Exam 2: Accounting Judgements

At the date of purchase of a service which is not immediately used up, the cost of such unused service is a(n):

The primary qualitative criteria of accounting information include which of the following:

Assuming that the continuity assumption is valid, accrual accounting income and cash based income would be expected to "even out" over the long term.

Accounting should provide information that is useful in assessing the "value" of an entity; however, accounting information does not necessarily report the actual "value" of the entity.

Preparation of financial statements with adequate notes is primarily based on the:

Under ASPE (Private Entity GAAP), which of the following is an ingredient of reliability?

The unit of measure assumption holds that all aspects of a company's business operations can be readily quantified.

S Corporation offered to issue 5,000 shares of its no par value common shares to another company in exchange for a building at a time when there were 1,000,000 shares already outstanding and were selling for $4.00 per share at the time. The owner of the building had the opportunity to sell it to a competing buyer for $26,000. However, because the seller wanted the S Corporation shares, S's offer was accepted. At what amount should the building be reported in S's financial statements?

The goal of maximizing shareholder wealth is consistent with the entity concept.

Materiality is a component of representational faithfulness under IFRS.

Timeliness is an ingredient of the qualitative criteria of Relevance Reliabilly 1 Yes Yes 2 No Yes 3 Yes No 4 No No

Under ASPE, feedback value is an ingredient of: Relevance R Reliabiliy 1 Yes Yes 2 Yes No 3 No No 4 No Yes

A large international corporation immediately expenses the $50 cost of a small item of office equipment. This is an example of:

The quality of information that gives assurance that it is reasonably free of error and bias and is a faithful representation is relevance.

Estimating bad debt expense for the period is based primarily on the:

The first step in choosing an accounting policy is to understand a company's primary reporting objectives.

The sales manager of a firm has the use of a blue company-owned automobile to use to visit potential customers. The sales manager also owns her own identical car except that it is red. The manager paid for the red car with funds earned from her employment as sales manager. The firm will report the cost of the blue auto in its balance sheet, but not the red auto. This is an example of:

The continuity assumption assumes that a company will have a perpetual life.

The list price of a new van was $30,000 at a local car dealership. However, a customer convinced the dealer to sell the van for $25,000 (the van had cost the dealer $20,000 one year earlier). The van would cost the dealer $24,000 today. Inflation is 5% per year. The amount of profit that would be recognized by the dealer as a result of the sale using the nominal dollar approach is:

Under IFRS 13, a publicly quoted share price would be an example of a Level 1 Input.