Acct 301 CH 1 Practice Test – Flashcards
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What is NOT a qualitative characteristic of accounting information according to the FASB's conceptual framework?
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Auditor Independence
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According to the conceptual framework, neutrality is a character of
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Faithful Representation
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The Financial Accounting Standards Broad (FASB)
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is a private body that helps set accounting standards in the United States
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Confirmatory value is an ingredient of the primary quality of
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relevance; no faithful representation
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Predictive value is an ingredient of
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no faithful representation; relevance
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Completeness is a an ingredient of the primary quality of
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faithful representation
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The objective of financial reporting for business enterprises is a based on:
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The needs of the users of the information
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According to the FASB's conceptual framework, comprehensive income includes?
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operating income; no investments by owners
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The equivalent to the FASB's Financial Accounting Standards Advisory Council (FASAC) for the IASB:
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Standards Advisory Council (SAC)
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Which of the following is not a function of the ISAB's conceptual framework
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The conceptual framework includes specific implementation guidance to enable consistence application of particular complex standards
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Accounting standard setting in the United States is
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Done primarily by the private sector
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Verifiability as used in accounting includes
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similar results being obtained by both the accountant and an independent party using the same measurement methods
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Recognition is the process of formally recording and reporting an item in the financial statements. In order for a revenue item to be recognized?
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Material
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The process of providing financial information to external decision makers is referred to as
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Financial accounting
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Financial statements generally include all of the following except
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federal income tax return
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The primary objective of financial reporting is to provide information
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That is useful in decision making
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GAAP included which of the follow
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statements of financial accounting standards; accounting research bulletins; accounting principles board options
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The SEC exerts a continuing influence on the establishment of accounting standards. It does so primarily by
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Monitoring the development of GAAP within the accounting profession and using its stature of influence that development
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The documents that set forth fundamental concepts on which financial accounting and reporting standards will be based are:
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Statements of Financial Accounting Concepts
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The two primary decision-specific qualities that make accounting information useful are:
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relevance and faithful representation
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Relevance requires that information posses predictive and/or:
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confirmatory value
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The qualitative characteristics the manes there is agreement between a measure and a real-world phenomenon is:
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representational faithfulness
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Which of the following is considered a practical constraint on the qualitative characteristics
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cost effectiveness
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Which of the following characteristics does not describe an asset
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requires the receipt of cash
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Which of the following characteristics does not describe a liability
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must be legally enforceable
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The underlying assumption that presumes a company will continue indefinitely is
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Going concern
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The underlying assumption that assumes that the life of a company can be divided into artificial time periods is:
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periodicity
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In general revenue is recognized when the earnings process is virtually complete and
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goods or services are transferred to the customer
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The primary objective of matching is to:
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recognize expenses in the same period as the related revenue
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The main objective of the IASB is to
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develop a single set of global accounting standards
