Exam 2: Financial Reporting Theory

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

Which of the following is not a purpose of FASB's conceptual framework?

The primary purpose of financial reporting is to provide information that is useful to a company's ________.

Relevance is an enhancing characteristic of financial information.

All of the following are enhancing characteristics except ________.

Ronaldo Woods is a student getting his degree in business administration.He does not like his accounting class very much,and doesn't understand why he needs to study accounting - stating "I'm never going to be an accountant - why do I need to know this?" Explain to Ronaldo why it is important for business students to learn about accounting and give examples.

According to IFRS,there are two types of capital maintenance adjustments: financial and physical.

________ characteristics distinguish useful financial information from information that is not useful.

Leo's Lounge reported revenue of $500,000 in its accrual based income statement for the year ended December 31,2014.Additional information from the books: What would Leo's revenue be under the cash basis of accounting?

________ indicates whether financial information depicts an economic event in a way that is complete,neutral,and free from error.

Recording online sales transactions in bitcoin currency is a violation of ________.

Information is relevant if it reliably depicts the substance of an economic event.

Which of the following is a characteristic of faithful representation?

The conceptual framework assists with ________.

Under IFRS,which of the following is considered to be a measure of current cost?

TNT Inc charges $125 per month for a storage unit.In the first quarter of the year,they collected $6,125.Ten customers pre-paid for three months rental in January,seven customers pre-paid for two months rental in February,and five customers paid for one month in March.Using the cash basis of accounting,TNT will recognize ________ in revenue for March and ________ using the accrual basis.

U.S.GAAP and IFRS identify the same three period-of-time elements.

Complete the following table - identify which enhancing characteristic is indicated in each independent scenario and whether it was satisfied or violated.

A purpose of IASB's conceptual framework is to assist preparers,auditors,and users of financial statements.

The two types of qualitative characteristics are fundamental characteristics and elective characteristics.