Question 1

Timeliness and neutrality are two ingredients of relevance.

Accepted Answer

A) True 
 B)False

Question 2

The second level in the International Accounting Standards Board's (IASB's) Conceptual Framework

Accepted Answer

A)  Identifies the objective of financial reporting. 
B)  Identifies recognition, measurement, and disclosure concepts used in establishing and applying accounting standards. 
C)  Provides the elements of financial statements. 
D)  Includes assumptions, principles, and constraints. 
A)  Identifies the objective of financial reporting. 
B)  Identifies recognition, measurement, and disclosure concepts used in establishing and applying accounting standards. 
C)  Provides the elements of financial statements. 
D)  Includes assumptions, principles, and constraints.

Question 3

The economic entity assumption means that economic activity can be identified with a particular legal entity.

Accepted Answer

A) True 
 B)False

Question 4

The basic assumptions of accounting used by the International Accounting Standards Board (IASB) include

Accepted Answer

A)  Neutrality. 
B)  Periodicity. 
C)  Understandability. 
D)  Materiality. 
A)  Neutrality. 
B)  Periodicity. 
C)  Understandability. 
D)  Materiality.

Question 5

An enhancing quality as described by the International Accounting Standards Board's (IASB's) Conceptual Framework is comparability.

Accepted Answer

A) True 
 B)False

Question 6

An implicit assumption of the International Accounting Standards Board's (IASB's) Conceptual Framework is that users need to be experts in business and financial accounting matters to understand the information contained in financial statements.

Accepted Answer

A) True 
 B)False

Question 7

What is the objective of general-purpose financial reporting?

Accepted Answer

A)  to provide financial information about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors in making decisions in their capacity as capital providers. 
B)  to provide companies with the option to select information that favors one set of interested parties over another. 
C)  to provide users with financial information that implies total freedom from error. 
D)  to provide a metric for financial information used to determine when the boundary between two or more entities should be disregarded and the entities considered to be a licensing arrangement. 
A)  to provide financial information about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors in making decisions in their capacity as capital providers. 
B)  to provide companies with the option to select information that favors one set of interested parties over another. 
C)  to provide users with financial information that implies total freedom from error. 
D)  to provide a metric for financial information used to determine when the boundary between two or more entities should be disregarded and the entities considered to be a licensing arrangement.

Question 8

Which of the following is a fundamental quality of useful accounting information?

Accepted Answer

A)  Conservatism. 
B)  Comparability. 
C)  Faithful representation. 
D)  Consistency. 
A)  Conservatism. 
B)  Comparability. 
C)  Faithful representation. 
D)  Consistency.

Question 9

The expense recognition principle states that debits must equal credits in each transaction.

Accepted Answer

A) True 
 B)False

Question 10

What is the quality of information that is capable of making a difference in a decision?

Accepted Answer

A)  Faithful representation. 
B)  Materiality. 
C)  Timeliness. 
D)  Relevance. 
A)  Faithful representation. 
B)  Materiality. 
C)  Timeliness. 
D)  Relevance.

Question 11

A company has a performance obligation when it agrees to

Accepted Answer

A)  Perform a service for a customer and receives cash payment. 
B)  Sell a product to a customer after receiving payment. 
C)  Perform a service or sell a product to a customer. 
D)  None of these answers are correct. 
A)  Perform a service for a customer and receives cash payment. 
B)  Sell a product to a customer after receiving payment. 
C)  Perform a service or sell a product to a customer. 
D)  None of these answers are correct.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Erin Company applies the same accounting treatment to similar events from period to period. Erin Company is exhibiting which of the following qualities as described by the International Accounting Standards Board's (IASB's) Conceptual Framework?

Accepted Answer

A)  Verifiability. 
B)  Consistency. 
C)  Predictive value. 
D)  All of the choices are correct. 
A)  Verifiability. 
B)  Consistency. 
C)  Predictive value. 
D)  All of the choices are correct.

Question 14

The economic entity assumption

Accepted Answer

A)  is inapplicable to unincorporated businesses. 
B)  recognizes the legal aspects of business organizations. 
C)  requires periodic income measurement. 
D)  is applicable to all forms of business organizations. 
A)  is inapplicable to unincorporated businesses. 
B)  recognizes the legal aspects of business organizations. 
C)  requires periodic income measurement. 
D)  is applicable to all forms of business organizations.

Question 15

Generally, revenue from sales should be recognized at a point when

Accepted Answer

A)  management decides it is appropriate to do so. 
B)  the product is available for sale to the ultimate consumer. 
C)  the entire amount receivable has been collected from the customer and there remains no further warranty liability. 
D)  None of these answers are correct. 
A)  management decides it is appropriate to do so. 
B)  the product is available for sale to the ultimate consumer. 
C)  the entire amount receivable has been collected from the customer and there remains no further warranty liability. 
D)  None of these answers are correct.

