Conceptual Framework

Question 1

Relevance:

Answer 1

Predictive Value
Confirmatory Value
Materiality

Question 2

Faithful Representation:

Answer 2

Complete
Neutral
Free from Error

Question 3

Enhancing Qualities:

Answer 3

Comparability
Verifiability
Timeliness
Understandability

Question 4

Comprehensive income includes:

Answer 4

Operating income, per SFAC 6
Equals net of its cash receipts and cash outlays, excluding cash invested by owners or distributions to owners

Question 5

Statements of Financial Accounting Concepts:

Answer 5

issued to establish a framework from which financial accounting and reporting standards could be developed. Provide theory behind accounting and reporting and provide guidance when no GAAP exists

Question 6

Measurement Bases:

Answer 6

Current Market Value
Discounted Cash Flow
Replacement Cost

Question 7

SFAC 6, “Recognized” =

Answer 7

Recorded

Question 8

SFAC 6, Gains and Losses:

Answer 8

may be classified as operating or nonoperating

Question 9

SFAC 6, Revenues:

Answer 9

inflows of assets or settlements of liabilities, or both, during a period as a result of an entity’s major or primary operations
(1) arise from a company’s primary earnings activities
(2) are recurring or continuing in nature

Question 10

Recognizing depletion expense is an example of:

Answer 10

Allocation - process of assigning or distributing an amount according to a plan or formula
Amortization - allocation process for accounting for prepayments and deferrals