Question 1

The IASB conceptual framework specifically identifies accrual basis accounting as one of its fundamental assumptions.

Accepted Answer

A) True 
 B)False  True

Question 2

Which of the following is not true concerning a conceptual framework in accounting?

Accepted Answer

A)  It should be a basis for standard-setting. 
B)  It should allow practical problems to be solved more quickly by reference to it. 
C)  It should be based on fundamental truths that are derived from the laws of nature. 
D)  All of these answers are correct. 
A)  It should be a basis for standard-setting. 
B)  It should allow practical problems to be solved more quickly by reference to it. 
C)  It should be based on fundamental truths that are derived from the laws of nature. 
D)  All of these answers are correct. C

Question 3

Under International Financial Reporting Standards (IFRS) companies need not report immaterial items within the body of the financial statements, but must disclose them in the notes or supplementary information that accompany the financial statements.

Accepted Answer

A) True 
 B)False  False

Question 4

The conceptual framework underlying U.S. GAAP is similar to that underlying IFRS.

Accepted Answer

A) True 
 B)False

Question 5

The second level of the International Accounting Standards Board's (IASB's) Conceptual Framework serves as a bridge between the "why" of accounting and the "how" of accounting.

Accepted Answer

A) True 
 B)False

Question 6

Recognition of expense related to amortization of an intangible asset illustrates which principle of accounting?

Accepted Answer

A)  Expense recognition. 
B)  Full disclosure. 
C)  Revenue recognition. 
D)  Historical cost. 
A)  Expense recognition. 
B)  Full disclosure. 
C)  Revenue recognition. 
D)  Historical cost.

Question 7

Verifiability and predictive value are two ingredients of faithful representation.

Accepted Answer

A) True 
 B)False

Question 8

The idea of consistency does not mean that companies cannot switch from one accounting method to another.

Accepted Answer

A) True 
 B)False

Question 9

One of the challenges in developing a common conceptual framework will be to agree on how the framework should be organized since the FASB and IASB conceptual frameworks are organized in very different ways.

Accepted Answer

A) True 
 B)False

Question 10

Under International Financial Reporting Standards (IFRS) supplementary information

Accepted Answer

A)  May be information that is high in relevance but low in reliability. 
B)  May include explanations of uncertainties and contingencies. 
C)  May include descriptions of accounting policies and methods. 
D)  All of the choices are correct regarding supplementary information. 
A)  May be information that is high in relevance but low in reliability. 
B)  May include explanations of uncertainties and contingencies. 
C)  May include descriptions of accounting policies and methods. 
D)  All of the choices are correct regarding supplementary information.

Question 11

Companies consider only quantitative factors in determining whether an item is material.

Accepted Answer

A) True 
 B)False

Question 12

The allowance for doubtful accounts, which appears as a deduction from accounts receivable on a statement of financial position and which is based on an estimate of bad debts, is an application of the

Accepted Answer

A)  consistency characteristic. 
B)  expense recognition principle. 
C)  materiality quality. 
D)  revenue recognition principle. 
A)  consistency characteristic. 
B)  expense recognition principle. 
C)  materiality quality. 
D)  revenue recognition principle.

Question 13

The IASB has issued a conceptual framework and has agreed to develop a common conceptual framework with the FASB.

Accepted Answer

A) True 
 B)False

Question 14

Materiality is one of the basic assumptions of accounting used by the International Accounting Standards Board (IASB).

Accepted Answer

A) True 
 B)False

Question 15

The measurement principle includes the

Accepted Answer

A)  fair value principle only. 
B)  historical cost principle only. 
C)  revenue recognition principle and expense recognition principle. 
D)  historical cost principle and the fair value principle. 
A)  fair value principle only. 
B)  historical cost principle only. 
C)  revenue recognition principle and expense recognition principle. 
D)  historical cost principle and the fair value principle.

Question 16

Accounting information is considered to be relevant when it

Accepted Answer

A)  can be depended on to represent the economic conditions and events that it is intended to represent. 
B)  is capable of making a difference in a decision. 
C)  is understandable by reasonably informed users of accounting information. 
D)  is verifiable and neutral. 
A)  can be depended on to represent the economic conditions and events that it is intended to represent. 
B)  is capable of making a difference in a decision. 
C)  is understandable by reasonably informed users of accounting information. 
D)  is verifiable and neutral.

Question 17

The 2nd level of the IASB's conceptual framework provides the qualitative characteristics that make accounting information useful and the elements of financial statements.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following basic elements of financial statements is more associated with the statement of financial position than the income statement?

Accepted Answer

A)  Equity. 
B)  Income. 
C)  Gains. 
D)  Expenses. 
A)  Equity. 
B)  Income. 
C)  Gains. 
D)  Expenses.

