1. Information about enterprise earnings and its components measured under accrual basis provides a better measure of an enterprise's performance than information about cash receipts and payments because a. Accrual basis recognizes that events affecting enterprise operations during a period often do not coincide with cash receipts and payments. b. Accrual basis relates accomplishments and efforts in measuring and reporting enterprise's earnings and its components. C. Accrual basis provides estimates of future earnings. d. Cash receipts and cash payments information cannot adequately indicate whether or not an enterprise's performance is successful. 2. Under a lease where the lessee acquires the benefits of ownership of an asset, the lessee often recognizes the present value of future rental payments as an asset even though legal title to the property is not acquired. This is an example of the application of a. Form over substance b. Prudence C. Substance over form d. Consistency 3. Which of the following does not necessarily contribute to representational faithfulness of accounting information? a. Providing information that possesses confirmatory value. b. Providing complete information within the bounds of materiality and cost. c. Providing information that is free from bias. d. Informing the users of the accounting policies and changes in accounting policies employed in the preparation of the financial statements. 4. Which of the following is not a valid statement relating to the accrual basis of accounting? a. Revenues are recorded in the period that they are earned rather than in the period in which the cash is collected. b. Expenses are recorded in the period that they are incurred rather than in the period in which cash is paid. C. Accrual basis results in more complete financial information compared to the cash basis. d. Accrual basis emphasizes the timing of cash receipts and cash disbursements in the recognition of income and expenses. 5. Which of the following statements relating to initial measurement is not correct? a. When an asset or liability is measured at cost, transaction costs are included in the initial measurement basis to arrive at historical cost. b. When an asset is acquired through donation, the fair value of the asset at the date of donation is its "deemed cost". c. When an asset or liability is initially measured at fair value, transaction costs increase the initial measurement basis for that asset or liability d. The choice of the initial measurement basis is affected by the nature of the information that the measurement basis will produce and the characteristics of asset or liability as well as their contributions to the entity's cash flows|| 6. Which of the following are elements relating to the entity's financial position? 1. Present economic resources controlled by the entity as a result of past events. II. The residual interest in the assets of the entity after deducting all its liabilities. III. Outflow or using up of an economic resource or incurrence of an obligation from delivering or producing goods or rendering services. IV. Present obligation of an entity to transfer an economic resource as a result of past events. a. I, II, III and IV b. I, II and IV C. II, III and IV d. I and