Download Inter Media Accounting 1 Chpter 2 PDF

TitleInter Media Accounting 1 Chpter 2
TagsBalance Sheet Expense Financial Statement Historical Cost Going Concern
File Size197.1 KB
Total Pages9
Document Text Contents
Page 1

Q 1
In the conceptual framework for financial reporting, what provides "the why"--the purpose of accounting?


a) Qualitative characteristics of accounting information


b) Elements of financial statements


c) Objective of financial reporting


d)

Recognition, measurement, and disclosure concepts such as assumptions, principles, and

constraints

Q 2
Which of the following is not an objective of financial reporting?


a)

To provide information about economic resources, the claims to those resources, and the

changes in them.


b)

To provide information that is helpful to investors and creditors and other users in assessing

the amounts, timing, and uncertainty of future cash flows.


c) To provide information that is useful to those making investment and credit decisions.


d) All of these are objectives of financial reporting.

Q 3
Neutrality is an ingredient of which fundamental quality of information?


a) Understandability.


b) Relevance.


c) Comparability.


d) Faithful representation.

Q 4
Which of the following is an ingredient of relevance?


a) Timeliness.


b) Verifiability.


c) Neutrality.


d) Materiality.

Page 5

Q 17
Which of the following is the process of converting assets received or held into cash or claims to cash?


a) Recognition


b) Allocation


c) Measurement


d) Realization

Q 18
Allowing firms to estimate rather than physically count inventory at interim (quarterly) periods is an

example of a trade-off between


a) faithful representation and comparability.


b) verifiability and faithful representation.


c) timeliness and verifiability.


d) neutrality and consistency.

Q 19
Charging off the cost of a wastebasket with an estimated useful life of 10 years as an expense of the period

when purchased is an example of the application of the


a) materiality characteristic.


b) consistency characteristic.


c) expense recognition principle.


d) historical cost principle.

Q 20
What is prudence or conservatism?


a) Recognizing the option that is least likely to overstate assets and income.


b) Understating assets and net income.


c) Recognizing revenue when earned and realized.


d) When in doubt, recognizing the option that is least likely to overstate assets and income.

Q 21

Generally accepted accounting principles


a) derive their authority from legal court proceedings.


b)

derive their credibility and authority from general recognition and acceptance by the accounting
profession.


c) have been specified in detail in the FASB conceptual framework.


d) are fundamental truths or axioms that can be derived from laws of nature.

Page 6

Q 22
The objectives of financial reporting include all of the following except to provide information that


a) is useful to those making investment and credit decisions.


b)

is useful to the Internal Revenue Service in allocating the tax burden to the business
community.


c) is helpful in assessing future cash flows.


d)

identifies the economic resources (assets), the claims to those resources (liabilities), and the
changes in those resources and claims.

Q 23
Accounting information is considered to be relevant when it


a) is understandable by reasonably informed users of accounting information.


b) is verifiable and neutral.


c) is capable of making a difference in a decision.


d)

can be depended on to represent the economic conditions and events that it is intended to
represent.

Q 24
Neutrality means that information


a) provides benefits which are at least equal to the costs of its preparation.


b) can be compared with similar information about an enterprise at other points in time.


c) would have no impact on a decision maker.


d) cannot favor one set of interested parties over another.

Q 25

What is meant by consistency when discussing financial accounting information?


a) Information is measured similarly across the industry.


b) Information is timely.


c) Information is verifiable.


d) Information that is measured and reported in a similar fashion across points in time.

Q 26
The pervasive criterion by which accounting information can be judged is that of


a) timeliness.


b) comparability.


c) freedom from bias.


d) decision usefulness.

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