Question 1

The recognition of revenue is based on estimates of a project's progress toward completion in the percentage-of-completion method.

Accepted Answer

A) True 
 B)False

Question 2

One criterion for recognition of revenue is to recognize revenue when

Accepted Answer

A)  cash is collected. 
B)  collection is not assured. 
C)  the seller does not have control over the goods. 
D)  all sales returns have been returned. 
A)  cash is collected. 
B)  collection is not assured. 
C)  the seller does not have control over the goods. 
D)  all sales returns have been returned.

Question 3

Predictive value confirms or corrects prior expectations.

Accepted Answer

A) True 
 B)False

Question 4

Revenue can be recognized before the service has been fully provided.

Accepted Answer

A) True 
 B)False

Question 5

A number of unrelated transactions recorded by National Company are as follows:   Instructions
For each of the above situations, identify the accounting assumption, concept, constraint or recognition criteria that have been violated. Prepare the correct journal entry as it should have been made. If no entry should have been made, or if additional financial statement disclosure is required, explain.

Accepted Answer

The answer of A number of unrelated transactions recorded by...

Question 6

There are several ways the recognition and measurement concepts can be violated. Which one of the following would not necessarily be considered a violation?

Accepted Answer

A)  intentional misstatement of estimates 
B)  failure to record a revenue or expense 
C)  recognition of revenue or expense in the incorrect accounting period 
D)  a change in an accounting policy 
A)  intentional misstatement of estimates 
B)  failure to record a revenue or expense 
C)  recognition of revenue or expense in the incorrect accounting period 
D)  a change in an accounting policy

Question 7

The main objective of financial reporting is to provide useful information for decision making.

Accepted Answer

A) True 
 B)False

Question 8

Which one of the following is the main objective of financial reporting according to the conceptual framework?

Accepted Answer

A)  to provide information that will increase the value of the company 
B)  to provide information in assessing future cash flows 
C)  to provide information about the company's capital providers 
D)  to provide financial information that is useful to existing and potential investors and creditors in making decisions about a business 
A)  to provide information that will increase the value of the company 
B)  to provide information in assessing future cash flows 
C)  to provide information about the company's capital providers 
D)  to provide financial information that is useful to existing and potential investors and creditors in making decisions about a business

Question 9

A conceptual framework ensures we have a coherent set of standards.

Accepted Answer

A) True 
 B)False

Question 10

In the conceptual framework for IFRS, which one of the following is NOT a qualitative characteristic of useful accounting information?

Accepted Answer

A)  relevance 
B)  faithful representation 
C)  conservatism 
D)  comparability 
A)  relevance 
B)  faithful representation 
C)  conservatism 
D)  comparability

Question 11

A company can change to a new accounting principle if management can justify that the new principle results in

Accepted Answer

A)  more relevant and faithful representation of the financial presentation in the statements. 
B)  a higher profit. 
C)  a lower profit for tax purposes. 
D)  less likelihood of clerical errors. 
A)  more relevant and faithful representation of the financial presentation in the statements. 
B)  a higher profit. 
C)  a lower profit for tax purposes. 
D)  less likelihood of clerical errors.

Question 12

The qualitative characteristics should be applied in which order?

Accepted Answer

A)  relevance, comparability and then faithful representation 
B)  faithful representation, relevance, and then comparability 
C)  Timeliness, faithful representation, and then comparability 
D)  relevance, faithful representation and then comparability 
A)  relevance, comparability and then faithful representation 
B)  faithful representation, relevance, and then comparability 
C)  Timeliness, faithful representation, and then comparability 
D)  relevance, faithful representation and then comparability

Question 13

Accounting information has relevance if it makes a difference in a decision.

Accepted Answer

A) True 
 B)False

Question 14

The summary of significant accounting policies footnoted in the financial statements would NOT normally discuss

Accepted Answer

A)  depreciation methods. 
B)  board of directors salaries. 
C)  method of inventory costing. 
D)  revenue recognition policies. 
A)  depreciation methods. 
B)  board of directors salaries. 
C)  method of inventory costing. 
D)  revenue recognition policies.

Question 15

Timeliness means that accounting information is provided when it is still highly useful for decision-making.

Accepted Answer

A) True 
 B)False

Question 16

Under the contract based approach, a company can recognize revenue when it has transferred a promised good or service to a customer.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is an important component of relevance?

