Which of the following is not true concerning a Conceptual Framework in accounting

A soundly developed conceptual framework of concepts and objectives should

(D) all of these. increase financial statement users' understanding of and confidence in financial reporting, enhance comparability among companies' financial statements, and allow new and emerging practical problems to be more quickly soluble.

Generally accepted accounting principles

(C) Derive their credibility and authority from general recognition and acceptance by the accounting profession.

Which of the following is not true concerning a conceptual framework in accounting?

(C) It should be based on fundamental truths that are derived from the laws of nature.

Which of the following is not a benefit associated with the FASB conceptual framework project?

(D) Business entities will need far less assistance from accountants because the financial reporting process will be quite easy to apply

In the conceptual framework for financial reporting the provides the why?- the goals and purposes of accounting?

(D) Objectives of financial reporting

The underlying theme of the conceptual framework is

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

(C) Provide information about economic resources, claims to resources, and changes in resources and claims.

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

(A) Is useful to the Internal Revenue Service in allocating the tax burden to the business community

Decision makers vary widely in the types of decisions they make, the methods of decision making they employ, the information they already possess or can obtain from other sources, and their ability to process information. Consequently, for information to be useful there must be a linkage between these users and the decisions they make. This link is

The overriding criterion by which accounting information can be judged is that of

(A) Usefulness for decision making.

The two primary qualities that make accounting information useful for decision making are

(C) Relevance and reliability.

Accounting information is considered to be relevant when it

(B) Is capable of making a difference in a decision.

The quality of information that gives assurance that it is reasonably free of error and bias and is a faithful representation is

According to Statement of Financial Accounting Concepts No. 2, which of the following relates to both relevance and reliability?

(D) All of these. Materiality, Understandability, Usefulness

According to Statement of Financial Accounting Concepts No. 2, timeliness is an ingredient of the primary quality of

(C) Yes (Relevance) No (Relability)

According to Statement of Financial Accounting Concepts No. 2, verifiability is an ingredient of the primary quality of

(D) No (Relevance) Yes (Relability)

According to Statement of Financial Accounting Concepts No. 2, neutrality is an ingredient of the fundamental quality of

(B) No (Relevance) Yes (Relability)

Information is neutral if it

(D) Is free from bias toward a predetermined result.

The characteristic that is demonstrated when a high degree of consensus can be secured among independent measurers using the same measurement methods is

According to Statement of Financial Accounting Concepts No. 2, predictive value is an ingredient of the fundamental quality of

(A) Yes (Relevance) No (Relability)

Under Statement of Financial Accounting Concepts No. 2, representational faithfulness is an ingredient of the primary quality of

(C) Yes (Reliabilty) No (Relevance)

Financial information does not demonstrate consistency when

(D) None of these. Firms in the same industry use different accounting methods to account for the same type of transaction. A company changes its estimate of the salvage value of a fixed asset. A company fails to adjust its financial statements for changes in the value of the measuring unit.

Financial information exhibits the characteristic of consistency when

(B) Accounting entities give accountable events the same accounting treatment from period to period.

Information about different companies and about different periods of the same company can be prepared and presented in a similar manner. Comparability and consistency are related to which of these objectives?

(D) Periods (Comparability)     Periods (Consistency)

When information about two different enterprises has been prepared and presented in a similar manner, the information exhibits the characteristic of

(D) none of these. Relevance, Reliability,

Consistency.

The elements of financial statements include investments by owners. These are increases in an entity's net assets resulting from owners'

(D) All of these answer choices are correct. (transfers of assets to the entity. rendering services to the entity. satisfaction of liabilities of the entity.)

In classifying the elements of financial statements, the primary distinction between revenues and gains is

(C) The nature of the activities that gave rise to the transactions involved

A decrease in net assets arising from peripheral or incidental transactions is called a(n)

One of the elements of financial statements is comprehensive income. As described in Statement of Financial Accounting Concepts No. 6, "Elements of Financial Statements," comprehensive income is equal to

(D) none of these. Not revenues minus expenses plus gains minus losses, revenues minus expenses plus gains minus losses plus investments by owners minus distributions to owners, and revenues minus expenses plus gains minus losses plus investments by owners minus distributions to owners plus assets minus liabilities.

Which of the following elements of financial statements is not a component of comprehensive income?

(B) Distributions to owners

Which of the following is false with regard to the element "comprehensive income"?

(D) It excludes prior period adjustments (transactions that relate to previous periods, such as corrections of errors).

