Conceptual Framework and Financial Reporting

Question 1

ACCOUNTING EQUATION

Answer 1

A=L+E

Question 2

ACCOUNTING EQUATION FOR ACCRUAL TO CASH

Answer 2

CHANGE IN C=CHANGE L- CHANGE E- CHANGE IN ALL OTHER ASSETS

Question 3

ACCOUNTING EQUATION FOR CASH TO ACCRUAL

Answer 3

CHANGE IN C= CHANGE L+ CHANFE E + CHANGE IN ALL OTHER ASSETS

Question 4

PREDICTIVE VALUE

Answer 4

QUALITY OF INFORMATION THAT HELPS USERS INCREASE THE LIKELIHOOD OF CORRECTLY FORECASTING THE OUTCOME OF PAST OR PRESENT EVENTS.

Question 5

RELEVANCE

Answer 5

PRIMARILY ALLOWS USERS OF FINANCIAL STATEMENTS TO GENERATE PREDICTIONS ABOUT AN ORGANIZATION.

Question 6

WHEN A FIRM IS IN LIQUIDATION ARE HISTORICAL COSTS AND ENTRY COSTS RELEVANT?

Answer 6

NO LONGER RELEVANT

Question 7

REPORTING INVENTORY AT THE LOWER OF COST OR MARKET IS A DEPARTURE FROM THE ACCOUNTING PRINCIPLE OF ?

Answer 7

HISTORICAL COST

Question 8

FAIR VALUE IS A MARKET BASED MEASUREMENT

Answer 8

TRUE

Question 9

GENERAL RULE TO CONVERT FROM CASH TO ACCRUAL

Answer 9

ADD DECREASES IN LIABILITIES AND INCREASES IN ASSETS AND SUBTRACT INCREASES IN LIABILITIES AND DECREASES IN ASSETS

Question 10

WHEN MUST A COMPANY ELECT TO IMPLEMENT THE FAIR VALUE OPTION ON AN INVESTMENT

Answer 10

IT MUST MAKE THE ELECTION ON THE DATE IT FIRST RECOGNIZES THE INVESTMENT

Question 11

COST APPROACH (FV)

Answer 11

WHEN FAIR VALUE IS DETERMINED AS THE AMOUNT THAT CURRENTLY WOULD BE REQUIRED TO REPLACE THE SERVICE CAPACITY OF AN ASSET.

Question 12

WHAT ARE THE QUALITATIVE CHARACTERISTICS OF FAITHFUL REPRESENTATION

Answer 12

NEUTRALITY, COMPLETENESS, AND FREE FROM ERROR

Question 13

WHAT COSTS ARE NO LONGER RELEVANT WHEN A FIRM IS IN LIQUIDATION?

Answer 13

HISTORICAL COSTS AND ENTRY VALUES (REPLACEMENT COSTS) ARE NO LONGER RELEVANT.

Question 14

WHAT IS THE UNDERLYING CONCEPT GOVERNING THE GAAP PERTAINING TO RECORDING GAIN CONTINGENCIES

Answer 14

CONSERVATISM

Question 15

WHAT ARE THE TWO FUNDAMENTAL QUALITATIVE CHARACTERISTICS OF FINANCIAL INFORMATION ACCORDING TO THE IASB FRAMEWORK 5-18

Answer 15

RELEVANCE AND FAITHFUL REPRESENTATION

Question 16

Under Ifrs the classified statement of financial position has how many classifications

Answer 16

2. Current and non current assets and liabilities

Question 17

Which inventory valuation can you use under IFES for SMEs?

Answer 17

FIFO AND WEIGHTED AVERAGE COST

Question 18

Is earnings per share required in financial statements under IFRS?

Answer 18

No

Question 19

How long must goodwill be amortized under IFRS? HOW IS THIS DIFFERENT FROM US GAP?

Answer 19

UNDER IFRS GOODWILL IS ASSUMED TO HAVE A LIMITED LIFE AND IS AMORTIZED OVER THAT LIFE NOT TO EXCEED 10 YEARS…. UNDER US GAAP GOODWILL IS ASSUMED TO HAVE UNLIMITED LIFE AND IS NOT AMORTIZED

Question 20

Fair value for an asset or liability is measured as

Answer 20

The price that would be received when selling an asset or paid when transferring a liability in an orderly transaction between market participants

Question 21

Can an investment in a subsidiary that is to be consolidated be measured at fair value at the election of the entity?

Answer 21

No

Question 22

Which valuation methods may be used to measure debt investments classified as held to maturity ? Amortized cost or fair value?

Answer 22

Both

Question 23

What’s happens in a sale with a right of return?

Answer 23

Recognition should be delayed until the right of return has expired.

Question 24

Predictive value is a component of ?

Answer 24

Relevance….. along with feedback value

Question 25

SFAC 5 states that’s _______ is inflows or other enhancements of assets of an entity or setlltlement of its liabilities from delivering or producing goods rendering services or other activities that constitute an entities ongoing operations.

Answer 25

Revenues

Question 26

Quality of information that helps users increase the likelihood of correctly forecasting the outcome of past or present events

Answer 26

Predictive value

Question 27

A performance measure primarily concerned with cash to cash cycles

Answer 27

Earnings