Question 1

The FASB's conceptual framework's qualitative characteristics of accounting information include:

Accepted Answer

A)  Historical cost.
B)  Realization.
C)  Faithful representation.
D)  Full disclosure.

Question 2

Comprehensive income is another term for net income.

Accepted Answer

A) True 
 B)False

Question 3

Revenue should not be recognized until:

Accepted Answer

A)  The earnings process is complete and collection is reasonably assured.
B)  Contracts have been signed and payment has been received.
C)  Work has been performed and customer has been billed.
D)  Collection has been made and warrantees have expired.

Question 4

One of the elements that many believe distinguishes a profession from other occupations is the acceptance of responsibility by its members for the interests of those it serves, which is often articulated in:

Accepted Answer

A)  Its conceptual framework.
B)  Its code of ethics.
C)  Federal laws.
D)  State laws.

Question 5

A rules-based approach to standard setting stresses professional judgment as opposed to following a list of rules.

Accepted Answer

A) True 
 B)False

Question 6

Constraints on qualitative characteristics of accounting information include:

Accepted Answer

A)  Timeliness.
B)  Going concern.
C)  Neutrality.
D)  Cost-effectiveness.

Question 7

The FASB's due process invites various interested parties to indicate their opinions about whether financial accounting standards should be changed.

Accepted Answer

A) True 
 B)False

Question 8

Auditors play an important role in the resource allocation process by adding credibility to financial statements.

Accepted Answer

A) True 
 B)False

Question 9

Identify or define the following terms: economic entity, going concern.

Accepted Answer

Economic entity: All economic events can...

Question 10

Independent auditors express an opinion on the:

Accepted Answer

A)  Fairness of financial statements.
B)  Accuracy of financial statements.
C)  Soundness of a company's future.
D)  Quality of a company's management.

Question 11

Compute net income for the first year for Alpaca Corporation.

Accepted Answer

The answer of Compute net income for the first year...

Question 12

Which of the following is not true about net operating cash flow?

Accepted Answer

A)  It is the difference between cash receipts and cash disbursements from providing goods and services.
B)  It is a measure used in accrual accounting and is recognized as the best predictor of future operating cash flows.
C)  Over short periods, it may not be indicative of long-run cash-generating ability.
D)  It is easy to understand and all information required to measure it is factual.

Question 13

The conceptual framework's qualitative characteristic of relevance includes:

Accepted Answer

A)  Predictive value.
B)  Verifiability.
C)  Completeness.
D)  Neutrality.

Question 14

The FASB's conceptual framework's qualitative characteristics of accounting information include:

Accepted Answer

A)  Full disclosure.
B)  Relevance.
C)  Going concern.
D)  Historical cost.

Question 15

Compute net income for the first year for Tri Fecta.

Accepted Answer

The answer of Compute net income for the first year...

Question 16

Disclosure notes to a company's financial statements:

Accepted Answer

A)  Are relatively unimportant facts that don't belong in the basic financial statements.
B)  Document the source of financial statement facts, like literary footnotes.
C)  Are an integral part of a company's financial statements.
D)  Are irrelevant facts that are immaterial in amount.

Question 17

Over time, accounting standards have developed to reflect changes in the business world as well as changes in our ability to account for such changes. Using the example of marking assets and liabilities to their fair value, explain why you would expect accounting standards to change.

Accepted Answer

Historically, financial accounting relie...

Question 18

Compute the income before income tax for Amazon.

Accepted Answer

Net income = Gross profit - Op...

Question 19

Compute Amazon's total liabilities at the end of the year.

Accepted Answer

Total assets = Total liabiliti...

Question 20

Which of the following is typically characterized as a principle, rather than an assumption?

Accepted Answer

A)  Periodicity.
B)  Monetary unit.
C)  Conservatism.
D)  Full disclosure.

Exam 1: Environment and Theoretical Structure of Financial Accounting

A rules-based approach to standard setting stresses professional judgment as opposed to following a list of rules.

Correct AnswerverifiedShow Answer

The conceptual framework's qualitative characteristic of relevance includes:

Correct AnswerverifiedShow Answer

Compute net income for the first year for Alpaca Corporation.

Correct AnswerverifiedShow Answer

The FASB's due process invites various interested parties to indicate their opinions about whether financial accounting standards should be changed.

Correct AnswerverifiedShow Answer

Compute the income before income tax for Amazon.

Correct AnswerverifiedNet income = Gross profit - Op...View AnswerShow Answer

Comprehensive income is another term for net income.

Correct AnswerverifiedShow Answer

Compute net income for the first year for Tri Fecta.

Correct AnswerverifiedShow Answer

The FASB's conceptual framework's qualitative characteristics of accounting information include:

Correct AnswerverifiedShow Answer

Which of the following is typically characterized as a principle, rather than an assumption?

Correct AnswerverifiedShow Answer

Identify or define the following terms: economic entity, going concern.

Correct AnswerverifiedEconomic entity: All economic events can...View AnswerShow Answer

Which of the following is not true about net operating cash flow?

Correct AnswerverifiedShow Answer

One of the elements that many believe distinguishes a profession from other occupations is the acceptance of responsibility by its members for the interests of those it serves, which is often articulated in:

Correct AnswerverifiedShow Answer

Independent auditors express an opinion on the:

Correct AnswerverifiedShow Answer

Over time, accounting standards have developed to reflect changes in the business world as well as changes in our ability to account for such changes. Using the example of marking assets and liabilities to their fair value, explain why you would expect accounting standards to change.

Correct AnswerverifiedHistorically, financial accounting relie...View AnswerShow Answer

Revenue should not be recognized until:

Correct AnswerverifiedShow Answer

Compute Amazon's total liabilities at the end of the year.

Correct AnswerverifiedTotal assets = Total liabiliti...View AnswerShow Answer

The FASB's conceptual framework's qualitative characteristics of accounting information include:

Correct AnswerverifiedShow Answer

Constraints on qualitative characteristics of accounting information include:

Correct AnswerverifiedShow Answer

Disclosure notes to a company's financial statements:

Correct AnswerverifiedShow Answer

Auditors play an important role in the resource allocation process by adding credibility to financial statements.

Correct AnswerverifiedShow Answer

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Net income = Gross profit - Op...
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Economic entity: All economic events can...
View Answer

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Historically, financial accounting relie...
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Total assets = Total liabiliti...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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