AIS 301 Final

Question 1

Arises from peripheral or incidental transactions.

Answer 1

Gains/losses

Question 2

Obligation to transfer resources arising from a past transaction.

Answer 2

Liabilities

Question 3

Increases ownership interest.

Answer 3

Investment by owners/comprehensive income

Question 4

Declares and pays cash dividends to owners.

Answer 4

Distribution to owners

Question 5

Increases in net assets in a period from nonowner sources.

Answer 5

comprehensive income

Question 6

Items characterized by service potential or future economic benefit.

Answer 6

assets

Question 7

Equals increase in assets less liabilities during the year, after adding distributions to owners and subtracting investments by owners.

Answer 7

comprehensive income

Question 8

Arises from income statement activities that constitute the entity’s ongoing major or central operations.

Answer 8

Revenues/expenses

Question 9

Residual interest in the assets of the enterprise after deducting its liabilities.

Answer 9

Equity

Question 10

Increases assets during a period through sale of product.

Answer 10

Revenues

Question 11

Decreases assets during the period by purchasing the company’s own stock.

Answer 11

Distribution to owners

Question 12

Includes all changes in equity during the period, except those resulting from investments by owners and distributions to owners.

Answer 12

Comprehensive income

Question 13

Allocates expenses to revenues in the proper period.

Answer 13

Expense recognition principle

Question 14

Indicates that fair value changes subsequent to purchase are not recorded in the accounts.

Answer 14

Measurement principle (historical cost)

Question 15

Ensures that all relevant financial information is reported.

Answer 15

full disclosure principle

Question 16

Rationale why plant assets are not reported at liquidation value

Answer 16

Going concern assumption

Question 17

Indicates that personal and business record keeping should be separately maintained.

Answer 17

Economic entity assumption

Question 18

Separates financial information into time periods for reporting purposes.

Answer 18

Periodicity assumption

Question 19

Assumes that the dollar is the “measuring stick” used to report on financial performance.

Answer 19

Monetary unit assumption