Question 1

Under Statement of Financial Accounting Concepts No.8,confirmatory value is an ingredient of the primary quality of Relevance Faithful representation
A)No No
B)No Yes
C)Yes Yes
D)Yes No

Accepted Answer

D

Question 2

Which of the following is not one of DR Scott's hierarchy of accounting postulates and principles?
A)Orientation postulate.
B)The principles of truth and fairness.
C)The materiality principle
D)The principles of adaptability and consistency.

Accepted Answer

C

Question 3

Which early accounting theorist was among the first to express the view that all changes in the value of assets and liabilities should be reflected in the financial statements?
A)A.C.Littleton
B)John Canning
C)William Paton
D)DR Scott

Accepted Answer

William Paton was among the first to express the view that all changes in the value of assets and liabilities should be reflected in the financial statements.

Question 4

Under Statement of Financial Accounting Concepts No.8,which of the following is an ingredient of the primary quality of relevance?
A)Neutrality
B)Completeness
C)Understandability
D)Verifiability

Accepted Answer

According to Statement of Financial Accounting Concepts No.8, the primary quality of relevance includes two ingredients: completeness and predictive value. Of the options given, only B) Completeness is an ingredient of relevance. A) Neutrality is an ingredient of the secondary quality of faithful representation, C) Understandability is an ingredient of the primary quality of understandability, and D) Verifiability is an ingredient of the secondary quality of faithful representation.

Question 5

Under Statement of Financial Accounting Concepts No.8,the ability through consensus of measures to ensure that information represents what it purports to represent is an example of the concept of
A)Relevance
B)Verifiability
C)Faithful representation
D)Feedback value

Accepted Answer

The answer of Under Statement of Financial Accounting Concepts No.8,the...

Question 6

Which of the following organizations published the monograph titled A Statement of Accounting Principles?
A)SEC
B)AAA
C)AIA
D)NAA

Accepted Answer

The answer of Which of the following organizations published the...

Question 7

Who was the author of Accounting Research Study No.1,The Basic Postulates of Accounting?
A)Robert Sprouse
B)Maurice Moonitz
C)Alvin Jennings\
D)Thomas Hatfield

Accepted Answer

Maurice Moonitz authored Accounting Research Study No. 1, titled "The Basic Postulates of Accounting," which was published by the American Accounting Association.

Question 8

What is the purpose of Emerging Issues Task Force?
A)Provide interpretation of existing standards.
B)Provide a consensus on how to account for new and unusual financial transactions.
C)Provide interpretive guidance.
D)Provide timely guidance on select issues

Accepted Answer

The answer of What is the purpose of Emerging Issues...

Question 9

Which of the following organizations published the monograph titled A Tentative Statement of Accounting Principles Affecting Annual Corporate Reports?
A)SEC
B)AAA
C)AIA
D)NAA

Accepted Answer

The monograph titled A Tentative Statement of Accounting Principles Affecting Annual Corporate Reports was published by the American Accounting Association (AAA). The other organizations listed (SEC, AIA, NAA) have all played a role in shaping financial reporting and accounting standards, but they were not directly responsible for this specific publication.

Question 10

If the FASB's proposed definition of materiality as a legal concept is adopted the most likely outcome is
A)It will have little impact on the number of items classified as material
B)It will lower the threshold for recognizing event and transactions as material
C)It will raise the threshold for recognizing event and transactions as material
D)Its impact cannot be determined

Accepted Answer

If the FASB's proposed definition of materiality as a legal concept is adopted, it will likely raise the threshold for recognizing events and transactions as material. The proposed definition emphasizes the potential impact on a reasonable investor's decision-making process, rather than relying solely on quantitative or qualitative factors. This could result in only truly significant information being classified as material, leading to a higher threshold for recognition.

Question 11

Which of the following is not a topic being currently studied by the FASB in its disclosure framework project?
A)Fair value measurement
B)Defined benefit pension plans
C)Leases
D)Income taxes

Accepted Answer

The answer of Which of the following is not a...

Question 12

Which of the following is not an approach to accounting theory as categorized by Statement on Accounting Theory and Theory Acceptance?
A)Classical,
B)Neoclassical
C)Decision usefulness
D)Information economics.

Accepted Answer

The Statement on Accounting Theory and Theory Acceptance categorizes approaches to accounting theory into three categories: classical, decision usefulness, and information economics. Neoclassical is not included as a separate category.

Question 13

What is meant by consistency when discussing financial accounting information?
A)Information that is measured and reported in a similar fashion across points in time.
B)Information is timely.
C)Information is measured similarly across the industry.
D)Information is verifiable

Accepted Answer

Consistency refers to the use of the same accounting principles and methods from one period to the next, which allows for the comparability of financial statements over time. Option B refers to timeliness, Option C refers to consistency across industry standards, and Option D refers to verifiability which is a different concept.

