Question 1

According to GAAP, which is not a specific objective?

Accepted Answer

A)   to provide information about an enterprise's cash flows
B)   to provide information that is useful to present to potential investors, creditors, and other users in making rational investment, credit, and similar decisions
C)   to provide information about an enterprise's comprehensive income and its components
D)   to provide information about an enterprise's economic resources, obligations, and owners' equity B

Question 2

The joint IASB and FASB boards identified several "enhancing" decision useful characteristics of financial information including

Accepted Answer

A)   comparability, verifiability, timeliness, and understandability
B)   materiality, verifiability, timeliness, and understandability
C)   comparability, verifiability, timeliness, and materiality
D)   comparability, relevance, timeliness, and understandability A

Question 3

Accrual accounting relates the financial effects of a company's transactions

Accepted Answer

A)   so that the costs of nonoperational events are matched to the balance sheet in the period impacted
B)   to the period in which they occur rather than to when the cash receipts or payment occurs
C)   so that the revenue impact of every transaction in a period is properly reflected in the income statement
D)   so that the impact of every transaction is reflected in the statement of cash flows B

Question 4

Three phases of the convergence project were put on hold they were elements and recognition, measurement, and presentation and disclosure.

Accepted Answer

A) True 
 B)False

Question 5

What is the ultimate objective of accounting information?

Accepted Answer

A)   faithful representation
B)   decision usefulness
C)   relevance
D)   predictive value

Question 6

Oil and gas reserves information would be included within the financial statements.

Accepted Answer

A) True 
 B)False

Question 7

Accounting principles are theories, truths, and propositions that service as the basis for financial accounting and reporting.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is a specific objective of financial reporting?

Accepted Answer

A)   provide information that is useful to investors in making investment decisions
B)   provide information useful in assessing the amounts, timing, and uncertainty of prospective cash receipts
C)   provide information useful in assessing the amounts, timing, and uncertainty of prospective cash inflows
D)   provide information about a company's resources and the claims against the company

Question 9

Information about comprehensive income is useful to external users for all of the following purposes except

Accepted Answer

A)   evaluating management's performance
B)   examining cash flows for the current period
C)   predicting future income
D)   assessing the risk of lending to the company

Question 10

The task of developing the conceptual framework was so enormous that the FASB had to divide it into several projects.
Required:
Identify each of the projects by name and provide a brief description of their results.

Accepted Answer

The answer of The task of developing the conceptual framework...

Question 11

Using an allowance method of accounting to recognize uncollectible accounts receivable is an application of which accounting convention?

Accepted Answer

A)   revenue recognition
B)   historical cost
C)   matching principle
D)   period of time

Question 12

In its "Objectives of Financial Reporting by Business Enterprises" the FASB identified a variety of primary users including all of the following except

Accepted Answer

A)   internal management
B)   investors
C)   creditors
D)   security analysts

Question 13

Discuss the financial reporting model in the FASB Conceptual Framework.

Accepted Answer

The answer of Discuss the financial reporting model in the...

Question 14

Management's stewardship is to provide information about how a company's cash flows cause changes in the company's resources and claim's.

Accepted Answer

A) True 
 B)False

Question 15

How is the information concerning the company's net income, comprehensive income and their components useful to external users?

Accepted Answer

The answer of How is the information concerning the company's...

Question 16

Which of the following statements is not true with regard to the benefits derived from the FASB's conceptual framework of accounting?

Accepted Answer

A)   It serves as a guide in establishing standards for the FASB.
B)   The Statements of Financial Accounting Concepts is the primary source of GAAP for accountants.
C)   It establishes the objectives of financial reporting.
D)   It enhances comparability between different company's financial statements.

Question 17

Below is a list of the qualitative characteristics identified by GAAP. Following the list is a series of descriptive phrases.

Required:
Match each characteristic with the appropriate phrase.

Accepted Answer

The answer of Below is a list of the qualitative...

Question 18

What three phases were active under the Joint FASB and IASB convergence project but were put on hold to focus on other convergence topics?

Accepted Answer

A)   Reporting entity, measurement, and presentation and disclosure
B)   Framework for a GAAP hierarchy, elements and recognition , and objective and qualitative characteristics
C)   Elements and recognition, measurement, presentation and disclosure
D)   Measurement, reporting entity, and elements and recognition

Question 19

Relevance and faithful representation are the ultimate objectives of accounting information.

Accepted Answer

A) True 
 B)False

Question 20

The IASB/FASB tentative joint conceptual framework includes two "fundamental qualitative characteristics" that must be present for financial reporting information to be useful.
Required:
Name and describe the two joint conceptual framework fundamental characteristics.

Accepted Answer

The answer of The IASB/FASB tentative joint conceptual framework includes...

Exam 2: Financial Reporting: Its Conceptual Framework

According to GAAP, which is not a specific objective?

The joint IASB and FASB boards identified several "enhancing" decision useful characteristics of financial information including

Accrual accounting relates the financial effects of a company's transactions

Three phases of the convergence project were put on hold they were elements and recognition, measurement, and presentation and disclosure.

What is the ultimate objective of accounting information?

Oil and gas reserves information would be included within the financial statements.

Accounting principles are theories, truths, and propositions that service as the basis for financial accounting and reporting.

Which of the following is a specific objective of financial reporting?

Information about comprehensive income is useful to external users for all of the following purposes except

The task of developing the conceptual framework was so enormous that the FASB had to divide it into several projects. Required: Identify each of the projects by name and provide a brief description of their results.

Using an allowance method of accounting to recognize uncollectible accounts receivable is an application of which accounting convention?

In its "Objectives of Financial Reporting by Business Enterprises" the FASB identified a variety of primary users including all of the following except

Discuss the financial reporting model in the FASB Conceptual Framework.

Management's stewardship is to provide information about how a company's cash flows cause changes in the company's resources and claim's.

How is the information concerning the company's net income, comprehensive income and their components useful to external users?

Which of the following statements is not true with regard to the benefits derived from the FASB's conceptual framework of accounting?

Below is a list of the qualitative characteristics identified by GAAP. Following the list is a series of descriptive phrases. Required: Match each characteristic with the appropriate phrase.

What three phases were active under the Joint FASB and IASB convergence project but were put on hold to focus on other convergence topics?

Relevance and faithful representation are the ultimate objectives of accounting information.

The IASB/FASB tentative joint conceptual framework includes two "fundamental qualitative characteristics" that must be present for financial reporting information to be useful. Required: Name and describe the two joint conceptual framework fundamental characteristics.