Question 1

The basic principles of accounting used by the International Accounting Standards Board include all of the following except:

Accepted Answer

A)  Measurement 
B)  Full disclosure 
C)  Revenue recognition 
D)  Going concern 
A)  Measurement 
B)  Full disclosure 
C)  Revenue recognition 
D)  Going concern

Question 2

Which basic assumption is illustrated when a firm reports financial results on an annual basis?

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 3

Under International Financial Reporting Standards (IFRS) revenue is recognized

Accepted Answer

A)  At the time cash is collected. 
B)  During production. 
C)  At the end of production. 
D)  When the performance obligation is satisfied. 
A)  At the time cash is collected. 
B)  During production. 
C)  At the end of production. 
D)  When the performance obligation is satisfied.

Question 4

During the lifetime of an entity, accountants produce financial statements at arbitrary points in time in accordance with which basic accounting concept?

Accepted Answer

A)  Cost constraint 
B)  Periodicity assumption 
C)  Conservation 
D)  Expense recognition principle 
A)  Cost constraint 
B)  Periodicity assumption 
C)  Conservation 
D)  Expense recognition principle

Question 5

The International Accounting Standards Board's (IASB) conceptual framework

Accepted Answer

A)  Includes the concept of prudence or conservatism which means when in doubt, choose the solution that will be least likely to overstate assets or income and/or understate liabilities or expenses. 
B)  Excludes the concept of prudence or conservatism because it is inconsistent with neutrality, which encompasses freedom from bias. 
C)  Includes the concept of prudence or conservatism which means when in doubt, choose the solution that will be least likely to understate assets or income and/or overstate liabilities or expenses. 
D)  Includes the concept of prudence or conservatism as a desirable, but not required, quality of financial reporting information. 
A)  Includes the concept of prudence or conservatism which means when in doubt, choose the solution that will be least likely to overstate assets or income and/or understate liabilities or expenses. 
B)  Excludes the concept of prudence or conservatism because it is inconsistent with neutrality, which encompasses freedom from bias. 
C)  Includes the concept of prudence or conservatism which means when in doubt, choose the solution that will be least likely to understate assets or income and/or overstate liabilities or expenses. 
D)  Includes the concept of prudence or conservatism as a desirable, but not required, quality of financial reporting information.

Question 6

Decision makers vary widely in the types of decisions they make, the methods of decision making they employ, the information they already possess or can obtain from other sources, and their ability to process information. Consequently, for information to be useful there must be a linkage between these users and the decisions they make. This link is

Accepted Answer

A)  relevance. 
B)  faithful representation. 
C)  understandability. 
D)  materiality. 
A)  relevance. 
B)  faithful representation. 
C)  understandability. 
D)  materiality.

Question 7

Preparation of consolidated financial statements when a parent-subsidiary relationship exists is an example of the

Accepted Answer

A)  economic entity assumption. 
B)  relevance characteristic. 
C)  comparability characteristic. 
D)  neutrality characteristic. 
A)  economic entity assumption. 
B)  relevance characteristic. 
C)  comparability characteristic. 
D)  neutrality characteristic.

Question 8

In the conceptual framework for financial reporting, what provides "the why"-the purpose of accounting?

Accepted Answer

A)  Recognition, measurement, and disclosure concepts such as assumptions, principles, and constraints 
B)  Qualitative characteristics of accounting information 
C)  Elements of financial statements 
D)  Objective of financial reporting 
A)  Recognition, measurement, and disclosure concepts such as assumptions, principles, and constraints 
B)  Qualitative characteristics of accounting information 
C)  Elements of financial statements 
D)  Objective of financial reporting

Question 9

Under International Financial Reporting Standards (IFRS) notes to the financial statements

Accepted Answer

A)  Must be quantifiable. 
B)  Must qualify as an element. 
C)  Amplify or explain items presented in the main body of the financial statements. 
D)  All of the choices are correct regarding notes to the financial statements. 
A)  Must be quantifiable. 
B)  Must qualify as an element. 
C)  Amplify or explain items presented in the main body of the financial statements. 
D)  All of the choices are correct regarding notes to the financial statements.

Question 10

Under International Financial Reporting Standards (IFRS) notes to the financial statements must qualify as an element.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is a constraint in presenting financial information?

Accepted Answer

A)  Cost. 
B)  Full disclosure. 
C)  Relevance. 
D)  Consistency. 
A)  Cost. 
B)  Full disclosure. 
C)  Relevance. 
D)  Consistency.

Question 12

Under current IFRS, inflation is ignored in accounting due to the

Accepted Answer

A)  economic entity assumption. 
B)  going concern assumption. 
C)  monetary unit assumption. 
D)  periodicity assumption. 
A)  economic entity assumption. 
B)  going concern assumption. 
C)  monetary unit assumption. 
D)  periodicity assumption.

Question 13

Which of the following is an ingredient of relevance?

Accepted Answer

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

Question 14

The quality of information that means the numbers and descriptions match what really existed or happened is

Accepted Answer

A)  relevance. 
B)  faithful representation. 
C)  completeness. 
D)  neutrality. 
A)  relevance. 
B)  faithful representation. 
C)  completeness. 
D)  neutrality.

