Question 1 In addition to a balance sheet, what are the basic financial statements that are presented when using the FRF for SMEs?

• a) Statement of comprehensive income and statement of owner's equity
• b) Statement of income and statement of cash flows
• c) Statement of income and changes in owner's equity
• d) Statement of comprehensive income and statement of cash flows

Question 2 For which financial statement users is the FRF for SMEs primarily designed?

• a) Investors and creditors who cannot require management to provide information directly to them
• b) Entities whose owners and management use the financial statements to help assess an entity's performance and to track what an entity owns and owes
• c) Investors, creditors, management and the general public
• d) Independent CPAs who might otherwise prepare tax basis financial statements

Question 3 In which of the following circumstances would the framework represented by FASB standards be more useful than the FRF for SMEs?

• a) Management uses the financial statements primarily to assess the performance of the reporting entity.
• b) Owners or management want to raise capital in public markets.
• c) Investors and lenders have the ability to require management to provide information that is not included in financial statements.
• d) Lenders are basing their lending decisions on the strength of collateral.

Question 4 Which of the following bases of accounting is a special purpose framework, but not an other comprehensive basis of accounting?

• a) FASB
• b) IFRS
• c) Contractual
• d) Tax basis