Exam 2: Financial Reporting Theory

Under IFRS,which of the following is not a criteria for recognizing items in the financial statements?

Recognition is the process of reporting an economic event in the financial statements.

Freddie's Fish Store maintains saltwater aquariums for office buildings in Anchorage.The following events occurred during the first two months of 2015.Determine the net income for each month using both the cash and accrual basis.For depreciable items use straight line depreciation with no salvage value. 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.

List the three primary components of the conceptual framework for financial reporting and the two subcomponents of each component.

Which of the following is not one of the four general recognition criteria under U.S.GAAP?

Fanny's Fitness Studio sells memberships at a fee of $75 per month.Clients pay bimonthly.She currently has 50 clients paying on an even month rotation (February,April,etc.)and 30 clients paying on an odd month rotation (January,March,etc.).Fanny incurs expenses each month for $100 in electric bills and pays the bill every other month.Determine Fannie's net income for each month for the first quarter of the year,as well as the quarterly total,under both the cash and accrual basis.Is the quarterly total the same? If it is different,what would account for this?

Firms change the value of an asset or a liability when expected future cash flows change.

Under U.S.GAAP,what is a condition for revenue to be realized or realizable?

Under the concept of ________,capital is regarded in terms of the productive capacity of a company.

Which of the following is not a characteristic of relevance?

Angelo's charges $200 per month for catering services.In the first quarter of the year they collected $14,000.Fifteen customers pre-paid for three months of catering beginning in January,ten customers pre-paid for two months of catering beginning in February,and five customers paid for one month of catering in March.Using the cash basis of accounting,Angelo's will recognize ________ in revenue for January and ________ using the accrual basis.

Current cost is the amount of cash received in exchange for an asset less the direct costs of disposal.

The ________ stipulates that an entity measure and report its economic activities in dollars (or some other monetary unit).

A company reports financial results each year.Which underlying assumption is illustrated by this example?

If a company is facing bankruptcy,which underlying assumption would not be valid?

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 February and ________ using the accrual basis.

________ include(s)all changes in equity during a period except those resulting from transactions with owners.

List three active phases in the FASB conceptual framework project.

Verifiability is a characteristic of faithful representation.

The IFRS element expenses encompasses which U.S.GAAP elements?