Accepted Answer

A)  materiality 
B)  verifiability 
C)  consistency 
D)  comparability 
A)  materiality 
B)  verifiability 
C)  consistency 
D)  comparability

Question 18

The objective of financial reporting is to provide information that is mainly useful to

Accepted Answer

A)  governmental taxing bodies. 
B)  employees and labour unions. 
C)  investors and creditors. 
D)  internal and external auditors. 
A)  governmental taxing bodies. 
B)  employees and labour unions. 
C)  investors and creditors. 
D)  internal and external auditors.

Question 19

Information is verifiable if two knowledgeable and independent people would generally agree that it faithfully represents the economic reality.

Accepted Answer

A) True 
 B)False

Question 20

Shediac Bay Sailing Inc. sold $175,500 of boat parts on credit in the month of September to customers. 30% of the goods were shipped FOB destination and 70% were shipping FOB shipping point. At September 30, $25,000 of the goods that were FOB destination, were in transit. During September the company collected $100,000 cash from its customers. The company estimates that about 2% of the sales will become uncollectible and that about 8% of the sales will be returned by the customer. How much revenue should the company recognize for the month of September?

Accepted Answer

The answer of Shediac Bay Sailing Inc. sold $175,500 of...

The recognition of revenue is based on estimates of a project's progress toward completion in the percentage-of-completion method.

One criterion for recognition of revenue is to recognize revenue when

Predictive value confirms or corrects prior expectations.

Revenue can be recognized before the service has been fully provided.

There are several ways the recognition and measurement concepts can be violated. Which one of the following would not necessarily be considered a violation?

The main objective of financial reporting is to provide useful information for decision making.

Which one of the following is the main objective of financial reporting according to the conceptual framework?

A conceptual framework ensures we have a coherent set of standards.

In the conceptual framework for IFRS, which one of the following is NOT a qualitative characteristic of useful accounting information?

A company can change to a new accounting principle if management can justify that the new principle results in

The qualitative characteristics should be applied in which order?

Accounting information has relevance if it makes a difference in a decision.

The summary of significant accounting policies footnoted in the financial statements would NOT normally discuss

Timeliness means that accounting information is provided when it is still highly useful for decision-making.

Under the contract based approach, a company can recognize revenue when it has transferred a promised good or service to a customer.

Which of the following is an important component of relevance?

The objective of financial reporting is to provide information that is mainly useful to

Information is verifiable if two knowledgeable and independent people would generally agree that it faithfully represents the economic reality.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Accounting for Merchandising Operations

Inventory Costing

Internal Control and Cash

Long-Lived Assets

Current Liabilities

Accounting for Partnerships

Introduction to Corporations

Corporations: Additional Topics and Ifrs

Non-Current Liabilities

The Cash Flow Statement

Financial Statement Analysis

Investments

Filters

Exam 11: Accounting Principles

The recognition of revenue is based on estimates of a project's progress toward completion in the percentage-of-completion method.

One criterion for recognition of revenue is to recognize revenue when

Predictive value confirms or corrects prior expectations.

Revenue can be recognized before the service has been fully provided.

There are several ways the recognition and measurement concepts can be violated. Which one of the following would not necessarily be considered a violation?

The main objective of financial reporting is to provide useful information for decision making.

Which one of the following is the main objective of financial reporting according to the conceptual framework?

A conceptual framework ensures we have a coherent set of standards.

In the conceptual framework for IFRS, which one of the following is NOT a qualitative characteristic of useful accounting information?

A company can change to a new accounting principle if management can justify that the new principle results in

The qualitative characteristics should be applied in which order?

Accounting information has relevance if it makes a difference in a decision.

The summary of significant accounting policies footnoted in the financial statements would NOT normally discuss

Timeliness means that accounting information is provided when it is still highly useful for decision-making.

Under the contract based approach, a company can recognize revenue when it has transferred a promised good or service to a customer.

Which of the following is an important component of relevance?

The objective of financial reporting is to provide information that is mainly useful to

Information is verifiable if two knowledgeable and independent people would generally agree that it faithfully represents the economic reality.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Accounting for Merchandising Operations

Inventory Costing

Internal Control and Cash

Long-Lived Assets

Current Liabilities

Accounting for Partnerships

Introduction to Corporations

Corporations: Additional Topics and Ifrs

Non-Current Liabilities

The Cash Flow Statement

Financial Statement Analysis

Investments

Filters