Question 1

In classifying the elements of financial statements, the primary distinction between revenues and gains is the materiality of the amounts involved.

Accepted Answer

A) True 
 B)False

Question 2

A firm does not know exactly how long its equipment will last. The firm decides to use shorter rather than longer useful lives for amortizing the equipment. This is an example of:

Accepted Answer

A)  Reliability 
B)  Materiality 
C)  Conservatism 
D)  Unit of measure 
E)  None of these answers are correct. 
A)  Reliability 
B)  Materiality 
C)  Conservatism 
D)  Unit of measure 
E)  None of these answers are correct.

Question 3

The inclusion of notes and supporting schedules in the financial statements reflect application of the:

Accepted Answer

A)  time period assumption. 
B)  industry peculiarities constraint. 
C)  relevance quality. 
D)  full-disclosure principle. 
E)  comparability characteristic. 
A)  time period assumption. 
B)  industry peculiarities constraint. 
C)  relevance quality. 
D)  full-disclosure principle. 
E)  comparability characteristic.

Question 4

The qualitative characteristics follow the same hierarchy under both the IFRS and ASPE Conceptual Frameworks.

Accepted Answer

A) True 
 B)False

Question 5

The materiality constraint:

Accepted Answer

A)  is only relevant when preparing annual financial statements as opposed to quarterly statements. 
B)  is applicable only for low-cost items that cost less than, say, $500. 
C)  is the only defence for gross negligence by an independent accountant. 
D)  does not necessarily imply that an immaterial amount can be ignored for accounting purposes. 
A)  is only relevant when preparing annual financial statements as opposed to quarterly statements. 
B)  is applicable only for low-cost items that cost less than, say, $500. 
C)  is the only defence for gross negligence by an independent accountant. 
D)  does not necessarily imply that an immaterial amount can be ignored for accounting purposes.

Question 6

If accounting information is timely and has predictive and feedback value, then it can be characterized as:

Accepted Answer

A)  Verifiable. 
B)  Qualitative. 
C)  Reliable. 
D)  Relevant. 
A)  Verifiable. 
B)  Qualitative. 
C)  Reliable. 
D)  Relevant.

Question 7

Under IFRS, a change in accounting policy must result in information that is more reliable and relevant.

Accepted Answer

A) True 
 B)False

Question 8

Deferrals are required when cash flows are received before they affect the income statement, while accruals affect the income statement prior to cash being exchanged.

Accepted Answer

A) True 
 B)False

Question 9

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 10

The cost-benefit trade-off is a persuasive constraint under both IFRS and ASPE.

Accepted Answer

A) True 
 B)False

Question 11

Information is neutral when it is free from bias that would lead users towards making decisions that are influenced by the way the information is measured or presented.

Accepted Answer

A) True 
 B)False

Question 12

Relevance is of primary importance in financial reporting, whereas comparability is of secondary importance.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following qualities does the cost principle primarily support?

Accepted Answer

A)  Predictive value 
B)  Conservatism 
C)  Verifiability 
D)  Timeliness 
A)  Predictive value 
B)  Conservatism 
C)  Verifiability 
D)  Timeliness

Question 14

Representational faithfulness is an ingredient of the qualitative criteria of $\begin{array}{|l|l|l|}
\hline &\text { Relesance}&\text {  Reliabiliy } \
\hline1& \text { Yes } & \text { Yes } \
\hline 2&\text { No } & \text { Yes } \
\hline 3&\text { Yes } & \text { No } \
\hline 4&\text { No } & \text { No } \
\hline
\end{array}$

Accepted Answer

A)  Choice 1 
B)  Choice 2 
C)  Choice 3 
D)  Choice 4 
A)  Choice 1 
B)  Choice 2 
C)  Choice 3 
D)  Choice 4

Question 15

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 16

Relevance is sometimes sacrificed for:

Accepted Answer

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

Question 17

Under IFRS, Level 1 amounts refer to quoted prices or directly observable amounts.

Accepted Answer

A) True 
 B)False

Question 18

Increases in equity (net assets) from peripheral or incidental transactions of an entity are called:

Accepted Answer

A)  revenues. 
B)  gains. 
C)  net income. 
D)  economic benefits. 
A)  revenues. 
B)  gains. 
C)  net income. 
D)  economic benefits.

Question 19

State the accounting assumption, principle, information characteristic or constraint that is most applicable:
1. An officer of Nanuck Inc. purchased a new home computer for personal use with company money, charging miscellaneous expense.

