M1 - Standards and Conceptual Framework

Question 1

What are the fundamental qualitative characteristics of useful information?

Answer 1

Relevance & Faithful Representation

Question 2

What are enhancing qualitative characteristics?

Answer 2

Comparability , Verifiability, Timeliness, Understandability (Compare and verify in time to understand)

Question 3

What is the single source of US GAAP that US companies are required to follow?

Answer 3

FASB Accounting Standards Codification

Question 4

To be relevant, financial information must

Answer 4

Have predictive value and/or confirming value and must be material (Predict and Confirm your Material Value)

Question 5

Faithful representation requires

Answer 5

Completeness, Neutrality, and Free from Error (Completely neutral is free from error)

Question 6

Replacement Cost

Answer 6

Amount of cash or its equivalent that would be paid to acquire or replace an asset currently. Replacement cost is an acquisition cost.

Question 7

Net Realizable Value

Answer 7

Selling price - any disposal costs

Question 8

Interim financial reporting should be viewed primarily as:

Answer 8

As reporting for an integral part of an annual period.

Question 9

Asset

Answer 9

probable future economic benefit obtained or controlled by a particular entity as a result of past transactions or events.

Question 10

Royalties should be reported as expense in the

Answer 10

period incurred