FAR BECKER FINAL REVIEW 2025/26 QUESTIONS WITH
COMPLETE SOLUTIONS RATED 100% CORRECT.
*Fundamental Qualitative Characteristics* Answer - The fundamental
qualitative characteristics of useful financial information are *relevance and
faithful representation.* Both characteristics must be present for financial
information to be useful.
*Relevance:* Financial information is relevant if it is capable of making a
difference in the decisions made by the users. To be relevant, financial
information must have predictive value and/or confirming value, and must be
material *(PCM)*.
1. *P*redictive value
2. *C*onfirmatory value
3. *M*aterial
*Faithful Representation:* To be useful, financial information must faithfully
represent the reported economic phenomena. Faithful representation requires
financial information to be *complete, neutral, and free from error.* Although
perfect faithful representation is generally not achievable, these characteristics
must be maximized.
1. Complete
2. Neutral
3. Free from error
MCQ-08471
Materiality and relevance are both defined by:
,A. The consistency in the application of methods over time.
B. The perceived benefits to be denied that exceed the perceived costs
associated with it.
C. What influences or makes the difference to a decision maker.
D. Quantitative criteria set by the Financial Accounting Standards Board.
Answer - C. What influences or makes the difference to a decision maker.
The accountant's determination of materiality and relevance is based on
professional judgment and is affected by the needs of those who will be using
the financial statements to make decisions.
Choice "1" is incorrect. Materiality and relevance are not defined by
consistency in the application of methods over time. Consistency in the
application of methods over time is a quality needed for the overall accounting
process.
Choice "2" is incorrect. The perceived benefits to be denied that exceed the
perceived costs associated with it does not define materiality and relevance.
The perceived benefits achieved that exceed the costs associated with them
better describes the cost constraint, which holds that the benefits of financial
reporting must be greater than the costs of obtaining and presenting the
information.
Choice "4" is incorrect. The Financial Accounting Standards Board does not
establish quantitative criteria that define materiality and relevance.
Going Concern Assumption Answer - Under U.S. GAAP, preparation of financial
statements presumes that the reporting entity will continue as a going concern
(to stay in business). Under this presumption, financial statements are
prepared under the going concern basis of accounting.
*If an entity's liquidation is imminent (and the entity is therefore no longer
considered to be a going concern), financial statements are prepared under the
liquidation basis of accounting.*
,Management is required to evaluate whether there is substantial doubt about
an entity's ability to continue as a going concern within one year after the date
that the financial statements are issued.
MCQ-04833
Under U.S. GAAP, what method of accounting must be used in the preparation
of financial statements for an entity that is not considered a going concern?
A. Liquidation basis.
B. Historical cost basis.
C. Realization basis.
C. Market basis. Answer - A. Liquidation basis.
Under U.S. GAAP, preparation of financial statements presumes that the
reporting entity will continue as a going concern (to stay in business). Under
this presumption, financial statements are prepared under the going concern
basis of accounting.
If an entity's liquidation is imminent (and the entity is therefore no longer
considered to be a going concern), financial statements are prepared under the
liquidation basis of accounting.
Simple Bank Reconciliation (Cash & cash equivalents) Answer - *Banks
adjustments*
Company's records (starting point)
Deposits in transit: Add to bank
Outstanding checks: Deduct from bank
*Bank add it, LOC (less outstanding checks)*
, *Book adjustments*
Bank stmt. cash bal (starting point)
Service charge: Deduct from books
Bank collections: Add to books
Non-sufficient funds (NSF): Deduct from books
Interest Income: Add to books
*Bank or both adjustments*
Errors
Errors made by either *bank or the depositors* are another cause for a
difference.
MCQ-12641
Light Co. had the following bank reconciliation at March 31:
Balance per bank statement, March 31 $23,250
Add: Deposit in transit 5,150
Total balance 28,400
Less: Outstanding checks 6,300
Balance per books, March 31 $22,100
Additional information from Light's bank statement for the month of April is as
follows:
Deposits $29,200
Disbursements 24,800
COMPLETE SOLUTIONS RATED 100% CORRECT.