Question 14

What is the objective of financial reporting?
A)Provide information that is useful to management in making decisions.
B)Provide information that clearly portrays nonfinancial transactions.
C)Provide information about the reporting entity that is useful to present and potential equity investors,lenders,and other creditors.
D)Provide information that excludes claims to the resources.

Accepted Answer

The objective of financial reporting is to provide information about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors. This information should be reliable, relevant, comparable, and understandable. While financial reporting may also be useful to management in making decisions, this is not its primary objective. Financial reporting should also portray nonfinancial transactions, but again, this is not its primary objective. Finally, financial reporting should include claims to the resources, not exclude them.

Question 15

Under Statement of Financial Accounting Concepts No.8,which of the following relates to both relevance and reliability?
A)Timeliness
B)Materiality
C)Predictive value
D)Neutrality

Accepted Answer

The answer of Under Statement of Financial Accounting Concepts No.8,which...

Question 16

Under Statement of Financial Accounting Concepts No.8,which of the following is not a qualitative characteristic associated with faithful representation?
A)Completeness
B)Free from error
C)Neutrality
D)Predictive value

Accepted Answer

Predictive value is a characteristic associated with relevance, not faithful representation. The three characteristics associated with faithful representation are completeness, free from error, and neutrality.

Question 17

Which of the following is considered a constraint by Statement of Financial Accounting Concepts No.8?
A)Cost
B)Conservatism
C)Timeliness
D)Verifiability

Accepted Answer

Statement of Financial Accounting Concepts No.8 considers cost as a constraint because financial reporting should provide information that is cost-effective to produce and to use. Conservatism, timeliness, and verifiability are qualities of information but not constraints.

Question 18

An item is considered material if
A)It doesn't cost a lot of money.
B)It is of a tangible good.
C)It is likely to influence the decision of an investor or creditor.
D)The cost of reporting the item is greater than its benefits

Accepted Answer

Materiality is determined based on whether the item is likely to influence the decision of an investor or creditor. The other options do not accurately reflect the concept of materiality.

Question 19

What is meant by comparability when discussing financial accounting information?
A)Information has predictive or confirmatory value.
B)Information is reasonably free from error.
C)Information that is measured and reported in a similar fashion across companies.
D)Information is timely.

Accepted Answer

Comparability refers to the ability to compare financial information across companies, which requires that the information is measured and reported in a similar fashion. This allows for more meaningful analysis and interpretation of financial statements. Options A, B, and D are all important characteristics of high-quality financial information, but they do not specifically relate to comparability.

Question 20

Under Statement of Financial Accounting Concepts No.8,which of the following is an ingredient of the primary quality of faithful representation?
A)Understandability
B)Verifiability
C)Predictive value
D)Materiality

Accepted Answer

The primary qualities of faithful representation are completeness, neutrality, and verifiability. Out of these three, verifiability is the concept that ensures that different knowledgeable and independent observers would reach a consensus that a depiction is a faithful representation. Therefore, verifiability is an integral ingredient of the primary quality of faithful representation. Understandability and predictive value are enhancing qualities, and Materiality is a constraint.

Quiz 2: The Pursuit of the Conceptual Framework

Under Statement of Financial Accounting Concepts No.8,confirmatory value is an ingredient of the primary quality of Relevance Faithful representation

Which of the following is not one of DR Scott's hierarchy of accounting postulates and principles?

Which early accounting theorist was among the first to express the view that all changes in the value of assets and liabilities should be reflected in the financial statements?

Under Statement of Financial Accounting Concepts No.8,which of the following is an ingredient of the primary quality of relevance?

Under Statement of Financial Accounting Concepts No.8,the ability through consensus of measures to ensure that information represents what it purports to represent is an example of the concept of

Which of the following organizations published the monograph titled A Statement of Accounting Principles?

Who was the author of Accounting Research Study No.1,The Basic Postulates of Accounting?

What is the purpose of Emerging Issues Task Force?

Which of the following organizations published the monograph titled A Tentative Statement of Accounting Principles Affecting Annual Corporate Reports?

If the FASB's proposed definition of materiality as a legal concept is adopted the most likely outcome is

Which of the following is not a topic being currently studied by the FASB in its disclosure framework project?

Which of the following is not an approach to accounting theory as categorized by Statement on Accounting Theory and Theory Acceptance?

What is meant by consistency when discussing financial accounting information?

What is the objective of financial reporting?

Under Statement of Financial Accounting Concepts No.8,which of the following relates to both relevance and reliability?

Under Statement of Financial Accounting Concepts No.8,which of the following is not a qualitative characteristic associated with faithful representation?

Which of the following is considered a constraint by Statement of Financial Accounting Concepts No.8?

An item is considered material if

What is meant by comparability when discussing financial accounting information?

Under Statement of Financial Accounting Concepts No.8,which of the following is an ingredient of the primary quality of faithful representation?