Questions Flashcards
According to the FASB and IASB conceptual frameworks, the primary users of financial reports include all of the following exceptlenders, investors, regulators, creditors
REGULATORS
not primary users
According to the FASB and IASB conceptual frameworks, useful Information must exhibit the fundamental qualitative characteristics of a. neutrality and venerabilityb. understandability and timelinessc. comparability and materialityd. faithful representation and relevance
faithful representation and relevance
What is the underlying concept governing the recording of gain contingencies?a. conservatismb. reliabilityc. relevanced. consistency
CONSERVATISMgain contingencies should not be recognized prior to realization as a prudent reaction to the uncertainty surrounding the realization of the gain as reflected in the convention of conservatism.
According to the FASB conceptual frameworks, which of the following attributes would NOT be used to measure inventorya. replacement costb. net realizable valuec. historical cost. present value of future cash flows
present value of future cash flowsThe present value cash flows is used to measure long term receivables or payable, because inventory is a short term asset, which has more immediate cash flow.
According to the FASB and IASB conceptual frameworks, the objective of general purpose financial reporting is to: ………..a. Comply with the need for conservatism …………. b. comply with generally accepted accounting principles …………. c. report on how effectively and efficiently management has used the entity’s resources . d. Provide financial information that is useful to primary users
Provide financial information that is useful to primary users……………….. The objective of general purpose financial reporting is to provide financial information about the reporting entity that is the primary users of general purpose financial reports in making decisions about providing resources to the reporting entity
According to the FASB and IASB conceptual frameworks, completeness is an ingredient of: relevance faithful representationa. no nob. yes yesc. no yesd. yes no
c. no yesCompleteness is an ingredient of faithful representation. Other ingredients of faithful representation include neutrality and freedom from error
What is the underlying concept that supports the immediate recognition of a contingent loss?a. substance over formb. conservatismc. matchingd. consistency
b. conservatism ……………… conservatism is a prudent reaction to uncertainty to try to ensure that uncertainty and risks inherent in business situations are adequately considered. Recognition of a contingent loss is the recording of an amount representing uncertainty and risk in a business situation.
According to the FASB and IASB conceptual frameworks, the process of reporting an item in the financial statements of an entity is a. matchingb. realizationc. recognitiond. allocation
c. recognition ………………………. Recognition is the process of recording an items in the financial statements on an entity.
Define Matching process
matching of cost and revenues is simultaneous or combined recognition of the revenues and expenses that result directly and jointly from the same transactions or other events
Define realization process
is the process of converting non cash resources and rights into money
Define recognition process
Recognition is the process of recording an items in the financial statements on an entity.
Define allocation process
is the accounting process of assigning or distributing an amount according to a plan or formaula
The FASB and IASB conceptual frameworks project is intended to establish …………… a. a common set of objectives and concepts for use in developing standards of financial accounting and reporting ………………… b. A common set of generally accepting principles ………….. c. a comprehensive set of financial statement disclosures ………….. d. the structure of the FASB condifiction
a. a common set of objectives and concepts for use in developing standards of financial accounting and reporting
Financial information provided in general purpose financial reports does not include information about: …….. a. how effectively and efficiently the entity’s governing board has discharges its responsibility to use the entity’s resources ………….. b. how efficiently and effectively the entity’s shareholders’ have discharges their responsibility to use the entity’s resources ………… c. the resources of the entity …………. d. the claims against the entity
b. how efficiently and effectively the entity’s shareholders’ have discharges their responsibility to use the entity’s resourcesShareholders do not have a responsibility (or a right) to use entity’s resources
According to the FASB and IASB conceptual frameworks, which of the following statements conforms to the realization concept?a. equipment depreciation was assigned to a production dept and then to a product unit costb. product units costs were assigned to COGS when the units were soldc. depreciated equipment was sold in exchange for a notes receivabled. cash was collected on accounts recievables
c. depreciated equipment was sold in exchange for a notes receivablerevenues and gains are realized when assets are exchanged for cash or claims to cash
