FAR 1 - M1 - MCQ
FASB Accounting Standards Codification
A US public company needs guidance in accounting for and reporting a complex derivative transaction that it entered into with a European subsidiary. This company is most likely to find the appropriate guidance in the: -FASB Accounting Standards Codification. -FASB Statements of Financial Accounting Concepts. -FASB Statements of Financial Accounting Standards. -International Financial Reporting Standards.
A decrease in a liability from primary operations
According to FASB, an entity's revenue may results from: -A decrease in an asset from primary operations. -An increase in a liability from incidental transactions. -A decrease in a liability from primary operations. -An increase in an asset from incidental transactions.
An asset provides future benefits RULE: According to FASB, assets are probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events.
According to FASB, which of the following is an essential characteristic of an asset? -An asset is obtained at a cost. -The claims to an asset's benefits are legally enforceable. -An asset provides future benefits. -An asset is tangible.
Unrealized holding loss from available-for-sale securities
According to FASB, which of the following would cause earnings to differ from comprehensive income? -Realized gain from sale of held-to-maturity security. -Dividends declared but not paid. -Unrealized holding gain from trading securities. -Unrealized holding loss from available-for-sale securities.
Faithful Representation
According to the FASB and IASB conceptual frameworks, completeness is an ingredient of: -Relevance. -Faithful Representation. -Both -Neither.
Relevance
According to the FASB and IASB conceptual frameworks, one of the fundamental qualitative characteristics of useful financials is: -Verifiability. -Comparability. -Timeliness. -Relevance.
Provide financial info that is useful to primary users.
According to the FASB and IASB conceptual frameworks, the objective of general purpose financial reporting is to: -Provide financial info that is useful to primary users. -Report on how effectively and efficiently management has used the entity's resources. -Comply with the need for conservatism. -Comply with GAAP.
Regulators
According to the FASB and IASB conceptual frameworks, the primary users of financial reports include all of the following, except: -Lenders. -Investors. -Creditors. -Regulators.
Predictive Value
According to the FASB and IASB conceptual frameworks, the quality of info that helps users forecast future outcomes is: -Predictive value. -Neutrality. -Representational faithfulness. -Confirming value.
Predictive value
According to the FASB and IASB conceptual frameworks, to be relevant, info should have which of the following: -Verifiability. -Completeness. -Neutrality. -Predictive value.
Faithful representation and relevance
According to the FASB and IASB conceptual frameworks, useful information must exhibit the fundamental qualitative characteristics of: -Understandability and timeliness. -Neutrality and verifiability. -Faithful representation and relevance. -Comparability and materiality.
Timeliness.
According to the FASB and IASB conceptual frameworks, which of the following is an enhancing qualitative characteristic? -Timeliness. -Neutrality. -Completeness. -Materiality.
Faithful representation
According to the FASB and IASB, neutrality is an ingredient of: -Relevance. -Faithful representation. -Timeliness. -Comparability.
Relevance
According to the FASB and IASB, predictive value is an ingredient of: -Relevance. -Faithful Representation. -Both. -Neither.
Neutrality.
According to the FASB and IASB, what does the concept of faithful representation include? -Neutrality. -Materiality. -Certainty. -Effectiveness.
Relevance and materiality.
According to the FASB and IASB, which of the following correctly pairs a fundamental qualitative characteristic of useful info with one of its components? -Faithful representation and predictive value. -Faithful representation and verifiability. -Relevance and materiality. -Relevance and timeliness.
Replacement cost
According to the FASB conceptual framework, certain assets are reported in financials at the amount of cash or its equivalent that would have to be paid if the same or equivalent assets were acquired currently. What is the name of the reporting concept?
Recognition
According to the FASB conceptual framework, the process of reporting an item in the financial statements of an entity is: -Recognition. -Realization. -Allocation. -Matching.
Present value of future cash flows
According to the FASB conceptual framework, which of the following attributes would not be used to measure inventory? -Historical cost. -Present value of future cash flows. -Replacement cost. -Net realizable value.
Depreciated equipment was sold in exchange for a N/R
According to the FASB conceptual framework, which of the following statements conforms to the realization concept? -Cash was collected on A/R. -Depreciated equipment was sold in exchange for a N/R. -Equipment depreciation was assigned to a production department and then to product unit costs. -Product unit costs were assigned to COGS when the units were sold.
The needs of the users of the information
According to the FASB, the objectives of financial reporting for business enterprises are based on: -The need for conservatism. -GAAP. -Reporting on management's stewardship. -The needs of the users of the information.
Going concern
According to the IASB conceptual framework, which of the following is an underlying assumption of the financials preparation and presentation? -Historical cost. -Peridocity. -Monetary unit. -Going concern.