2. A machine, which cost $60,000, is reported at its current market value of $90,000.

3. Nanuck Inc. decides to establish a large loss and related liability this year because of the possibility that it may lose a pending patent infringement lawsuit. The possibility of loss is considered remote by its lawyers.

4. Because the company's income is low this year, a switch from accelerated depreciation to straight-line depreciation is made this year. 
5. The president of Nanuck Inc. believes it is foolish to report financial information on a yearly basis. Instead, the president believes that financial information should be disclosed only when significant new information is available related to the company's operations.

Accepted Answer

1. Separate entity.
2. Histori

Question 20

Which of the following relates to both relevance and reliability?

Accepted Answer

A)  Cost-benefit constraint. 
B)  Predictive value. 
C)  Verifiability. 
D)  Representational faithfulness. 
E)  None of these answers are correct. 
A)  Cost-benefit constraint. 
B)  Predictive value. 
C)  Verifiability. 
D)  Representational faithfulness. 
E)  None of these answers are correct.

In classifying the elements of financial statements, the primary distinction between revenues and gains is the materiality of the amounts involved.

A firm does not know exactly how long its equipment will last. The firm decides to use shorter rather than longer useful lives for amortizing the equipment. This is an example of:

The inclusion of notes and supporting schedules in the financial statements reflect application of the:

The qualitative characteristics follow the same hierarchy under both the IFRS and ASPE Conceptual Frameworks.

The materiality constraint:

If accounting information is timely and has predictive and feedback value, then it can be characterized as:

Under IFRS, a change in accounting policy must result in information that is more reliable and relevant.

Deferrals are required when cash flows are received before they affect the income statement, while accruals affect the income statement prior to cash being exchanged.

The implementation constraints include all of the following except:

The cost-benefit trade-off is a persuasive constraint under both IFRS and ASPE.

Information is neutral when it is free from bias that would lead users towards making decisions that are influenced by the way the information is measured or presented.

Relevance is of primary importance in financial reporting, whereas comparability is of secondary importance.

Which of the following qualities does the cost principle primarily support?

Representational faithfulness is an ingredient of the qualitative criteria of Relesance Reliabiliy 1 Yes Yes 2 No Yes 3 Yes No 4 No No

Financial information exhibits the characteristic of consistency when

Relevance is sometimes sacrificed for:

Under IFRS, Level 1 amounts refer to quoted prices or directly observable amounts.

Increases in equity (net assets) from peripheral or incidental transactions of an entity are called:

Which of the following relates to both relevance and reliability?

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

Revenue Recognition

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Long-Lived Assets

Depreciation, Amortization, and Impairment

Financial Instruments: Investments in Bonds and Equity Securities

Filters

Exam 2: Accounting Judgements

In classifying the elements of financial statements, the primary distinction between revenues and gains is the materiality of the amounts involved.

A firm does not know exactly how long its equipment will last. The firm decides to use shorter rather than longer useful lives for amortizing the equipment. This is an example of:

The inclusion of notes and supporting schedules in the financial statements reflect application of the:

The qualitative characteristics follow the same hierarchy under both the IFRS and ASPE Conceptual Frameworks.

The materiality constraint:

If accounting information is timely and has predictive and feedback value, then it can be characterized as:

Under IFRS, a change in accounting policy must result in information that is more reliable and relevant.

Deferrals are required when cash flows are received before they affect the income statement, while accruals affect the income statement prior to cash being exchanged.

The implementation constraints include all of the following except:

The cost-benefit trade-off is a persuasive constraint under both IFRS and ASPE.

Information is neutral when it is free from bias that would lead users towards making decisions that are influenced by the way the information is measured or presented.

Relevance is of primary importance in financial reporting, whereas comparability is of secondary importance.

Which of the following qualities does the cost principle primarily support?

Representational faithfulness is an ingredient of the qualitative criteria of Relesance Reliabiliy 1 Yes Yes 2 No Yes 3 Yes No 4 No No

Financial information exhibits the characteristic of consistency when

Relevance is sometimes sacrificed for:

Under IFRS, Level 1 amounts refer to quoted prices or directly observable amounts.

Increases in equity (net assets) from peripheral or incidental transactions of an entity are called:

Which of the following relates to both relevance and reliability?

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

Revenue Recognition

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Long-Lived Assets

Depreciation, Amortization, and Impairment

Financial Instruments: Investments in Bonds and Equity Securities

Filters