Answered: 1. Which of the following should be…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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FAR- Conceptual Framework

Kindly help me answer the following :

1. Which of the following should be considered a current value measure? *

a. Replacement cost and discounted cash flow

b. Replacement cost and exit value

c. Replacement cost, exit value and discounted cash flow

d. Exit value and discounted cash flow

2. Obligations to transfer an economic resource include all, except *

a. Obligation to provide services

b. Obligation to pay cash

c. Obligation to transfer an economic resource even if a specified future event does not occur

d. Obligation to deliver goods

3. Which is not a purpose of the Conceptual Framework? *

a. To assist accountants in selecting among alternative accounting and reporting methods.

b. To provide definitions of key terms and concepts.

c. To assist IASB in the standard-setting process.

d. To provide specific guidelines for resolving situations not covered by existing accounting standards.

4. The elements directly related to the measurement of financial position are *

a. Asset, liability, equity, income and expense

b. Asset, liability and equity

c. Income and expense

d. Asset and liability

5. The presentation and disclosure requirement achieves all of the following, except *

a. Financial position, performance and cash flows

b. An effective communication tool

c. Understandability and comparability of information

d. More relevant and faithfully represented information

6. Which of the following represents the least desirable choice for the recognition of revenue? *

a. Recognition of revenue during production

b. Recognition of revenue when a sale occurs

c. Recognition if revenue when a cash is collected

d. Recognition of revenue when production is completed

7. Which statement regarding the term profit is true? *

a. Profit is equal to income minus expenses.

b. All of these statements are true about the term profit.

c. Profit is the equivalent of net income under IFRS.

d. Profit is any amount over and above that required to maintain the capital at the beginning of the period.

8. What is the authoritative status of the Conceptual Framework? *

a. In the absence of a standard or an interpretation that specifically applies to a transaction, the Conceptual Framework shall be followed.

b. In the absence of a standard or an interpretation that specifically applies to a transaction, management shall consider the applicability of the Conceptual Framework in developing and applying an accounting policy that results in information that is relevant and reliable.

c. The Conceptual Framework has the highest level of authority.

d. The Conceptual Framework applies only when the IASB develops new standards.

9. The Conceptual Framework is intended to establish *

a. The meaning of “present fairly in accordance with GAAP”

b. The objectives and concepts for use in developing standards of financial accounting and reporting.

c. GAAP in financial reporting.

d. The hierarchy of sources of GAAP.

10. An example of direct matching would be *

a. Office salaries expense

b. Direct labor costs incurred to produce inventory sold

c. Depreciation expense

d. Advertising expense

Process of recording, summarizing, and analyzing financial information to prepare financial statements, and making them available to stakeholders, thereby enabling them to make an informed decision about the company. Financial reporting is an extension of financial accounting that deals with the presentation of financial information in accordance with the requirements of prescribed accounting standards.

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