Both
Advertising costs may be accrued or deferred to provide an appropriate expense in each period for: -Interim financial reporting. -Year-end financial reporting. -Both. -Neither.
Timeliness
Conceptually, interim financials can be described as emphasizing which of the following enhancing qualitative characteristics? -Timeliness. -Verifiability. -Relevance. -Faithful representation.
Currently reported NI: Financial Capital Comprehensive income: Financial Capital
FASB explains both financial and physical maintenance concepts. Which capital maintenance concept is applied to currently reported net income, and which is applied to comprehensive income? -Currently reported NI: Financial/Physical capital -Comprehensive income: Financial/Physical capital
How effectively and efficiently the entity's shareholders' have discharged their responsibility to use the entity's resources.
Financial info provided in general purpose financial reports does not include info about: -How effectively and efficiently the entity's governing board has discharged its responsibility to use the entity's resources. -The claims against the entity. -The resources of the entity. -How effectively and efficiently the entity's shareholders' have discharged their responsibility to use the entity's resources.
Investors and creditors and their advisers
General purpose external financial reporting of a corporation focuses primarily on the needs of which of the following users? -The management of the corporation. -Regulatory and taxing authorities. -Investors and creditors and their advisers. -The board of directors of the corporation.
As reporting for an integral part of an annual period
Interim financial reporting should be viewed primarily in which of the following ways? -As useful only if activity is spread evenly throughout the year. -As reporting for an integral part of an annual period. -As if the interim period were an annual accounting period. -As reporting under a comprehensive basis of accounting other than GAAP/IFRS.
What influences or makes a difference to a decision maker
Materiality and relevance are both defined by: -Quantitative criteria set by the FASB. -What influences or makes a difference to a decision maker. -The perceived benefits to be denied that exceed the perceived costs associated with it. -The consistency in the application of methods over time.
Net Realizable Value
On Dec 31, Brooks Co. decided to end operations and dispose of its assets within 3 months. At Dec 31, the NRV of the equipment was below historical cost. What is the appropriate measurement basis for equipment included in Brooks' Dec 31 BS? -Current reproduction cost. -Historical cost. -NRV. -Current replacement cost.
In the period incurred
Under a royalty agreement with another company, Wand Co. will pay royalties for the assignment of a patent for three years. The royalties paid should be reported as expense: -In the period paid. -At the date the royalty agreement expired. -In the period incurred. -At the date the royalty agreement began.
Relevance
Users of financials frequently rely upon the data displayed in the financials to predict future financial outcomes. Financial accounting concepts refer to the characteristic of accounting info that provides predictive value to users as the quality of: -Faithful representation. -Comparability. -Understandability. -Relevance.
Monetary unit
Which of the following assumptions means that money is the common denominator of economic activity and provides an appropriate basis for accounting measurement and analysis? -Economic entity. -Periodicity. -Going concern. -Monetary unit.
Timeliness
Which of the following characteristics enhances relevance and faithful representation? -Predictive Value. -Timeliness. -Neutrality. -Materiality.
Relevance
Which of the following characteristics of accounting info primarily allows users of financials to generate predictions about an organization? -Timeliness. -Reliability. -Relevance. -Nuetrality.
A proposed accounting standards update
Which of the following documents is typically issued as part of the due-process activities of the FASB for amending the FASB Accounting Standards Codification? -A proposed statement of position. -A proposed accounting research bulletin. -A proposed accounting standards update. -A proposed staff accounting bulletin.
Risk Tolerance of Management
Which of the following is not defined in FASB Statement of Financial Accounting Concepts Number 7 as one of the five elements of PV (or economic value) measurement used to establish the value of assets or liabilities using cash flow information? -Estimate of Future Cash Flow. -Time Value of Money. -Risk Tolerance of Management. -Timing Variations of Future Cash Flows.
FASB Accounting Standards Codification
Which of the following is the most authoritative source of US GAAP? -FASB Statements of Accounting Standards. -FASB Statements of Financial Accounting Concepts. -IFRS -FASB Accounting Standards Codification.
Managerial account need not follow GAAP while financial accounting must
Which of the following is true regarding the comparison of managerial to financial accounting? -The emphasis on managerial accounting is relevance and the emphasis on financial accounting is timeliness. -Managerial accounting is generally more precise. -Managerial account need not follow GAAP while financial accounting must. -Managerial accounting has a past focus and financial accounting has a future focus.
An Accounting Standards Update is issued only after a majority vote by the members of the FASB
Which of the following statements best describes an operating procedure for issuing FASB Accounting Standards Update? -The emerging issues task force must approve a discussion memorandum before it is disseminated to the public. -The exposure draft is modified per public opinion before issuing the discussion memorandum. -A new Accounting Standards Update can be rescinded by a majority vote of the AICPA membership. -An Accounting Standards Update is issued only after a majority vote by the members of the FASB.