Question 15

Application of the full disclosure principle

Accepted Answer

A)  is theoretically desirable but not practical because the costs of complete disclosure exceed the benefits. 
B)  is violated when important financial information is buried in the notes to the financial statements. 
C)  is demonstrated by the use of supplementary information explaining the effects of financing arrangements. 
D)  requires that the financial statements be consistent and comparable. 
A)  is theoretically desirable but not practical because the costs of complete disclosure exceed the benefits. 
B)  is violated when important financial information is buried in the notes to the financial statements. 
C)  is demonstrated by the use of supplementary information explaining the effects of financing arrangements. 
D)  requires that the financial statements be consistent and comparable.

Question 16

To be a faithful representation as described by the International Accounting Standards Board's (IASB's) Conceptual Framework, information must be all of the following except:

Accepted Answer

A)  Complete. 
B)  Free from error. 
C)  Confirmatory. 
D)  Neutral. 
A)  Complete. 
B)  Free from error. 
C)  Confirmatory. 
D)  Neutral.

Question 17

Which of the following is an ingredient of faithful representation?

Accepted Answer

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

Question 18

The International Accounting Standards Board's (IASB) conceptual framework includes a materiality constraint. Which of the following is true regarding this constraint?

Accepted Answer

A)  The IASB's rule for materiality is any item under 5% of net income is considered immaterial. 
B)  Materiality factors into both internal and external accounting decisions. 
C)  An item is immaterial if its inclusion or omission would influence or change the judgment of a reasonable person. 
D)  All of the choices are correct. 
A)  The IASB's rule for materiality is any item under 5% of net income is considered immaterial. 
B)  Materiality factors into both internal and external accounting decisions. 
C)  An item is immaterial if its inclusion or omission would influence or change the judgment of a reasonable person. 
D)  All of the choices are correct.

Question 19

The objective of financial reporting in the International Accounting Standards Board's (IASB's) Conceptual Framework

Accepted Answer

A)  Is the foundation for the Framework. 
B)  Includes the qualitative characteristics that make accounting information useful. 
C)  Is found on the third level of the Framework. 
D)  All of the choices are correct regarding the objective of financial reporting. 
A)  Is the foundation for the Framework. 
B)  Includes the qualitative characteristics that make accounting information useful. 
C)  Is found on the third level of the Framework. 
D)  All of the choices are correct regarding the objective of financial reporting.

Question 20

What is meant by comparability when discussing financial accounting information?

Accepted Answer

A)  Information has predictive or feedback value. 
B)  Information is reasonably free from error. 
C)  Information that is measured and reported in a similar fashion across companies. 
D)  Information is timely. 
A)  Information has predictive or feedback value. 
B)  Information is reasonably free from error. 
C)  Information that is measured and reported in a similar fashion across companies. 
D)  Information is timely.

The basic principles of accounting used by the International Accounting Standards Board include all of the following except:

Which basic assumption is illustrated when a firm reports financial results on an annual basis?

Under International Financial Reporting Standards (IFRS) revenue is recognized

During the lifetime of an entity, accountants produce financial statements at arbitrary points in time in accordance with which basic accounting concept?

The International Accounting Standards Board's (IASB) conceptual framework

Preparation of consolidated financial statements when a parent-subsidiary relationship exists is an example of the

In the conceptual framework for financial reporting, what provides "the why"-the purpose of accounting?

Under International Financial Reporting Standards (IFRS) notes to the financial statements

Under International Financial Reporting Standards (IFRS) notes to the financial statements must qualify as an element.

Which of the following is a constraint in presenting financial information?

Under current IFRS, inflation is ignored in accounting due to the

Which of the following is an ingredient of relevance?

The quality of information that means the numbers and descriptions match what really existed or happened is

Application of the full disclosure principle

To be a faithful representation as described by the International Accounting Standards Board's (IASB's) Conceptual Framework, information must be all of the following except:

Which of the following is an ingredient of faithful representation?

The International Accounting Standards Board's (IASB) conceptual framework includes a materiality constraint. Which of the following is true regarding this constraint?

The objective of financial reporting in the International Accounting Standards Board's (IASB's) Conceptual Framework

What is meant by comparability when discussing financial accounting information?

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 basic principles of accounting used by the International Accounting Standards Board include all of the following except:

Which basic assumption is illustrated when a firm reports financial results on an annual basis?

Under International Financial Reporting Standards (IFRS) revenue is recognized

During the lifetime of an entity, accountants produce financial statements at arbitrary points in time in accordance with which basic accounting concept?

The International Accounting Standards Board's (IASB) conceptual framework

Preparation of consolidated financial statements when a parent-subsidiary relationship exists is an example of the

In the conceptual framework for financial reporting, what provides "the why"-the purpose of accounting?

Under International Financial Reporting Standards (IFRS) notes to the financial statements

Under International Financial Reporting Standards (IFRS) notes to the financial statements must qualify as an element.

Which of the following is a constraint in presenting financial information?

Under current IFRS, inflation is ignored in accounting due to the

Which of the following is an ingredient of relevance?

The quality of information that means the numbers and descriptions match what really existed or happened is

Application of the full disclosure principle

To be a faithful representation as described by the International Accounting Standards Board's (IASB's) Conceptual Framework, information must be all of the following except:

Which of the following is an ingredient of faithful representation?

The International Accounting Standards Board's (IASB) conceptual framework includes a materiality constraint. Which of the following is true regarding this constraint?

The objective of financial reporting in the International Accounting Standards Board's (IASB's) Conceptual Framework

What is meant by comparability when discussing financial accounting information?

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