FAR - Mod 1.1

Which of the following statements best describes an operating procedure for issuing FASB Accounting Standards Update? A. An Accounting Standards Update is issued only after a majority vote by the members of the FASB B. A new Accounting Standards Update can be rescinded by a majority vote of the AICPA membership C. The emerging issues task force must approve a discussion memorandum before it is disseminated to the public D. The exposure draft is modified per public opinion before issuing the discussion memorandum

A. An Accounting Standards Update is issued only after a majority vote by the members of the FASB

Interim financial reporting should be viewed primarily in which of the following ways: A. As reporting for an integral part of an annual period B. As reporting under a comprehensive basis of accounting other than GAAP/IFRS C. As if the interim period were an annual accounting period D. As useful only if activity is spread evenly throughout the year

A. As reporting for an integral part of an annual period

According the FASB and IASB conceptual frameworks, useful information must exhibit the fundamental qualitative characteristics of: A. Faithful representation and relevance B. Neutrality and verifiability C. Comparability and materiality D. Understandability and timeliness

A. Faithful representation and relevance

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: A. In the period incurred B. At the date of the royalty agreement expired. C. In the period paid. D. At the date the royalty agreement began

A. In the period incurred

According to the FASB and IASB conceptual frameworks, the quality of information that helps users forecast future outcomes is: A. Predictive value B. Neutrality C. Confirming Value D. Representational faithfulness

A. Predictive value

Which of the following is not defined in FASB Statement of Financial Accounting Concepts Number 7 as one of the five elements of present value (or economic value) measurement used to establish the value of assets or liabilities using cash flow information? A. Risk Tolerance of Management B. Estimate of Future Cash Flow. C. Time Value of Money. D. Timing Variations of Future Cash Flows.

A. Risk Tolerance of Management

A U.S. 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: A. FASB Statements of Financial Accounting Standards B. FASB Accounting Standards Codification C. FASB Statements of Financial Accounting Concepts D. International Financial Reporting Standards

B. FASB Accounting Standards Codification

According to the FASB and IASB conceptual frameworks, completeness is an ingredient of Relevance or Faithful Representation A. Yes / Yes B. No / Yes C. No / No D. Yes / No

B. No, Yes

According to the FASB and IASB conceptual frameworks, to be relevant, information should have which of the following? A. Neutrality B. Predictive value C. Verifiability D. Completeness

B. Predictive value

According to the FASB conceptual framework, the process of reporting an item in the financial statements of an entity is: A. Realization B. Recognition C. Allocation D. Matching

B. Recognition

Conceptually, interim financial statements can be described as emphasizing which of the following enhancing qualitative characteristics: A. Verifiability B. Timeliness C. Relevance D. Faithful Representation

B. Timeliness

Which of the following characteristics enhances relevance and faithful representation? A. Predictive value B. Timeliness C. Materiality D. Neutrality

B. Timeliness

What is the primary objective of financial reporting? A. To provide economic information that is comprehensible to all users B. To provide information that is useful for economic decision making C. To provide forecasts for future cash flows and financial performance D. To provide management with an accurate evaluation of their financial performance

B. To provide information that is useful for economic decision making

Which of the following defines equity as it relates to a business entity? A. Net revenues B. Total assets less total liabilities C. Total assets and liabilities D. Total revenues less total expenses

B. Total assets less total liabilities

The FASB amends the Accounting Standards Codification through the issuance of: A. Staff Accounting Bulletins B. Statements of Financial Accounting Standards C. Accounting Standards Updates D. Technical Bulletins

C. Accounting Standards Updates

According to the FASB conceptual framework, which of the following is an essential characteristic of an asset: A. An asset is tangible B. The claims to an asset's benefits are legally enforceable C. An asset provides future benefits D. An asset is obtained at a cost

C. An asset provides future benefits

Which of the following is the most authoritative source of U.S. GAAP? A. FASB Statements of Financial Accounting Concepts B. FASB Statements of Financial Accounting Standards C. FASB Accounting Standards Codification D. International Financial Reporting Standards

C. FASB Accounting Standards Codification

According to the FASB and IASB conceptual frameworks, neutrality is an ingredient of: A. Relevance B. Timeliness C. Faithful representation D. Comparability

C. Faithful representation

Which of the following is true regarding the comparison of managerial to financial accounting? A. The emphasis on managerial accounting is relevance and the emphasis on financial accounting is timeliness. B. Managerial accounting has a past focus and financial accounting has a future focus. C. Managerial accounting need *not* follow generally accepted accounting principals (GAAP) while financial accounting must follow them. D. Managerial accounting is generally more precise.

C. Managerial accounting need *not* follow generally accepted accounting principals (GAAP) while financial accounting must follow them.

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? A. Periodicity B. Economic entity. C. Monetary unit. D. Going concern

C. Monetary unit

Users of the financial statements frequently rely upon the data displayed in the financial statements to predict future financial outcomes. Financial accounting concepts refer to the characteristic of accounting information that provides predictive value to the users as the quality of: A. Understandability B. Faithful representation C. Relevance D. Comparability

C. Relevance

According to the FASB conceptual framework, an entity's revenue may result from: A. A decrease in an asset from primary operations B. An increase in an asset from incidental transactions C. An increase in a liability from incidental transactions D. A decrease in a liability from primary operations

D. A decrease in a liability from primary operations

Financial information provided in general purpose financial reports does not include information about: A. The claims against the entity B. How effectively and efficiently the entity's governing board has discharged its responsibility to use the entity's resources. C. The resources of the entity. D. How effectively and efficiently the entity's shareholders' have discharged their responsibility to use the entity's resources.

D. How effectively and efficiently the entity's shareholders' have discharged their responsibility to use the entity's resources.

On December 31, Brooks Co. decided to end operations and dispose of its assets within three months. At December 31, the net realizable value of the equipment was below historical cost. What is the appropriate measurement basis for equipment included in Brooks' December 31 balance sheet? A. Historical cost B. Current replacement cost C. Current reproduction cost D. Net realizable value

D. Net realizable value

According to the FASB and IASB conceptual frameworks, what does the concept of faithful representation include? A. Materiality B. Certainty C. Effectiveness D. Neutrality

D. Neutrality

According to the FASB and IASB conceptual frameworks, the primary users of financial reports include all of the following, except: A. Lenders B. Creditors C. Investors D. Regulators

D. Regulators

According to the FASB and IASB conceptual frameworks, which of the following correctly pairs a fundamental qualitative characteristic of useful information with one of its components? A. Relevance and timeliness B. Faithful representation and predictive value C. Faithful representation and verifiability D. Relevance and materiality

D. Relevance and materiality

According to the FASB conceptual framework, certain assets are reported in financial statements 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? A. Net realizable value B. Historical cost C. Current market value D. Replacement cost

D. Replacement cost

Materiality and relevance are both defined by: A. The perceived benefits to be denied that exceed the perceived costs associated with it. B. The consistency in the application of methods over time. C. Quantitative criteria set by the Financial Accounting Standards Board D. What influences or makes a difference to a decision maker

D. What influences or makes a difference to a decision maker

According to the FASB and IASB conceptual frameworks, predictive value is an ingredient of Relevance and/or Faithful representation: A. No / No B. No / Yes C. Yes / Yes D. Yes / No

D. Yes / No