinct from the owners according to the

Accepted Answer

A)  going-concern assumption. 
B)  matching principle. 
C)  economic entity assumption. 
D)  full disclosure principle. 
A)  going-concern assumption. 
B)  matching principle. 
C)  economic entity assumption. 
D)  full disclosure principle.

Question 18

The primary current source of generally accepted accounting principles for governmental operations is the

Accepted Answer

A)  Financial Accounting Standards Board. 
B)  Securities and Exchange Commission. 
C)  Governmental Accounting Standards Board. 
D)  Government Accounting Office. 
A)  Financial Accounting Standards Board. 
B)  Securities and Exchange Commission. 
C)  Governmental Accounting Standards Board. 
D)  Government Accounting Office.

Question 19

As independent (or external) auditors, CPAs are primarily responsible for

Accepted Answer

A)  preparing financial statements in conformity with GAAP. 
B)  certifying the accuracy of financial statements. 
C)  expressing an opinion as to the fairness of financial statements. 
D)  filing financial statements with the SEC. 
A)  preparing financial statements in conformity with GAAP. 
B)  certifying the accuracy of financial statements. 
C)  expressing an opinion as to the fairness of financial statements. 
D)  filing financial statements with the SEC.

Question 20

Conservatism is best described as selecting an accounting alternative that

Accepted Answer

A)  understates assets and/or net income. 
B)  has the least favorable impact on owners' equity. 
C)  overstates, as opposed to understates, liabilities. 
D)  is least likely to mislead users of financial information. 
A)  understates assets and/or net income. 
B)  has the least favorable impact on owners' equity. 
C)  overstates, as opposed to understates, liabilities. 
D)  is least likely to mislead users of financial information.

A conceptual framework of accounting should

The Financial Accounting Foundation oversees the

Which of the following is a characteristic of the Financial Accounting Standards Board?

The primary measurement basis currently used to value assets in external financial statements of an enterprise is the

The Journal of Accountancy is published by the

Which of the following qualitative characteristics of financial information requires that information not be biased in favor of one group of users to the detriment of others?

Which is the correct historical sequence of accounting rule-making bodies?

The primary purpose of the Securities and Exchange Commission is to

Accounting for inventories by applying the lower-of-cost-or-market is an example of the application of

Documents issued by the FASB include all of the following except

The normal order followed by the FASB in publishing its standards is

According to Statement of Financial Accounting Concepts No. 2, neutrality is an ingredient of $\text { Relevance } \quad \underline{\text { Reliability }}$ A. Yes Yes B. Yes No C. No No D. No Yes

Pronouncements issued by the SEC include

The financial statements that are prepared for the business are separate and distinct from the owners according to the

The primary current source of generally accepted accounting principles for governmental operations is the

As independent (or external) auditors, CPAs are primarily responsible for

Conservatism is best described as selecting an accounting alternative that

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll, Pensions, Other Comp Issues

Earnings Per Share

Derivatives, Contingencies, Business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

Filters

Exam 1: Financial Reporting

A conceptual framework of accounting should

The Financial Accounting Foundation oversees the

Which of the following is a characteristic of the Financial Accounting Standards Board?

The primary measurement basis currently used to value assets in external financial statements of an enterprise is the

The Journal of Accountancy is published by the

Which of the following qualitative characteristics of financial information requires that information not be biased in favor of one group of users to the detriment of others?

Which is the correct historical sequence of accounting rule-making bodies?

The primary purpose of the Securities and Exchange Commission is to

Accounting for inventories by applying the lower-of-cost-or-market is an example of the application of

Documents issued by the FASB include all of the following except

The normal order followed by the FASB in publishing its standards is

According to Statement of Financial Accounting Concepts No. 2, neutrality is an ingredient of Relevance Reliability ‾\text { Relevance } \quad \underline{\text { Reliability }} Relevance Reliability ​ A. Yes Yes B. Yes No C. No No D. No Yes

Pronouncements issued by the SEC include

The financial statements that are prepared for the business are separate and distinct from the owners according to the

The primary current source of generally accepted accounting principles for governmental operations is the

As independent (or external) auditors, CPAs are primarily responsible for

Conservatism is best described as selecting an accounting alternative that

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll, Pensions, Other Comp Issues

Earnings Per Share

Derivatives, Contingencies, Business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

Filters

According to Statement of Financial Accounting Concepts No. 2, neutrality is an ingredient of $\text { Relevance } \quad \underline{\text { Reliability }}$ A. Yes Yes B. Yes No C. No No D. No Yes