Question: $1$

$1\mathrm{.}1\mathrm{.}15$ Each of the following statements is correct regarding the Financial Accounting Standards Board except

A$.$ It develops principles and attributes that allow organizations to understand the necessary elements to ensure a robust system of internal control.

B$.$ It is recognized as authoritative by the United States Securities and Exchange Commission and the American Institute of Certified Public Accountants.

C$.$ It establishes accounting concepts and standards for financial accounting and reporting and provides guidance on implementation of standards.

D$.$ It provides a conceptual framework that helps to increase understanding of$,$ and confidence in$,$ financial information on the part of users of financial reports.

Question: $2$

$1\mathrm{.}2\mathrm{.}22$ According to the conceptual framework, the most basic objective of financial reporting is to convey information

A$.$ About the economic resources and obligations of a company.

B$.$ About the liquidity and solvency of a company.

C$.$ About the future cash flows of a company.

D$.$ That enables users to make decisions about a company.

Question: $3$ The financial statements included in the annual report to the shareholders are least useful to which one of the following?

A$.$ Stockbrokers.

B$.$ Bankers preparing to lend money.

C$.$ Competing businesses.

D$.$ Managers in charge of operating activities.

Question: $4$

$1\mathrm{.}2\mathrm{.}25$ According to the FASB$$s conceptual framework, for financial reporting to be useful, it must

A$.$ Be in accordance with generally accepted accounting principles.

B$.$ Provide information useful for making business and investment decisions.

C$.$ Be understandable to those who have a limited knowledge of business activities.

D$.$ Directly measure the value of the entity being reported on$.$

Question: $5$

$1\mathrm{.}4\mathrm{.}40$ Which of the following does not describe a difference between the business$-$type activities and the governmental$-$type activities of a governmental entity?

A$.$ Business$-$type activities have large investments in revenue$-$producing capital assets.

B$.$ Business$-$type activities adopt budgets, but they often lack the legal force of the budget for governmental$-$type activities.

C$.$ Business$-$type activities involve a direct exchange of money in return for goods delivered or services rendered.

D$.$ Business$-$type activities often perform multiple functions and are thus more easily compared between governments than are governmental$-$type activities.

Question: $6$

$1\mathrm{.}5\mathrm{.}62$ Financial information is most likely to be verifiable when an accounting transaction occurs that

A$.$ Involves an arm$$s$-$length transaction between two independent parties.

B$.$ Furthers the objectives of the entity.

C$.$ Is promptly recorded in a fixed amount of monetary units.

D$.$ Allocates revenues or expense items in a rational and systematic manner.

Question: $7$

$1\mathrm{.}6\mathrm{.}71$ According to the FASB$$s conceptual framework, which of the following is an essential characteristic of a liability?

A$.$ Liabilities must require the obligated entity to pay cash to a recipient entity.

B$.$ Liabilities must be legally enforceable.

C$.$ The identity of the recipient entity must be known to the obligated entity before the time of settlement.

D$.$ Liabilities are obligations resulting from previous transactions or events.

Question: $8$

$1\mathrm{.}6\mathrm{.}81$ All of the following are defined as elements of an income statement except

A$.$ Expenses.

B$.$ Shareholders$$ equity.

C$.$ Gains and losses.

D$.$ Revenues.

Question: $9$

$1\mathrm{.}7\mathrm{.}86$

According to the FASB$$s conceptual framework, noncurrent payables are usually measured and reported at

A$.$ Current market value.

B$.$ Present value of future cash flows.

C$.$ Settlement value.

D$.$ Historical proceeds.

Question: $10$

$1\mathrm{.}8\mathrm{.}126$ An external auditor$$s involvement with Form $10-$Q that is being prepared for filing with the SEC most likely will consist of a$($n$)$

A$.$ Audit of the financial statements included in Form $10-$Q$.$

B$.$ Compilation report on the financial statements included in Form $10-$Q$.$

C$.$ Comfort letter that covers stub$-$period financial data.

D$.$ Review of the interim financial statements included in Form $10-$Q$.$