Question 19

When information about two different enterprises has been prepared and presented in a similar manner, the information exhibits the characteristic of

Accepted Answer

A)  relevance. 
B)  faithful representation. 
C)  consistency. 
D)  none of these. 
A)  relevance. 
B)  faithful representation. 
C)  consistency. 
D)  none of these.

Question 20

Decision usefulness is the underlying theme of the conceptual framework.

Accepted Answer

A) True 
 B)False

The IASB conceptual framework specifically identifies accrual basis accounting as one of its fundamental assumptions.

Which of the following is not true concerning a conceptual framework in accounting?

Under International Financial Reporting Standards (IFRS) companies need not report immaterial items within the body of the financial statements, but must disclose them in the notes or supplementary information that accompany the financial statements.

The conceptual framework underlying U.S. GAAP is similar to that underlying IFRS.

The second level of the International Accounting Standards Board's (IASB's) Conceptual Framework serves as a bridge between the "why" of accounting and the "how" of accounting.

Recognition of expense related to amortization of an intangible asset illustrates which principle of accounting?

Verifiability and predictive value are two ingredients of faithful representation.

The idea of consistency does not mean that companies cannot switch from one accounting method to another.

One of the challenges in developing a common conceptual framework will be to agree on how the framework should be organized since the FASB and IASB conceptual frameworks are organized in very different ways.

Under International Financial Reporting Standards (IFRS) supplementary information

Companies consider only quantitative factors in determining whether an item is material.

The allowance for doubtful accounts, which appears as a deduction from accounts receivable on a statement of financial position and which is based on an estimate of bad debts, is an application of the

The IASB has issued a conceptual framework and has agreed to develop a common conceptual framework with the FASB.

Materiality is one of the basic assumptions of accounting used by the International Accounting Standards Board (IASB).

The measurement principle includes the

Accounting information is considered to be relevant when it

The 2^nd level of the IASB's conceptual framework provides the qualitative characteristics that make accounting information useful and the elements of financial statements.

Which of the following basic elements of financial statements is more associated with the statement of financial position than the income statement?

When information about two different enterprises has been prepared and presented in a similar manner, the information exhibits the characteristic of

Decision usefulness is the underlying theme of the conceptual framework.

Financial Reporting and Accounting Standards

The Accounting Information System

Income Statement and Related Information

Statement of Financial Position and Statement of Cash Flows

Accounting and the Time Value of Money

Cash and Receivables

Valuation of Inventories: a Cost-Basis Approach

Inventories: Additional Valuation Issues

Acquisition and Disposition of Property, Plant, and Equipment

Depreciation, Impairments, and Depletion

Intangible Assets

Filters

Exam 2: Conceptual Framework for Financial Reporting

The IASB conceptual framework specifically identifies accrual basis accounting as one of its fundamental assumptions.

Which of the following is not true concerning a conceptual framework in accounting?

Under International Financial Reporting Standards (IFRS) companies need not report immaterial items within the body of the financial statements, but must disclose them in the notes or supplementary information that accompany the financial statements.

The conceptual framework underlying U.S. GAAP is similar to that underlying IFRS.

The second level of the International Accounting Standards Board's (IASB's) Conceptual Framework serves as a bridge between the "why" of accounting and the "how" of accounting.

Recognition of expense related to amortization of an intangible asset illustrates which principle of accounting?

Verifiability and predictive value are two ingredients of faithful representation.

The idea of consistency does not mean that companies cannot switch from one accounting method to another.

One of the challenges in developing a common conceptual framework will be to agree on how the framework should be organized since the FASB and IASB conceptual frameworks are organized in very different ways.

Under International Financial Reporting Standards (IFRS) supplementary information

Companies consider only quantitative factors in determining whether an item is material.

The allowance for doubtful accounts, which appears as a deduction from accounts receivable on a statement of financial position and which is based on an estimate of bad debts, is an application of the

The IASB has issued a conceptual framework and has agreed to develop a common conceptual framework with the FASB.

Materiality is one of the basic assumptions of accounting used by the International Accounting Standards Board (IASB).

The measurement principle includes the

Accounting information is considered to be relevant when it

The 2nd level of the IASB's conceptual framework provides the qualitative characteristics that make accounting information useful and the elements of financial statements.

Which of the following basic elements of financial statements is more associated with the statement of financial position than the income statement?

When information about two different enterprises has been prepared and presented in a similar manner, the information exhibits the characteristic of

Decision usefulness is the underlying theme of the conceptual framework.

Financial Reporting and Accounting Standards

The Accounting Information System

Income Statement and Related Information

Statement of Financial Position and Statement of Cash Flows

Accounting and the Time Value of Money

Cash and Receivables

Valuation of Inventories: a Cost-Basis Approach

Inventories: Additional Valuation Issues

Acquisition and Disposition of Property, Plant, and Equipment

Depreciation, Impairments, and Depletion

Intangible Assets

Filters

The 2^nd level of the IASB's conceptual framework provides the qualitative characteristics that make accounting information useful and the elements of financial statements.