Question 1

List and briefly describe the five measurement attributes used commonly in current GAAP.

Accepted Answer

a. Historical cost: the amount given or ...

Question 2

The possibility that the capital markets' focus on periodic profits may tempt a company's management to bend or even break accounting rules to inflate reported net income is an example of:

Accepted Answer

A)   An ethical dilemma.
B)   An accounting theory issue.
C)   A technical accounting issue.
D)   An auditor's responsibility to inform the SEC.E) B) and C)
F) A) and D)

Question 3

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Verifiability

Accepted Answer

A)  Implies consensus among different observers.
B)  Assumes an entity will continue to operate indefinitely.
C)  Ignores the possibility of inflation.
D)  Assumes all transactions can be identified with a particular entity.
E)  Requires reporting the financial life of an entity in discrete time frames.F) All of the above
G) B) and C)

Question 4

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Conservatism

Accepted Answer

A)  Its EITF Issues are GAAP when entered in the Accounting Standards Codification.
B)  It is the national organization for CPAs in the United States.
C)  It has the authority to set U.S. accounting standards.
D)  It established GAAP before the FASB.
E)  Undermines representational faithfulness by being inconsistent with neutrality.F) None of the above
G) C) and D)

Question 5

Auditors play an important role in the resource allocation process by adding credibility to financial statements.

Accepted Answer

A) True 
 B)False

Question 6

The conceptual framework's qualitative characteristic of faithful representation includes:

Accepted Answer

A)   Predictive value.
B)   Neutrality.
C)   Confirmatory value.
D)   Timeliness.E) B) and C)
F) A) and B)

Question 7

Land was acquired in 2018 for a future building site at a cost of $40,000. The assessed valuation for tax purposes is $27,000, a qualified appraiser placed its value at $48,000, and a recent firm offer for the land was for a cash payment of $46,000. The land should be reported in the financial statements at:

Accepted Answer

A)   $40,000.
B)   $27,000.
C)   $46,000.
D)   $48,000.E) C) and D)
F) All of the above

Question 8

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Revenues

Accepted Answer

A)  Net outflows from peripheral transactions.
B)  Probable future economic benefits controlled by an entity.
C)  Results if an asset is sold for more than book value.
D)  Increases in equity from the sale of goods and/or services.
E)  All changes in equity except owner transactions.F) All of the above
G) C) and D)

Question 9

The primary focus for financial accounting information is to provide information useful for:

Accepted Answer

A)   Option a.
B)   Option b.
C)   Option c.
D)   Option d.E) All of the above
F) A) and D)

Question 10

In a recent annual report, Apple Computer reported the following in one of its disclosure notes: "Warranty Expense: The Company provides currently for the estimated cost for product warranties at the time the related revenue is recognized." This note exemplifies Apple's use of:

Accepted Answer

A)   Conservatism.
B)   Matching.
C)   Realization principle.
D)   Economic entity.E) B) and C)
F) A) and D)

Question 11

In IFRS, the conceptual framework indicates appropriate accounting when a more specific accounting standard does not apply.

Accepted Answer

A) True 
 B)False

Question 12

Accounting for stock-based compensation is an area in which the FASB has received little political interference.

Accepted Answer

A) True 
 B)False

Question 13

Mega Loan Company has very stringent credit requirements and, accordingly, has negligible losses from uncollectible accounts. The company's independent accountants did not protest when, contrary to GAAP, the company recorded bad debt expense only when specific accounts were determined to be uncollectible, rather than use an allowance for uncollectible accounts. The concept demonstrated is:

Accepted Answer

A)   Comparability.
B)   Faithful representation.
C)   Cost-effectiveness.
D)   Materiality.E) All of the above
F) C) and D)

Question 14

The conceptual framework's recognition and measurement concepts recognize which one of the following as an assumption?

Accepted Answer

A)   Going concern.
B)   Historical cost.
C)   Full disclosure.
D)   Realization.E) B) and C)
F) All of the above

Question 15

Listed below are ten organizations followed by a list of phrases that describe or characterize the organizations. Match each phrase with the correct organization.
-APB

Accepted Answer

A)  FASB's predecessor.
B)  Primary national organization of accountants working in industry.
C)  Regulates the financial reporting for public companies.
D)  The FASB's parent organization.
E)  National organization of certified public accountants.F) Sets accounting standards in the United States.G) Provides timely responses to financial reporting issues.H) Advises the FASBI) Sets global accounting standards.J) Establishes auditing standards in the US for public companies.K) C) and H)
L) A) and I)

Question 16

Surefeet Corporation changed its inventory valuation method. Which characteristic is jeopardized by this change?

Accepted Answer

A)   Comparability.
B)   Representational faithfulness.
C)   Consistency.
D)   Feedback value.E) A) and B)
F) A) and C)

Question 17

Contrast the role of the conceptual framework in U.S. GAAP and IFRS.

Accepted Answer

The conceptual frameworks in U.S. GAAP a...