*Fundamental Qualitative Characteristics* Answer - The fundamental
qualitative characteristics of useful financial information are *relevance and
faithful representation.* Both characteristics must be present for financial
information to be useful.
*Relevance:* Financial information is relevant if it is capable of making a
difference in the decisions made by the users. To be relevant, financial
information must have predictive value and/or confirming value, and must be
material *(PCM)*.
1. *P*redictive value
2. *C*onfirmatory value
3. *M*aterial
*Faithful Representation:* To be useful, financial information must faithfully
represent the reported economic phenomena. Faithful representation requires
financial information to be *complete, neutral, and free from error.* Although
perfect faithful representation is generally not achievable, these characteristics
must be maximized.
1. Complete
2. Neutral
3. Free from error
MCQ-08471
Materiality and relevance are both defined by:
,A. The consistency in the application of methods over time.
B. The perceived benefits to be denied that exceed the perceived costs
associated with it.
C. What influences or makes the difference to a decision maker.
D. Quantitative criteria set by the Financial Accounting Standards Board.
Answer - C. What influences or makes the difference to a decision maker.
The accountant's determination of materiality and relevance is based on
professional judgment and is affected by the needs of those who will be using
the financial statements to make decisions.
Choice "1" is incorrect. Materiality and relevance are not defined by
consistency in the application of methods over time. Consistency in the
application of methods over time is a quality needed for the overall accounting
process.
Choice "2" is incorrect. The perceived benefits to be denied that exceed the
perceived costs associated with it does not define materiality and relevance.
The perceived benefits achieved that exceed the costs associated with them
better describes the cost constraint, which holds that the benefits of financial
reporting must be greater than the costs of obtaining and presenting the
information.
Choice "4" is incorrect. The Financial Accounting Standards Board does not
establish quantitative criteria that define materiality and relevance.
Going Concern Assumption Answer - Under U.S. GAAP, preparation of financial
statements presumes that the reporting entity will continue as a going concern
(to stay in business). Under this presumption, financial statements are
prepared under the going concern basis of accounting.
*If an entity's liquidation is imminent (and the entity is therefore no longer
considered to be a going concern), financial statements are prepared under the
liquidation basis of accounting.*
,Management is required to evaluate whether there is substantial doubt about
an entity's ability to continue as a going concern within one year after the date
that the financial statements are issued.
MCQ-04833
Under U.S. GAAP, what method of accounting must be used in the preparation
of financial statements for an entity that is not considered a going concern?
A. Liquidation basis.
B. Historical cost basis.
C. Realization basis.
C. Market basis. Answer - A. Liquidation basis.
Under U.S. GAAP, preparation of financial statements presumes that the
reporting entity will continue as a going concern (to stay in business). Under
this presumption, financial statements are prepared under the going concern
basis of accounting.
If an entity's liquidation is imminent (and the entity is therefore no longer
considered to be a going concern), financial statements are prepared under the
liquidation basis of accounting.
Simple Bank Reconciliation (Cash & cash equivalents) Answer - *Banks
adjustments*
Company's records (starting point)
Deposits in transit: Add to bank
Outstanding checks: Deduct from bank
*Bank add it, LOC (less outstanding checks)*
, *Book adjustments*
Bank stmt. cash bal (starting point)
Service charge: Deduct from books
Bank collections: Add to books
Non-sufficient funds (NSF): Deduct from books
Interest Income: Add to books
*Bank or both adjustments*
Errors
Errors made by either *bank or the depositors* are another cause for a
difference.
MCQ-12641
Light Co. had the following bank reconciliation at March 31:
Balance per bank statement, March 31 $23,250
Add: Deposit in transit 5,150
Total balance 28,400
Less: Outstanding checks 6,300
Balance per books, March 31 $22,100
Additional information from Light's bank statement for the month of April is as
follows:
Deposits $29,200
Disbursements 24,800
