Question 1

Briefly describe the materiality constraint.

Accepted Answer

Materiality - Information is material if...

Question 2

The FASB's conceptual framework's qualitative characteristics of accounting information include:

Accepted Answer

A)  Historical cost.
B)  Realization.
C)  Reliability.
D)  Full disclosure.E) A) and B)
F) B) and D)

Question 3

Gains are:

Accepted Answer

A)  Inflows from selling a product or service to a customer.
B)  Increases in equity resulting from transfers of assets to the company from owners.
C)  Increases in equity from peripheral transactions of an entity.
D)  None of these.E) None of the above
F) A) and B)

Question 4

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 C)
F) C) and D)

Question 5

Financial reporting objectives state that financial statements should be comprehensible to

Accepted Answer

A)  Accounting experts.
B)  Those who have a reasonable understanding of business and economic activities and are willing to study the information.
C)  Large investors.
D)  The average investor with average communication skills and average training and experience.E) B) and C)
F) A) and D)

Question 6

To meet the needs of full disclosure, companies use supplemental information, including:

Accepted Answer

A)  Parenthetical comments or modifying comments placed on the face of the financial statements.
B)  Disclosure notes conveying additional insights about company operations, accounting principles, contractual agreements, and pending litigation.
C)  Supplemental financial statements that report more detailed information than is shown in the primary financial statements.
D)  All of these are correct.E) C) and D)
F) B) and D)

Question 7

Financial reporting objectives do not include providing information:

Accepted Answer

A)  About resources, obligations, and changes.
B)  To determine market values, assess profit potential, and evaluate management.
C)  To assess the amounts and timing of prospective cash receipts.
D)  To make rational investment, credit, and similar decisions.E) All of the above
F) None of the above

Question 8

Pronouncements issued by the Committee on Accounting Procedures:

Accepted Answer

A)  Dealt with specific accounting and reporting problems.
B)  Were based on exposure drafts and public comment letters.
C)  Originated from congressional studies and SEC directives.
D)  Were the outcome of research studies and a theoretical framework.E) All of the above
F) None of the above

Question 9

The primary professional organization for those accountants working in industry is the:

Accepted Answer

A)  AAA
B)  AICPA
C)  IIA
D)  IMAE) None of the above
F) All of the above

Question 10

A rules-based approach to standard setting stresses professional judgment as opposed to following a list of rules.

Accepted Answer

A) True 
 B)False

Question 11

Land was acquired in 2009 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) All of the above
F) B) and D)

Question 12

The conceptual framework's recognition and measurement concepts recognize which of the following as an assumption, rather than a principle?

Accepted Answer

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

Question 13

Primecoat could get its annual financial statements two days earlier if it shifted substantial human resources from other operations to the annual report project. Management decided the value of the earlier report was not worth the added commitment of resources. The concept demonstrated is:

Accepted Answer

A)  Timeliness.
B)  Materiality.
C)  Relevance.
D)  Cost effectiveness.E) All of the above
F) A) and B)

Question 14

Determining fair value by calculating the present value of future cash flows is a level 1 type of input.

Accepted Answer

A) True 
 B)False

Question 15

The conceptual framework's qualitative characteristic of reliability includes:

Accepted Answer

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

Question 16

The assumption that in the absence of contrary information a business entity will continue indefinitely is the:

Accepted Answer

A)  Periodicity assumption.
B)  Entity assumption.
C)  Going concern assumption.
D)  Historical cost assumption.E) A) and B)
F) C) and D)

Question 17

The International Accounting Standards Board:

Accepted Answer

A)  Was the predecessor to the IASC.
B)  Can overrule the FASB when their policies disagree.
C)  Promotes the use of high-quality, understandable global accounting standards.
D)  Has its headquarters in Geneva.E) B) and D)
F) B) and C)

Question 18

Compute the cash balance at the end of the first year for Tri Fecta.

Accepted Answer

The answer of Compute the cash balance at the end...

Question 19

What is the EITF and what is its purpose?

Accepted Answer

The Emerging Issues Task Force (EITF) ac...

