Question 1

Accounting traditionally has been influenced by conservatism because of the:

Accepted Answer

A) probability of undetected errors in the financial statements. 
B) difficulty in measuring net income on the accrual basis. 
C) inherent uncertainties of many accounting measurements. 
D) difficulty in making certain calculations. 
E) large number of transactions recorded in any one period. 
A) probability of undetected errors in the financial statements. 
B) difficulty in measuring net income on the accrual basis. 
C) inherent uncertainties of many accounting measurements. 
D) difficulty in making certain calculations. 
E) large number of transactions recorded in any one period.

Question 2

The nominal dollar capital maintenance approach is the mostly widely used application of the stable currency assumption in North American practice.

Accepted Answer

A) True 
 B)False

Question 3

Valuing assets at their liquidation values rather than their cost is inconsistent with the

Accepted Answer

A) time period assumption. 
B) matching principle. 
C) materiality constraint. 
D) historical cost principle. 
A) time period assumption. 
B) matching principle. 
C) materiality constraint. 
D) historical cost principle.

Question 4

Explain how revenues and gains are similar and how they differ.

Accepted Answer

Both revenues and gains increase net inc

Question 5

One of the objectives of financial reporting is to help users assess the amounts,timing and uncertainty of prospective cash flows of the enterprise.

Accepted Answer

A) True 
 B)False

Question 6

Financial information exhibits the characteristic of consistency when

Accepted Answer

A) Expenses are reported as charges against revenue in the period in which they are paid. 
B) Accounting entities give "accountable" events the same accounting treatment from period to period. 
C) Unusual or infrequent gains and losses are not included on the income statement. 
D) accounting procedures are adopted which give a consistent rate of net income. 
A) Expenses are reported as charges against revenue in the period in which they are paid. 
B) Accounting entities give "accountable" events the same accounting treatment from period to period. 
C) Unusual or infrequent gains and losses are not included on the income statement. 
D) accounting procedures are adopted which give a consistent rate of net income.

Question 7

An item is not material if:

Accepted Answer

A) The accounting equation (A = L + O
E)  does not include the item. 
B) It decreases the qualitative usefulness of the financial statements, but not the quantitative usefulness. 
C) Its cost is less than $25. 
D) Its omission will not influence the judgement of a reasonable person. 
A) The accounting equation (A = L + O
E)  does not include the item. 
B) It decreases the qualitative usefulness of the financial statements, but not the quantitative usefulness. 
C) Its cost is less than $25. 
D) Its omission will not influence the judgement of a reasonable person.

Question 8

The matching concept

Accepted Answer

A) Requires that a debit is matched or posted for every credit 
B) Treats all costs as being directly related to revenue generation 
C) Treats all costs as expenses 
D) Is the name applied to the process of associating expenses with revenues 
A) Requires that a debit is matched or posted for every credit 
B) Treats all costs as being directly related to revenue generation 
C) Treats all costs as expenses 
D) Is the name applied to the process of associating expenses with revenues

Question 9

The quality of information that gives assurance that it is reasonably free of error and bias and is a faithful representation is relevance.

Accepted Answer

A) True 
 B)False

Question 10

Materiality is one of the underlying constraints in the application of the IFRS conceptual framework.

Accepted Answer

A) True 
 B)False

Question 11

ABC Inc.is being sued by a client for an alleged breach of contract.The company's lawyers are uncertain as to what the outcome of the case will be.The client is suing ABC for $500,000 plus arrearages.Should ABC record a liability on its books due to the impending litigation? Why or why not?

Accepted Answer

No.Although some might argue that not re

Question 12

The implementation constraints include all of the following except:

Accepted Answer

A) materiality. 
B) conservatism. 
C) cost/benefit. 
D) separate entity. 
A) materiality. 
B) conservatism. 
C) cost/benefit. 
D) separate entity.

Question 13

Which of the following is NOT a time when revenue may be recognized?

Accepted Answer

A) At time of sale of goods. 
B) At receipt of cash from sale of goods. 
C) During production of goods. 
D) Sale of Property of a manufacturing company. 
A) At time of sale of goods. 
B) At receipt of cash from sale of goods. 
C) During production of goods. 
D) Sale of Property of a manufacturing company.

Question 14

The information provided by financial reporting pertains to:

Accepted Answer

A) individual business enterprises and the economy as a whole, rather than to industries or to members of society as consumers. 
B) individual business enterprises, industries and the economy as a whole, rather than to members of society as consumers. 
C) individual business enterprises, rather than to industries of the economy as a whole or to members of society as consumers. 
D) individual business enterprises and industries rather than to the economy as a whole or to members of society as consumers. 
A) individual business enterprises and the economy as a whole, rather than to industries or to members of society as consumers. 
B) individual business enterprises, industries and the economy as a whole, rather than to members of society as consumers. 
C) individual business enterprises, rather than to industries of the economy as a whole or to members of society as consumers. 
D) individual business enterprises and industries rather than to the economy as a whole or to members of society as consumers.

