Exam 1: Financial Reporting

Recording the purchase price of a paper shredder (with an estimated useful life of 10 years)as an expense of the current period is justified by the

Financial statements should provide information that is both relevant and reliable.The current model upon which financial statements are based is the historical cost model.Over the past fifty years,however,various individuals and groups have advocated the implementation of current value models of accounting.One such model represents the amount of cash for which an asset might be sold or a liability might be refinanced,sometimes referred as the current-exit-price approach.The current exit price is generally agreed to correspond (1)to the selling price under conditions of orderly rather than forced liquidation,and (2)to the selling price at the time of measurement.All assets and liabilities are thus revalued at their exit prices at each reporting date. Required: Evaluate the historical cost and current-exit-price models in terms of relevance and reliability.

According to the FASB's conceptual framework,the process of reporting an item in the financial statements of an entity is

Once the FASB has established an accounting standard,the

Under Statement of Financial Accounting Concepts No.2,representational faithfulness is an ingredient of

Primary responsibility for GAAP and public reporting currently rests with the

The mission statement of the Financial Accounting Standards Board includes a goal of promoting international comparability of accounting standards.Furthermore,the International Accounting Standards Board has begun over the last 20 years to issue international accounting standards designed to create a common set of international accounting and reporting standards. Identify reasons why such a set of international accounting standards would be desirable.

In Statement of Financial Accounting Concepts No.1,"Objectives of Financial Reporting by Business Enterprises," the Financial Accounting Standards Board presents the objectives of financial reporting. Required: Identify the three major objectives of financial reporting and explain the interrelationships that exist between these objectives.

Large business enterprises employ financial accountants who are primarily concerned with__________ financial reporting.

Much of the controversy surrounding the Enron scandal centered on the use of special purpose entities by Enron management. Briefly explain what a special purpose entity is and identify two ways in which Enron abused the accounting rules for SPEs.

The accrual basis of accounting is based primarily on

In 1973,the following private-sector body was organized to set accounting standards in the United States:

When a large number of individuals,using the same measurement method,demonstrate that a high degree of consensus can be secured among independent measurers,then the result exhibits the characteristic of

Proper application of accounting principles is most dependent upon the

A conceptual framework of accounting should

The following is NOT one of the fundamental criteria for recognition?

How many board members serve on the FASB?

__________ accounting focuses on the development and communication of financial information for external users.

A major difference between the Financial Accounting Standards Board (FASB)and its predecessor,the Accounting Principles Board (APB),is

Which of the following is true?