Exam 2: Financial Reporting Theory

________ accounting measures cash receipts and disbursements,leaving out economic activity.

IFRS element performance refers to ________.

Which of the following best characterizes the current situation concerning revisions to the conceptual framework?

Information that is not accurate can be considered faithfully representative.

The FASB's decisions are often based on an investor's need to form an opinion about a company's future cash flows.

________ are identical under U.S.GAAP and IFRS.

Do you agree or disagree with the following statement: "Financial statements that are free from error are accurate." Explain your answer.

Under U.S.GAAP,comprehensive income includes which of the following?

The economic entity concept ________.

Freddie's Fish Store maintains saltwater aquariums for office buildings in Anchorage.The following events occurred during the first two months of 2015.For each event,determine the revenue or expense under the cash and accrual bases of accounting. a.In January,Freddie's purchased a new industrial vacuum for cleaning tanks - it is expected to last 5 years,and cost $5,000. b.In January,Freddie's collected $30,000 prepayment for for cleaning services to be completed during January and February. c.In February,Freddie's signed a new client,collecting $6,000 for six months of services. d.In February,Freddie's paid its bimonthly utility bill of $500.They are always billed this amount and pay at the end of the cycle.

The IFRS element capital maintenance is identical to the GAAP element comprehensive income.

Purrfect Pets,Inc.provides animal daycare for $25 per day.Customers buy three month packages,which provide 15 days of care per month.In January they received cash payments from 10 customers.For the month of January,they will recognize ________ of revenue under the cash basis,and ________ of revenue under the accrual basis.

Starlight's Psychic reported revenue of $200,000 in its cash based income statement for the year ended December 31,2014.Additional information from the books: What would Starlight's Psychic's revenue be under the accrual basis of accounting?

IFRS does not treat transactions with owners as separate elements.

Under IFRS income is recognized simultaneously with ________.

U.S.GAAP does not allow companies to prepare financial statements using a cash-basis system.

The primary purpose of the conceptual framework is to provide guidance to ________.

Baxter Company issues its annual financial reports within one month of the end of the year.This is an example of which enhancing quality of accounting information?

In the conceptual framework,what are the two types of qualitative characteristics of financial reporting?

Which of the following types of information is not a focus of the primary objective of financial reporting?