According to the FASB conceptual framework, earnings

(B) Exclude certain gains and losses that are included in comprehensive income.  

ccording to the FASB Conceptual Framework, the elementsassets, liabilities, and equity, describe amounts of resources and claims to resources at/during a

(A) Yes (Moment in time)     No (Period of time)

Which of the following basic accounting assumptions is threatened by the existence of severe inflation in the economy?

(A) Monetary unit assumption

During the lifetime of an entity accountants produce financial statements at artificial points in time in accordance with the concept of

(C) No (Objectivity)       Yes (Periodicity)

Under current GAAP, inflation is ignored in accounting due to the

(C) Monetary unit assumption.

The economic entity assumption

(D) is applicable to all forms of business organizations.

Preparation of consolidated financial statements when a parent-subsidiary relationship exists is an example of the

(A) Economic entity assumption.

During the lifetime of an entity, accountants produce financial statements at arbitrary points in time in accordance with which basic accounting concept?

(B) Periodicity assumption

What accounting concept justifies the usage of accruals and deferrals?

(A) Going concern assumption

The assumption that a business enterprise will not be sold or liquidated in the near future is known as the

(D) None of these. Not economic entity assumption, monetary unit assumption, conservatism assumption.

Which of the following is an implication of the going concern assumption?

(D) All of these. ( The historical cost principle is credible. Depreciation and amortization policies are justifiable and appropriate. The current-noncurrent classification of assets and liabilities is justifiable and significant.)

Proponents of historical cost ordinarily maintain that in comparison with all other valuation alternatives for general purpose financial reporting, statements prepared using historical costs are more

Valuing assets at their liquidation values rather than their cost is inconsistent with the

(D) Historical cost principle

Revenue is generally recognized when realized or realizable and earned. this statement describes the....

(C) Revenue recognition principle

Generally, revenue from sales should be recognized at a point when

(D) None of these. Not management decides it is appropriate to do so, the product is available for sale to the ultimate consumer, and the entire amount receivable has been collected from the customer and there remains no further warranty liability.

Revenue generally should be recognized

(D) When realized or realizable and earned.

Which of the following is not a time when revenue may be recognized?

(D) All of these are possible times of revenue recognition. At time of sale, At receipt of cash, and During production

Under Statement of Financial Accounting Concepts No. 5, which of the following, in the most precise sense, means the process of converting noncash resources and rights into cash or claims to cash?

"When products (goods or services), merchandise, or other assets are exchanged for cash or claims to cash" is a definition of

The allowance for doubtful accounts, which appears as a deduction from accounts receivable on a balance sheet and which is based on an estimate of bad debts, is an application of the

The accounting principle of matching is best demonstrated by

(B) associating effort (expense) with accomplishment (revenue).

Which of the following serves as the justification for the periodic recording of depreciation expense?

(B) Systematic and rational allocation of costs over the periods benefited

Application of the full disclosure principle

(C) is demonstrated by the use of supplementary information explaining the effects of financing arrangements.

Which of the following statements concerning the cost-benefit relationship is not true?

(D) If needed by financial statement users, management should gather information not included in the financial statements that         would not otherwise be gathered for internal use

Under Statement of Financial Accounting Concepts No. 2, which of the following relates to both relevance and reliability?

(A) Cost-benefit constraint

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

(C) Materiality constraint

Which of the following statements about materiality is not correct?

(D) All of these are correct statements about materiality. An item must make a difference or it need not be disclosed

Materiality is a matter of relative size or importance

An item is material if its inclusion or omission would influence or change the judgment of a reasonable person.

which of the following are considered pervasive constraints by statement of financial accounting concepts no. 2

(D) materiality and cost-constaint relationship

The basic accounting concept that refers to the tendency of accountants to resolve uncertainty in favor of understating assets and revenues and overstating liabilities and expenses is known as the

(A)conservatism constraint.

Which of the following best illustrates the accounting concept of conservatism?

(B) Use of the lower of cost or market approach in valuing inventories.

Trade-offs between the characteristics that make information useful may be necessary or beneficial.  Issuance of interim financial statements is an example of a trade-off between

(A) verifiability and reliability.

Allowing firms to estimate rather than physically count inventory at interim (quarterly) periods is an example of a trade-off between

(C) timeliness and verifiability.

In matters of doubt and great uncertainty, accounting issues should be resolved by choosing the alternative that has the least favorable effect on net income, assets, and owners' equity. This guidance comes from the

(C) conservatism constraint

Which of the following is not true concerning a conceptual framework and accounting?

What are the conceptual framework in accounting?

What are the 3 main elements of the conceptual frame?

Which of the following is not an advantage of having a conceptual framework of accounting?