Question 20

The best argument in support of historical cost information is:

Accepted Answer

A)  Relevance.
B)  Predictive quality for future cash flows.
C)  Materiality.
D)  Verifiability.E) None of the above
F) A) and B)

Exam 1: Environment and Theoretical Structure of Financial Accounting

Briefly describe the materiality constraint.

Correct Answer
verified
Materiality - Information is material if...
View Answer

Compute the cash balance at the end of the first year for Tri Fecta.

Correct Answer
verified

To meet the needs of full disclosure, companies use supplemental information, including:

Correct Answer
verified

Gains are:

Correct Answer
verified

The FASB's conceptual framework's qualitative characteristics of accounting information include:

Correct Answer
verified

Determining fair value by calculating the present value of future cash flows is a level 1 type of input.

Correct Answer
verified

The conceptual framework's qualitative characteristic of reliability includes:

Correct Answer
verified

Financial reporting objectives state that financial statements should be comprehensible to

Correct Answer
verified

Primecoat could get its annual financial statements two days earlier if it shifted substantial human resources from other operations to the annual report project. Management decided the value of the earlier report was not worth the added commitment of resources. The concept demonstrated is:

Correct Answer
verified

The best argument in support of historical cost information is:

Correct Answer
verified

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

Correct Answer
verified

The primary professional organization for those accountants working in industry is the:

Correct Answer
verified

Pronouncements issued by the Committee on Accounting Procedures:

Correct Answer
verified

The conceptual framework's recognition and measurement concepts recognize which of the following as an assumption, rather than a principle?

Correct Answer
verified

A rules-based approach to standard setting stresses professional judgment as opposed to following a list of rules.

Correct Answer
verified

Correct Answer
verified

What is the EITF and what is its purpose?

Correct Answer
verified
The Emerging Issues Task Force (EITF) ac...
View Answer

The International Accounting Standards Board:

Correct Answer
verified

The assumption that in the absence of contrary information a business entity will continue indefinitely is the:

Correct Answer
verified

Financial reporting objectives do not include providing information:

Correct Answer
verified

Exam 1: Environment and Theoretical Structure of Financial Accounting

Briefly describe the materiality constraint.

Correct AnswerverifiedMateriality - Information is material if...View AnswerShow Answer

Compute the cash balance at the end of the first year for Tri Fecta.

Correct AnswerverifiedShow Answer

To meet the needs of full disclosure, companies use supplemental information, including:

Correct AnswerverifiedShow Answer

Gains are:

Correct AnswerverifiedShow Answer

The FASB's conceptual framework's qualitative characteristics of accounting information include:

Correct AnswerverifiedShow Answer

Determining fair value by calculating the present value of future cash flows is a level 1 type of input.

Correct AnswerverifiedShow Answer

The conceptual framework's qualitative characteristic of reliability includes:

Correct AnswerverifiedShow Answer

Financial reporting objectives state that financial statements should be comprehensible to

Correct AnswerverifiedShow Answer

Primecoat could get its annual financial statements two days earlier if it shifted substantial human resources from other operations to the annual report project. Management decided the value of the earlier report was not worth the added commitment of resources. The concept demonstrated is:

Correct AnswerverifiedShow Answer

The best argument in support of historical cost information is:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The primary professional organization for those accountants working in industry is the:

Correct AnswerverifiedShow Answer

Pronouncements issued by the Committee on Accounting Procedures:

Correct AnswerverifiedShow Answer

The conceptual framework's recognition and measurement concepts recognize which of the following as an assumption, rather than a principle?

Correct AnswerverifiedShow Answer

A rules-based approach to standard setting stresses professional judgment as opposed to following a list of rules.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What is the EITF and what is its purpose?

Correct AnswerverifiedThe Emerging Issues Task Force (EITF) ac...View AnswerShow Answer

The International Accounting Standards Board:

Correct AnswerverifiedShow Answer

The assumption that in the absence of contrary information a business entity will continue indefinitely is the:

Correct AnswerverifiedShow Answer

Financial reporting objectives do not include providing information:

Correct AnswerverifiedShow Answer

Correct Answer
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Materiality - Information is material if...
View Answer

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The Emerging Issues Task Force (EITF) ac...
View Answer

Correct Answer
verified

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Correct Answer
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