Accounting 3304 Exam 1 with answers graded A+ 2023

The objective of general-purpose financial reporting is to provide financial information about a reporting entity to each of the following except a. potential equity investors b. potential lenders c. present investors d. all of these are correct - d. all of these are correct Which of the following basic elements of financial statements is more associated with the balance sheet than the income statement? a. equity b. revenue c. gains d. expenses - a. equity In classifying the elements of financial statements, the primary distinction between revenues and gains is - The nature of the actives that gave rise to the transactions involved Which of the following is not a basic element of financial statements? a. assets b. balance sheet c. losses d. revenue - b. balance sheet The calculation of comprehensive income includes - Operating income not distribution to owners Which basic assumption may not be followed when a firm in bankruptcy reports financial results? - Going concern assumption Which of the following is an implication of the going concern assumption? a. the historical cost principle is credible b. depreciation and amortization policies are justifiable and appropriate c. the current-noncurrent classification of assets and liabilities is justifiable and significant d. all of these - d. all of these What accounting concept justifies the usage of depreciation and amortization policies? - Going concern assumption True or false? A soundly developed conceptual framework enables the FASB to issue more useful and consistent pronouncements over time. - True True or false? Although the FASB has developed a conceptual framework no statements of financial accounting have been issued to date. - False Which of the following is not true concerning a conceptual framework in accounting? a. it should be the basis for standard-setting b. it should allow practical problems to be solved more quickly by reference to it c. it should be based on fundamental truths that are derived from the laws of nature d. all of these answer choices are true - c. it should be based on fundamental truths that are derived from the laws of nature Generally, revenue from sales should be recognized at a point when a. management decides it is appropriate to do so. b. the product is available for sale to the ultimate consumer. c. he entire amount receivable has been collected from the customer and there remains no further warranty liability d. none of these answer choices are correct - d. none of these answer choices are correct A company has a performance obligation when it agrees to - Perform a service or sell a product to a customer A company has a factory building that originally cost the company $250,000. The current fair value of the factory building is $3 million. The president would like to report the difference as a gain. The write-up would represent a violation of which accounting assumption or principle? - Historical cost The accounting principle of expense recognition is best demonstrated by - Matching effort (expense) with accomplishment (revenue). Which of the following is a component of the revenue recognition principle? - Recognition occurs when the performance obligation is satisfied The measurement principle includes the - Historical cost principle and the fair value principle Trade-offs between the characteristics that make information useful may be necessary or beneficial. Issuance of interim financial statements is an example of a trade-off between - Relevance and faithful representation Allowing firms to estimate rather than physically count inventory at quarterly periods is an example of a trade-off between - Timeliness and verifiability