Question 16

Charging off the cost of a wastebasket with an estimated useful life of 10 years as an expense of the period when purchased is an example of the application of the

Accepted Answer

A)  consistency quality. 
B)  expense recognition principle. 
C)  materiality quality. 
D)  historical cost principle. 
A)  consistency quality. 
B)  expense recognition principle. 
C)  materiality quality. 
D)  historical cost principle.

Question 17

Under International Financial Reporting Standards (IFRS) _______ costs are charged off in the immediate period and ________ costs may be carried into future periods.

Accepted Answer

A)  Period; product. 
B)  Material; overhead. 
C)  Product; period. 
D)  Overhead; administrative. 
A)  Period; product. 
B)  Material; overhead. 
C)  Product; period. 
D)  Overhead; administrative.

Question 18

Which basic assumption may not be followed when a firm in bankruptcy reports financial results?

Accepted Answer

A)  Economic entity assumption. 
B)  Going concern assumption. 
C)  Periodicity assumption. 
D)  Monetary unit assumption. 
A)  Economic entity assumption. 
B)  Going concern assumption. 
C)  Periodicity assumption. 
D)  Monetary unit assumption.

Question 19

The historical cost principle would be of limited usefulness if not for the going concern assumption.

Accepted Answer

A) True 
 B)False

Question 20

Not adjusting the amounts reported in the financial statements for inflation is an example of which basic assumption or principle of accounting?

Accepted Answer

A)  Economic entity. 
B)  Going concern. 
C)  Monetary unit. 
D)  Full disclosure. 
A)  Economic entity. 
B)  Going concern. 
C)  Monetary unit. 
D)  Full disclosure.

Timeliness and neutrality are two ingredients of relevance.

The second level in the International Accounting Standards Board's (IASB's) Conceptual Framework

The economic entity assumption means that economic activity can be identified with a particular legal entity.

The basic assumptions of accounting used by the International Accounting Standards Board (IASB) include

An enhancing quality as described by the International Accounting Standards Board's (IASB's) Conceptual Framework is comparability.

An implicit assumption of the International Accounting Standards Board's (IASB's) Conceptual Framework is that users need to be experts in business and financial accounting matters to understand the information contained in financial statements.

What is the objective of general-purpose financial reporting?

Which of the following is a fundamental quality of useful accounting information?

The expense recognition principle states that debits must equal credits in each transaction.

What is the quality of information that is capable of making a difference in a decision?

A company has a performance obligation when it agrees to

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

Erin Company applies the same accounting treatment to similar events from period to period. Erin Company is exhibiting which of the following qualities as described by the International Accounting Standards Board's (IASB's) Conceptual Framework?

The economic entity assumption

Generally, revenue from sales should be recognized at a point when

Charging off the cost of a wastebasket with an estimated useful life of 10 years as an expense of the period when purchased is an example of the application of the

Under International Financial Reporting Standards (IFRS) _ costs are charged off in the immediate period and __ costs may be carried into future periods.

Which basic assumption may not be followed when a firm in bankruptcy reports financial results?

The historical cost principle would be of limited usefulness if not for the going concern assumption.

Not adjusting the amounts reported in the financial statements for inflation is an example of which basic assumption or principle of accounting?

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

Timeliness and neutrality are two ingredients of relevance.

The second level in the International Accounting Standards Board's (IASB's) Conceptual Framework

The economic entity assumption means that economic activity can be identified with a particular legal entity.

The basic assumptions of accounting used by the International Accounting Standards Board (IASB) include

An enhancing quality as described by the International Accounting Standards Board's (IASB's) Conceptual Framework is comparability.

An implicit assumption of the International Accounting Standards Board's (IASB's) Conceptual Framework is that users need to be experts in business and financial accounting matters to understand the information contained in financial statements.

What is the objective of general-purpose financial reporting?

Which of the following is a fundamental quality of useful accounting information?

The expense recognition principle states that debits must equal credits in each transaction.

What is the quality of information that is capable of making a difference in a decision?

A company has a performance obligation when it agrees to

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

Erin Company applies the same accounting treatment to similar events from period to period. Erin Company is exhibiting which of the following qualities as described by the International Accounting Standards Board's (IASB's) Conceptual Framework?

The economic entity assumption

Generally, revenue from sales should be recognized at a point when

Charging off the cost of a wastebasket with an estimated useful life of 10 years as an expense of the period when purchased is an example of the application of the

Under International Financial Reporting Standards (IFRS) _______ costs are charged off in the immediate period and ________ costs may be carried into future periods.

Which basic assumption may not be followed when a firm in bankruptcy reports financial results?

The historical cost principle would be of limited usefulness if not for the going concern assumption.

Not adjusting the amounts reported in the financial statements for inflation is an example of which basic assumption or principle of accounting?

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

Under International Financial Reporting Standards (IFRS) _ costs are charged off in the immediate period and __ costs may be carried into future periods.