Question 1

Which element of the financial statements results from peripheral or incidental transactions?

Accepted Answer

A)  gains 
B)  revenues 
C)  equity 
D)  liabilities 
A)  gains 
B)  revenues 
C)  equity 
D)  liabilities

Question 2

Jimmy's Jelly Company reported revenue of $250,000 in its accrual based income statement for the year ended December 31, 2018. Additional information from the books:
Accounts receivable December 31, 2017 $75,000
Accounts receivable December 31, 2018 80,000
Uncollectible accounts written off during 2018 3,000
What would Jimmy's Jelly Company's revenue be under the cash basis of accounting?

Accepted Answer

$250,000 +

Question 3

Current cost is the amount of cash received in exchange for an asset less the direct costs of disposal.

Accepted Answer

A) True 
 B)False

Question 4

Angelo's charges $280 per month for catering services. In the first quarter of the year they collected $19,600. Fifteen customers pre-paid for three months of catering beginning in January, ten customers pre-paid for two months of catering beginning in February, and five customers paid for one month of catering in March. Using the cash basis of accounting, Angelo's will recognize ________ in revenue for March and ________ using the accrual basis.

Accepted Answer

A)  $0; $1,400 
B)  $8,400; $1,400 
C)  $1,400; $0 
D)  $1,400; $8,400 
A)  $0; $1,400 
B)  $8,400; $1,400 
C)  $1,400; $0 
D)  $1,400; $8,400

Question 5

The IFRS element expenses encompasses which U.S. GAAP elements?

Accepted Answer

A)  revenues and expenses 
B)  losses and expenses 
C)  gains and expenses 
D)  expenses only 
A)  revenues and expenses 
B)  losses and expenses 
C)  gains and expenses 
D)  expenses only

Question 6

When developing new standards, the standard setters must first determine ________.

Accepted Answer

A)  which elements of the financial statements are affected by the proposed standard 
B)  if the proposed standard possesses the qualitative characteristics that make accounting information useful 
C)  if the proposed standard meets the objective of financial reporting 
D)  which recognition and measurement concepts are used to support the proposed standard 
A)  which elements of the financial statements are affected by the proposed standard 
B)  if the proposed standard possesses the qualitative characteristics that make accounting information useful 
C)  if the proposed standard meets the objective of financial reporting 
D)  which recognition and measurement concepts are used to support the proposed standard

Question 7

According to U.S. GAAP, period-of-time elements include performance, income, expenses, and capital maintenance adjustments.

Accepted Answer

A) True 
 B)False

Question 8

Identify the three main approaches to expense recognition under U.S. GAAP and provide examples of each. How does IFRS expense recognition principles differ?

Accepted Answer

Under U.S. GAAP, the three main approach

Question 9

Caesar & Company is planning a major expansion, and is in negotiations with their bank for a loan. The bank requested that Caesar & Co provide them with financial statements as soon as possible after the end of the year. Caesar & Co has several suppliers that are slow to submit invoices, so they are considering making estimates for the amounts associated with those liabilities in order to expedite the preparation of the financial statements for the bank. Discuss the qualitative characteristics that they need to consider.

Accepted Answer

This will be a trade-off between faithfu

Question 10

On April 2, the salaried employees of LaSalle Company receive their paychecks representing 8 workdays in March and 2 days in April for a total gross pay of $15,000. Other expenditures paid in April include advertising from March of $500 and property taxes for the first quarter of the year of $5,700. Property taxes for the second quarter are also expected to be $5,700. The company's vehicle was repaired on April 1 for an amount of $460 to be paid May 1. What are the expenses for April under the cash accounting method and what would they be under accrual basis accounting?

Accepted Answer

A)  $21,200 under both cash and accrual basis 
B)  $21,200 under cash basis and $5,360 under accrual basis accounting 
C)  $15,000 under the cash basis; $6,660 under the accrual basis 
D)  $12,000 under the cash basis; $12,460 under accrual basis 
A)  $21,200 under both cash and accrual basis 
B)  $21,200 under cash basis and $5,360 under accrual basis accounting 
C)  $15,000 under the cash basis; $6,660 under the accrual basis 
D)  $12,000 under the cash basis; $12,460 under accrual basis

Question 11

The IFRS element performance refers to ________.

Accepted Answer

A)  equity 
B)  capital maintenance 
C)  profit 
D)  revenues and gains 
A)  equity 
B)  capital maintenance 
C)  profit 
D)  revenues and gains

Question 12

According to U.S. GAAP, elements are categorized by whether they are relevant or faithfully representative.

Accepted Answer

A) True 
 B)False

Question 13

Identify the assumption represented in each scenario, and then decide if it is satisfied or violated.
 $\begin{array}{|l|l|l|}
\hline \text { Scenario } & \text { Assumption } & \text { Satisfied or violated? } \
\hline \text { Danios Inc. distributes an } & & \
\text { annual report to } & & \
\text { shareholders. }\
\hline \text { Illeo Industries does not } & & \
\text { regularly prepare financial } & & \
\text { statements. } & & \
\hline \text { Maynard Inc. s president } & & \
\text { purchases a car to be used } & & \
\text { solely for personal purposes } & & \
\text { with company funds. } & & \
\hline \text { Archer Corporation, a } & & \
\text { publicly traded U.S. } & & \
\text { company measures financial } & & \
\text { elements using the dollar. } & &\
\hline
\end{array}$

Accepted Answer

None

Question 14

Which of the following is not a characteristic of relevance?

