CFAS - Chapter 6: Multiple Choice questions answered correctly (passed)2022

CFAS - Chapter 6: Multiple Choice questions answered correctly (passed)2022It is the process of capturing for inclusion in the financial statements an item that meets the definition of the elements of financial statements a. Recognition b. Measurement c. Classifying d. Derecognition a An item is recognized in the financial statements if a. It is probable that economic benefits will flow to or from the entity. b. It meets the definition of an asset, liability, equity, income and expense c. The entity has ownership of such item d. It is probable that economic benefits will flow to or from the entity and that the cost can be measured b Recogniton of an element is appropriate when information result in a. Relevance b. Faithful representation c. Both relevance and faithful representation d. Neither relevance nor faithful representation c It is the removal of all or part of a recognized asset or liability from the statement of financial position a. Writeoff b. Derecognition c. Extinguishment d. Retirement b Derecogntion normally occurs when a. An item no longger meets the definition of an asset or a liability b. The entity losses control of the asset c. The entity no longer has a present obligation for the liability d. Under all of these circumstances d Generally, revenue us recognized a. At the point of sale b. When cause and effect are associated c. At the point of cash collection d. At appropriate points throughout the operating cycle a Which of the following is not an accepted basis for recognition of revenue? a. Passage of time b. Performance of service c. Completion of percentage of a project d. Upon signing of contract a Normally, revenue is recognized a. When the customer order is receive b. When the customer order is accompanied by a check c. Only of the transaction will create an account receivable d. When the title to the goods changes d Which of the following practices may not be an acceptable deviation from recognizing revenue at the point of sale? a. Upon receipt of cash b. During production c. Upon receipt of order d. End of production c 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 of revenue when cash is collected d. Recognition of revenue when production is completed a Revenue recognition conventionally refers to a. The process of identifying transactions to be recorded as revenue in an accounting period b. The process of measuring and relating revenue and expenses during a period. c. The earning process which gives rise to revenue realization d. The process of identifying those transactions that result in an inflow of assets to the entity a Which of the following in the most precise sense means the process of converting noncash resources and rights into cash or claims to cash? a. Allocation b. Collection c. Recognition d. Realization d Gains on assets unsold are identified, in a precise sense, by the term a. Unrecorded b. Unrealized c. Unrecognized d. Unallocated b The term "recognized" is synonymous with the term a. Recorded b. Realized c. Matched d. Allocated a Which statement conforms to the realization concept? a. Depreciation was assigned to product unit cost b. Equipment was sold in exchange for a note receivable c. Cash was collected on accounts receivable d. Product unit costs were assigned to cost of goods sold b or c Which of the following is not a theoretical basis for the allocation of expense? a. Immediate recognition b. Systematic and rational allocation c. Cause and effect association d. Profit maximization d Costs that can be reasonably associated with specific revenue but not with specific product should be a. Expensed in the period incurred b. Allocated to the specific product based on the best estimate of the product processing should be c. Expensed in the period in which the related revenue is recognized d. Capitalized and then amortized over a reasonable c Which of the following is an example of the cause and effect association principle? a. Sales commission b. Allocation of insurance cost c. Depreciation of property, plant and equipment d. Officers' salaries a Which of the following is an application of the systematic and rational allocation principle? a. Doubtful accounts b. Research and development cost c. Warranty cost d. Amortization of intangible asset d Which of the following would be matched with current revenue on a basis other than association of cause and effect? a. Goodwill b. Cost of good sold c. Sales commission d. Warranty cost a Why are certain costs of doing business capitalized when incurred and then depreciated or amortized over subsequent accounting period? a. To reduce the income tax liability b. To aid management in the decision-making process c. To match the cost of production with revenue d. To adhere to the accounting concept of conservatism c Which of the following principles best describe the conceptual rationale for the method of matching depreciation with revenue? a. Association cause and effect b. Systematic and rational allocation c. Immediate recognition d. Partial recognition b Which of the following should be expensed under the principle of systematic and rational allocation? a. Salesman's monthly salaries b. Insurance premiums c. Transportation to customers d. Electricity to light office building b The writeoff of a worthless patent is an example of which of the following principles? a. Association cause and effect b. Immediate recognition c. Systematic and rational allocation d. Objectivity b What is an example of cost that cannot be directly related to particular revenue but incurred to obtain benefits that are exhausted in the period when the cost in incurred? a. Sales commissions b. Sales salaries c. Freight in d. Prepaid insurance b The matching principle is best demonstrated by a. Not recognizing any expense unless some revenue is realized b. Associated effort with accomplishment c. Recognizing prepaid rent received as revenue d. Establishing an appropriation for contingency b Bad debts expense is recognized according to which expense recognition principle? a. Direct matching b. Immediate recognition c. Systematic and rational allocation d. Critical event recognition a