Question 15

Estimating bad debt expense for the period is based primarily on the:

Accepted Answer

A) cost principle. 
B) conservatism constraint. 
C) full-disclosure principle. 
D) revenue recognition principle. 
E) matching principle. 
A) cost principle. 
B) conservatism constraint. 
C) full-disclosure principle. 
D) revenue recognition principle. 
E) matching principle.

Question 16

The list price of a new van was $30,000 at a local car dealership.However,a customer convinced the dealer to sell the van for $25,000 (the van had cost the dealer $20,000 one year earlier).The van would cost the dealer $24,000 today.Inflation is 5% per year.The amount of profit that would be recognized by the dealer as a result of the sale using the constant dollar financial capital maintenance approach is:

Accepted Answer

A) $10,000 
B) $4,000 
C) $5,000 
D) $9,000 
A) $10,000 
B) $4,000 
C) $5,000 
D) $9,000

Question 17

Relevance is sometimes sacrificed for:

Accepted Answer

A) Reliability. 
B) Comparability 
C) Objectivity. 
D) Conservatism. 
A) Reliability. 
B) Comparability 
C) Objectivity. 
D) Conservatism.

Question 18

The matching concept is the name applied to the process of associating expenses with revenues.

Accepted Answer

A) True 
 B)False

Question 19

The separate entity assumption:

Accepted Answer

A) requires periodic income measurement. 
B) is applicable to both incorporated and unincorporated businesses. 
C) is not applicable to an unincorporated business. 
D) recognizes the legal nature of a business organization. 
A) requires periodic income measurement. 
B) is applicable to both incorporated and unincorporated businesses. 
C) is not applicable to an unincorporated business. 
D) recognizes the legal nature of a business organization.

Question 20

The nominal dollar capital maintenance approach adjusts for the replacement cost of the assets when reporting earnings.

Accepted Answer

A) True 
 B)False

Accounting traditionally has been influenced by conservatism because of the:

The nominal dollar capital maintenance approach is the mostly widely used application of the stable currency assumption in North American practice.

Valuing assets at their liquidation values rather than their cost is inconsistent with the

Explain how revenues and gains are similar and how they differ.

One of the objectives of financial reporting is to help users assess the amounts,timing and uncertainty of prospective cash flows of the enterprise.

Financial information exhibits the characteristic of consistency when

An item is not material if:

The matching concept

The quality of information that gives assurance that it is reasonably free of error and bias and is a faithful representation is relevance.

Materiality is one of the underlying constraints in the application of the IFRS conceptual framework.

ABC Inc.is being sued by a client for an alleged breach of contract.The company's lawyers are uncertain as to what the outcome of the case will be.The client is suing ABC for $500,000 plus arrearages.Should ABC record a liability on its books due to the impending litigation? Why or why not?

The implementation constraints include all of the following except:

Which of the following is NOT a time when revenue may be recognized?

The information provided by financial reporting pertains to:

Estimating bad debt expense for the period is based primarily on the:

Relevance is sometimes sacrificed for:

The matching concept is the name applied to the process of associating expenses with revenues.

The separate entity assumption:

The nominal dollar capital maintenance approach adjusts for the replacement cost of the assets when reporting earnings.

The Framework for Financial Reporting

Statements of Income and Comprehensive Income

Statements of Financial Position and Changes in Equity; Disclosure Notes

The Statement of Cash Flows

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Property,Plant,and Equipment; Intangibles; and Goodwill

Depreciation,Amortization,and Impairment

Financial Instruments: Investments in Debt and Equity Securities

Filters

Exam 2: Accounting Judgements

Accounting traditionally has been influenced by conservatism because of the:

The nominal dollar capital maintenance approach is the mostly widely used application of the stable currency assumption in North American practice.

Valuing assets at their liquidation values rather than their cost is inconsistent with the

Explain how revenues and gains are similar and how they differ.

One of the objectives of financial reporting is to help users assess the amounts,timing and uncertainty of prospective cash flows of the enterprise.

Financial information exhibits the characteristic of consistency when

An item is not material if:

The matching concept

The quality of information that gives assurance that it is reasonably free of error and bias and is a faithful representation is relevance.

Materiality is one of the underlying constraints in the application of the IFRS conceptual framework.

ABC Inc.is being sued by a client for an alleged breach of contract.The company's lawyers are uncertain as to what the outcome of the case will be.The client is suing ABC for $500,000 plus arrearages.Should ABC record a liability on its books due to the impending litigation? Why or why not?

The implementation constraints include all of the following except:

Which of the following is NOT a time when revenue may be recognized?

The information provided by financial reporting pertains to:

Estimating bad debt expense for the period is based primarily on the:

Relevance is sometimes sacrificed for:

The matching concept is the name applied to the process of associating expenses with revenues.

The separate entity assumption:

The nominal dollar capital maintenance approach adjusts for the replacement cost of the assets when reporting earnings.

The Framework for Financial Reporting

Statements of Income and Comprehensive Income

Statements of Financial Position and Changes in Equity; Disclosure Notes

The Statement of Cash Flows

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Property,Plant,and Equipment; Intangibles; and Goodwill

Depreciation,Amortization,and Impairment

Financial Instruments: Investments in Debt and Equity Securities

Filters