Choose the correct answer from the options

1. The underlying theme of the conceptual framework is (E1-PC1)

• decision usefulness.
• understandability.
• faithful representation.
• comparability.

2. The objective of financial reporting in the International Accounting Standards Boards (IASBs) Conceptual Framework (E1-PC1)

• Is the foundation for the Framework.
• Includes the qualitative characteristics that make accounting information useful.
• Is found on the third level of the Framework.
• All of the choices are correct regarding the objective of financial reporting.

3. The second level in the International Accounting Standards Boards (IASBs) Conceptual Framework (E1-PC1)

• Identifies the objective of financial reporting.
• Identifies recognition, measurement, and disclosure concepts used in establishing and applying accounting standards.
• Provides the elements of financial statements.
• Includes assumptions, principles, and constraints.

4. A soundly developed conceptual framework of concepts and objectives should (E1-PC1)

• Increase financial statement users understanding of and confidence in financial reporting.
• Enhance comparability among companies financial statements.
• Allow new and emerging practical problems to be more quickly solved.
• All of these answers are correct.

5. What is a purpose of having a conceptual framework? (E1-PC1)

• To make sure that economic activity can be identified with a particular legal entity.
• To segregate activities among competing companies.
• To provide comparable information for different companies.
• To enable the profession to more quickly solve emerging practical problems and to provide a foundation from which to build more useful standards.

6. The measurement principle includes the (E1-PC4)

• Fair value principle only.
• Historical cost principle only.
• Revenue recognition principle and expense recognition principle.
• Historical cost principle and the fair value principle.

7. Which of the following is an argument against using historical cost in accounting? (E1-PC4)

• Fair values are more relevant.
• Historical costs are based on an exchange transaction.
• Historical costs are reliable.
• Fair values are subjective.

8. Which of the following is a component of the revenue recognition principle? (E1-PC4)

• Cash is received and the amount is material.
• Recognition occurs when the performance obligation is satisfied.
• Production is complete and there is an active market for the product.
• Cash is realized or realizable and production is complete.

9. Recognition of expense related to amortization of an intangible asset illustrates which principle of accounting? (E1-PC4)

• Expense recognition.
• Full disclosure.
• Revenue recognition.
• Historical cost.

10. Under International Financial Reporting Standards (IFRS) revenue is recognized (E1-PC4)

• At the time when cash is collected.
• During production.
• At the end of production.
• When the performance obligation is satisfied.

11. What would be an advantage of having all countries adopt and follow the same accounting standards? (E2-PC1)

• Consistency.
• Comparability.
• Lower preparation costs.
• Comparability and lower preparation costs

12. What is the major objective of financial reporting? (E2-PC1)

• Provide information that is useful to management in making decisions.
• Provide information that clearly portray nonfinancial transactions.
• Provide information that is useful to present and potential equity investors, lenders, and other creditors in making decisions.
• Provide information that excludes claims to the resources.

13. The international financial reporting environment includes challenges in financial reporting including all of the following except: (E2-PC1)

• Political environment.
• Expectations gap.
• Decision-usefulness.
• Ethics.

14. Who issues International Financial Reporting Standards? (E2-PC2)

• The international auditing practices board
• The international stock exchange
• The international accounting standards board
• Representatives from the governments of each country

15. One of the objectives of the International Accounting Standards Committee Foundation is to? (E2-PC2)

• Oversee the standard setting and regulatory process
• Review defective accounts
• Control the accounting profession
• Formulate accounting standards

16. An accounting standard is issued after the following consultation procedure has been carried out: (E2-PC2)

• Research, Goes on the IASB agenda, Discussion paper, Exposure draft, adopted by countries,Post implementation review.
• IASC Foundation decide, Discussion Paper, Exposure Draft, adopted by countries, post implementation review.
• IASB decide, Adopted by countries, reviewed after 2 years.
• IASC Foundation, IASB, IFRS issued, reviewed after 2 years.

17. IAS 1 deals with: (E2-PC2)

• The presentation of financial statements
• The valuation of inventories
• The disclosures in the statement of cash flows
• Events after the reporting period

18. AS 7 deals with: (E2-PC2)

• The presentation of financial statements
• The valuation of inventories
• The disclosures in the statement of cash flows
• Events after the reporting period

choose correct answer from every q