F1 - Accounting Standards and Conceptual Frameworks

Question 1

According to the FASB and the IASB conceptual frameworks, useful information must exhibit the fundamental characteristics of:

Answer 1

Faithful representation and relevance.

Question 2

Characteristics of Faithful representation:

Answer 2

Completeness
Neutrality
Freedom from error

Question 3

Characteristics of Relevance

Answer 3

“Passing Confirms Money”
Predictive Value
Confirming Value
Materiality

Question 4

What is the process of reporting an item in the financial statements of an entity?

Answer 4

Recognition

Question 5

Depreciated equipment was sold in exchange for a note receivable. This is an example of:

Answer 5

Realization concept

Question 6

Assignment of overhead costs to products and thus to cost of goods sold is an example of:

Answer 6

The matching principle

Question 7

Enhancing Qualitative Characteristics

Answer 7

Comparability
Verifiability
Timeliness
Understandability

Question 8

What is the single source of U.S. GAAP that U.S. public companies are required to follow?

Answer 8

The FASB Accounting Standards Codification (ASC)

Question 9

The amount of cash or its equivalent that would be paid to acquire or replace an asset currently is:

Answer 9

Replacement Cost

Question 10

To be relevant, information should have:

Answer 10

Predictive Value and/or confirming value, and must be material.

Question 11

Under the IASB framework, ___________ and ___________ are the two underlying assumptions of financial statement preparation and presentation.

Answer 11

Going concern, and

Accrual accounting

Question 12

For the IASB, before an exposure draft is issued for public comment,

Answer 12

it must be approved by at least nine members of the IASB