Question 18

The matching principle is:

Accepted Answer

A)   A valuation method.
B)   An expense recognition accounting principle.
C)   A cash basis reporting principle.
D)   An asset classification procedure.E) A) and B)
F) All of the above

Question 19

SFAC 8 of the conceptual framework focuses on:

Accepted Answer

A)   Objective and qualitative characteristics.
B)   Presentation and disclosure.
C)   Recognition and measurement.
D)   Elements of financial statements.E) A) and B)
F) C) and D)

Question 20

Which of the following groups is not among financial intermediaries?

Accepted Answer

A)   Mutual fund managers.
B)   Financial analysts.
C)   CPAs.
D)   Credit rating organizations.E) A) and C)
F) B) and D)

Exam 1: Environment and Theoretical Structure of Financial Accounting

List and briefly describe the five measurement attributes used commonly in current GAAP.

Correct Answer
verified
a. Historical cost: the amount given or ...
View Answer

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Verifiability

Correct Answer
verified

The possibility that the capital markets' focus on periodic profits may tempt a company's management to bend or even break accounting rules to inflate reported net income is an example of:

Correct Answer
verified

In IFRS, the conceptual framework indicates appropriate accounting when a more specific accounting standard does not apply.

Correct Answer
verified

The conceptual framework's recognition and measurement concepts recognize which one of the following as an assumption?

Correct Answer
verified

Surefeet Corporation changed its inventory valuation method. Which characteristic is jeopardized by this change?

Correct Answer
verified

The primary focus for financial accounting information is to provide information useful for:

Correct Answer
verified

Contrast the role of the conceptual framework in U.S. GAAP and IFRS.

Correct Answer
verified
The conceptual frameworks in U.S. GAAP a...
View Answer

Listed below are ten organizations followed by a list of phrases that describe or characterize the organizations. Match each phrase with the correct organization. -APB

Correct Answer
verified

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Conservatism

Correct Answer
verified

SFAC 8 of the conceptual framework focuses on:

Correct Answer
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The matching principle is:

Correct Answer
verified

Correct Answer
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The conceptual framework's qualitative characteristic of faithful representation includes:

Correct Answer
verified

Auditors play an important role in the resource allocation process by adding credibility to financial statements.

Correct Answer
verified

In a recent annual report, Apple Computer reported the following in one of its disclosure notes: "Warranty Expense: The Company provides currently for the estimated cost for product warranties at the time the related revenue is recognized." This note exemplifies Apple's use of:

Correct Answer
verified

Which of the following groups is not among financial intermediaries?

Correct Answer
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Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Revenues

Correct Answer
verified

Accounting for stock-based compensation is an area in which the FASB has received little political interference.

Correct Answer
verified

Correct Answer
verified

Exam 1: Environment and Theoretical Structure of Financial Accounting

List and briefly describe the five measurement attributes used commonly in current GAAP.

Correct Answerverifieda. Historical cost: the amount given or ...View AnswerShow Answer

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Verifiability

Correct AnswerverifiedShow Answer

The possibility that the capital markets' focus on periodic profits may tempt a company's management to bend or even break accounting rules to inflate reported net income is an example of:

Correct AnswerverifiedShow Answer

In IFRS, the conceptual framework indicates appropriate accounting when a more specific accounting standard does not apply.

Correct AnswerverifiedShow Answer

The conceptual framework's recognition and measurement concepts recognize which one of the following as an assumption?

Correct AnswerverifiedShow Answer

Surefeet Corporation changed its inventory valuation method. Which characteristic is jeopardized by this change?

Correct AnswerverifiedShow Answer

The primary focus for financial accounting information is to provide information useful for:

Correct AnswerverifiedShow Answer

Contrast the role of the conceptual framework in U.S. GAAP and IFRS.

Correct AnswerverifiedThe conceptual frameworks in U.S. GAAP a...View AnswerShow Answer

Listed below are ten organizations followed by a list of phrases that describe or characterize the organizations. Match each phrase with the correct organization. -APB

Correct AnswerverifiedShow Answer

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Conservatism

Correct AnswerverifiedShow Answer

SFAC 8 of the conceptual framework focuses on:

Correct AnswerverifiedShow Answer

The matching principle is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The conceptual framework's qualitative characteristic of faithful representation includes:

Correct AnswerverifiedShow Answer

Auditors play an important role in the resource allocation process by adding credibility to financial statements.

Correct AnswerverifiedShow Answer

In a recent annual report, Apple Computer reported the following in one of its disclosure notes: "Warranty Expense: The Company provides currently for the estimated cost for product warranties at the time the related revenue is recognized." This note exemplifies Apple's use of:

Correct AnswerverifiedShow Answer

Which of the following groups is not among financial intermediaries?

Correct AnswerverifiedShow Answer

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Revenues

Correct AnswerverifiedShow Answer

Accounting for stock-based compensation is an area in which the FASB has received little political interference.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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a. Historical cost: the amount given or ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The conceptual frameworks in U.S. GAAP a...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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