Accepted Answer

A)  confirmatory value 
B)  materiality 
C)  free from error 
D)  predictive value 
A)  confirmatory value 
B)  materiality 
C)  free from error 
D)  predictive value

Question 15

________ indicates whether financial information depicts an economic event in a way that is complete, neutral, and free from error.

Accepted Answer

A)  Relevance 
B)  Faithful representation 
C)  Verifiability 
D)  Truthfulness 
A)  Relevance 
B)  Faithful representation 
C)  Verifiability 
D)  Truthfulness

Question 16

The periodicity assumption stipulates that the entity will continue to operate for an indefinite period of time.

Accepted Answer

A) True 
 B)False

Question 17

Recording online sales transactions in bitcoin currency is a violation of ________.

Accepted Answer

A)  the business entity concept 
B)  common sense 
C)  the monetary unit assumption 
D)  the going concern concept 
A)  the business entity concept 
B)  common sense 
C)  the monetary unit assumption 
D)  the going concern concept

Question 18

In the conceptual framework, what are the two types of elements of financial reporting?

Accepted Answer

A)  fundamental and enhancing 
B)  point-in-time and period-of-time 
C)  recognition and measurement 
D)  elements and principles 
A)  fundamental and enhancing 
B)  point-in-time and period-of-time 
C)  recognition and measurement 
D)  elements and principles

Question 19

Revenue and expense recognition under the current IFRS conceptual framework is the same as under the U.S. GAAP conceptual framework.

Accepted Answer

A) True 
 B)False

Question 20

The ________ ignores inflation.

Accepted Answer

A)  economic entity concept 
B)  monetary unit assumption 
C)  historical cost assumption 
D)  business entity concept 
A)  economic entity concept 
B)  monetary unit assumption 
C)  historical cost assumption 
D)  business entity concept

Which element of the financial statements results from peripheral or incidental transactions?

Current cost is the amount of cash received in exchange for an asset less the direct costs of disposal.

The IFRS element expenses encompasses which U.S. GAAP elements?

When developing new standards, the standard setters must first determine ________.

According to U.S. GAAP, period-of-time elements include performance, income, expenses, and capital maintenance adjustments.

Identify the three main approaches to expense recognition under U.S. GAAP and provide examples of each. How does IFRS expense recognition principles differ?

The IFRS element performance refers to ________.

According to U.S. GAAP, elements are categorized by whether they are relevant or faithfully representative.

Which of the following is not a characteristic of relevance?

________ indicates whether financial information depicts an economic event in a way that is complete, neutral, and free from error.

The periodicity assumption stipulates that the entity will continue to operate for an indefinite period of time.

Recording online sales transactions in bitcoin currency is a violation of ________.

In the conceptual framework, what are the two types of elements of financial reporting?

Revenue and expense recognition under the current IFRS conceptual framework is the same as under the U.S. GAAP conceptual framework.

The ________ ignores inflation.

The Financial Reporting Environment

Judgment and Applied Financial Accounting Research

Review of the Accounting Cycle

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Revenue Recognition

Extenssion: Ol Revenue Recognition Previous Standard

Short-Term Operating Assets: Cash and Receivables

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, Cost Allocation

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Leases

Extension: Ol Accounting for Leases Current Standard

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

The Statement of Cash Flows

Filters

Exam 2: Financial Reporting Theory

Which element of the financial statements results from peripheral or incidental transactions?

Current cost is the amount of cash received in exchange for an asset less the direct costs of disposal.

The IFRS element expenses encompasses which U.S. GAAP elements?

When developing new standards, the standard setters must first determine ________.

According to U.S. GAAP, period-of-time elements include performance, income, expenses, and capital maintenance adjustments.

Identify the three main approaches to expense recognition under U.S. GAAP and provide examples of each. How does IFRS expense recognition principles differ?

The IFRS element performance refers to ________.

According to U.S. GAAP, elements are categorized by whether they are relevant or faithfully representative.

Which of the following is not a characteristic of relevance?

________ indicates whether financial information depicts an economic event in a way that is complete, neutral, and free from error.

The periodicity assumption stipulates that the entity will continue to operate for an indefinite period of time.

Recording online sales transactions in bitcoin currency is a violation of ________.

In the conceptual framework, what are the two types of elements of financial reporting?

Revenue and expense recognition under the current IFRS conceptual framework is the same as under the U.S. GAAP conceptual framework.

The ________ ignores inflation.

The Financial Reporting Environment

Judgment and Applied Financial Accounting Research

Review of the Accounting Cycle

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Revenue Recognition

Extenssion: Ol Revenue Recognition Previous Standard

Short-Term Operating Assets: Cash and Receivables

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, Cost Allocation

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Leases

Extension: Ol Accounting for Leases Current Standard

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

The Statement of Cash Flows

Filters