COMPXM CAPSTONE BUSINESS
SIMULATION COMPLETE EXAM REVIEW
WITH FULL SOLUTIONS
●● What is the objective of conceptual framework?
Answer: to provide financial information about companies that is useful
to capital providers in making decisions
●● Relevance
Answer: Reporting information must possess predictive value and/or
confirmatory value. Information must be relevant to the decision being
made
●● Faithful Representation
Answer: exists when there is an agreement between a measure or
description and the phenomenon it purports to represent
●● Comparability
Answer: The ability to compare financial results between sperate entities
●● Consistency
Answer: Comparing financial statements of the same company from
different reporting periods.
,●● Verifiability
Answer: different, knowledgeable, and independent measures would
reach census regarding whether information is a faithful representation
of what it is intended to depict
●● Timeliness
Answer: Information is timely when its available to users early enough
to allow them to use it in their decision process
●● Cost Effectiveness
Answer: constraints the accounting choices we make. The information is
cost effective if the benefit of increased decision usefulness exceeds the
costs of providing that information
●● What are the elements of financial statements
Answer: assets
liabilities
equity
investments
distributions
comprehensive income
revenues
, expenses
gains
losses
●● Assets
Answer: are economic resources presently controlled by the company
that have measurable value and are expected to benefit the company by
producing cash inflows or reducing cash outflows in the future. Assets
include things like cash, supplies, furniture, and equipment.
●● Liabilities
Answer: Amounts owed to creditors. The amount owed is called an
Account Payable because purchases made using credit are said to be "on
account."
●● Stockholders' Equity
Answer: represents the owners' claims on the business.
●● Investments
Answer: increases in equity of a particular business enterprise resulting
from transfers to it from other entities of something of value to obtain or
increase ownership interest in it
●● Distribution
SIMULATION COMPLETE EXAM REVIEW
WITH FULL SOLUTIONS
●● What is the objective of conceptual framework?
Answer: to provide financial information about companies that is useful
to capital providers in making decisions
●● Relevance
Answer: Reporting information must possess predictive value and/or
confirmatory value. Information must be relevant to the decision being
made
●● Faithful Representation
Answer: exists when there is an agreement between a measure or
description and the phenomenon it purports to represent
●● Comparability
Answer: The ability to compare financial results between sperate entities
●● Consistency
Answer: Comparing financial statements of the same company from
different reporting periods.
,●● Verifiability
Answer: different, knowledgeable, and independent measures would
reach census regarding whether information is a faithful representation
of what it is intended to depict
●● Timeliness
Answer: Information is timely when its available to users early enough
to allow them to use it in their decision process
●● Cost Effectiveness
Answer: constraints the accounting choices we make. The information is
cost effective if the benefit of increased decision usefulness exceeds the
costs of providing that information
●● What are the elements of financial statements
Answer: assets
liabilities
equity
investments
distributions
comprehensive income
revenues
, expenses
gains
losses
●● Assets
Answer: are economic resources presently controlled by the company
that have measurable value and are expected to benefit the company by
producing cash inflows or reducing cash outflows in the future. Assets
include things like cash, supplies, furniture, and equipment.
●● Liabilities
Answer: Amounts owed to creditors. The amount owed is called an
Account Payable because purchases made using credit are said to be "on
account."
●● Stockholders' Equity
Answer: represents the owners' claims on the business.
●● Investments
Answer: increases in equity of a particular business enterprise resulting
from transfers to it from other entities of something of value to obtain or
increase ownership interest in it
●● Distribution
