6

Question 1

The financial accounting information is directed toward the common needs of users and is independent of presumptions about particular needs and desires of specific users

Answer 1

NEUTRALITY

Question 2

It is the result of the standard of adequate disclosure.

Answer 2

COMPLETENESS

Question 3

It is the ability to bring together for the purpose of noting similarities and dissimilarities

Answer 3

COMPARABILITY

Question 4

The effects of transactions and other events are recognized when they occur and not as cash or its equivalent is received or paid, and they are recorded and reported in the financial statements of the periods to which they relate

Answer 4

ACCRUAL

Question 5

Which of the following is incorrect?
a. In accordance with the unit of measure assumption, accountants normally revise the amounts to reflect the changing purchasing power of money due to inflation or deflation.
b. Expenses are matched with revenues, not the reverse.
c. In accordance with the going concern assumption, the life of a business is presumed to be indefinite.
d. The accrual method, which builds directly on the revenue and matching principles, ignores the timing of cash receipts or payments when determining when to recognize revenue or expenses

Answer 5

A

Question 6

It is the capacity of information to make a difference in decision by helping users evaluate past, present or future events, or confirming, or correcting, their past evaluations.

Answer 6

RELEVANCE

Question 7

It is the exercise of care and caution in dealing with uncertainties in measurement so as not to overstate assets and income and not understate liabilities and expenses.

Answer 7

PRUDENCE

Question 8

If a business is not being sold or closed, the amounts reported in the accounts for assets used in the business operations are based on the cost of the assets. This practice is justified by

Answer 8

GOIMG CONCERN

Question 9

Financial reports communicated after an accounting decision has been made defeat the primary purpose of which characteristic?

Answer 9

TIMELINESS

Question 10

Historically, managers, investors and accountants have generally preferred that possible errors in measurement be in the direction of understatement of net income and net assets.

Answer 10

CONSERVATISM

Question 11

Financial reporting is concerned only with information that is significant enough to affect evaluation or decision.

Answer 11

MATERIALITY

Question 12

This accounting concept justifies the usage of accruals and deferrals

Answer 12

GOING CONCERN

Question 13

The financial information must be comprehensible or intelligible if it is to be useful.

Answer 13

UNDERSTANDABILITY

Question 14

In the event of conflict between the economic substance of a transaction and its legal form, the economic substance shall prevail. This concept is known as

Answer 14

SUBSTANCE OVER FORM

Question 15

Which accounting process is the recognition or non-recognition of business activities as accountable events?

Answer 15

IDENTIFYING

Question 16

Accountants do not recognize that the value of the peso changes over time. This concept is called the

Answer 16

MONETARY UNIT

Question 17

The consistency standard of reporting requires that
a. The accounting procedures be adopted which give a consistent rate of return
b. Expenses be reported as charges against the period in which they are incurred
c. The effect of changes in accounting upon income be properly disclosed
d. Extraordinary gains and losses should not appear on the income statement

Answer 17

C

Question 18

The periodicity concept
a. Requires that all companies prepare monthly, quarterly and annual financial statements
b. Results from the Bureau of Internal Revenue requirement that taxable income be reported on an annual basis
c. Requires all companies to use a fiscal year ending December 31
d. Involves dividing the life of a business entity into accounting periods of equal length thus enabling the financial users to periodically evaluate the results of business operations

Answer 18

D

Question 19

Which area of public accounting means the examination of financial statements by a CPA for the purpose of expressing an opinion as to the fairness of the statements?

Answer 19

EXTERNAL AUDITING

Question 20

The measurement phase of accounting is accomplished by

Answer 20

RECORDING DATA

Question 21

The consistency concept means that
a. Firms in the same industry must account for similar items in the same way
b. Firms may never change the way in which they prepare their accounts
c. When preparing the accounts of a firm, one should normally account for similar items in the same way from one accounting period to the next
d. None of the above

Answer 21

C

Question 22

Which of the following accounting concepts states that an accounting transaction should be supported by sufficient evidence to allow two or more qualified individuals to arrive at essentially similar conclusion?

Answer 22

OBJECTIVITY

Question 23

The financial accounting process provides information about economic activities of an enterprise for a specified accounting period that is shorter than the life of the enterprise

Answer 23

TIME PERIOD

Question 24

Accounting changes are often made and the monetary impact is reflected in the financial statements of a company even though, in theory, this may be a violation of the accounting concept of

Answer 24

CONSISTENCY