FAC1503 ASS 2 ACTUAL QUESTIONS AND
CORRECT ANSWERS COMPLETE STUDY
GUIDE
●● The _____ reports the financial position (assets, liabilities, and
equity) of a company at a particular date
Answer: balance sheet
●● Does the balance sheet attempt to show the total fair value of a
company?
Answer: no - it is meant to be useful to external users who wish to
estimate the company's fair value
●● T/F: The FMV of a company = the BV of a company
Answer: false
●● formally recording/reporting an element in the financial statement
Answer: recognition
●● To be recognized, the FASB Statement of Financial Accounting
Concepts No. 6 states that an item:
1.
,2.
3.
4.
Answer: 1. must meet the definition of an element
2. must be measurable
3. must be relevant
4. must be faithfully represented
●● What are the 3 aspects of an asset?
Answer: a. probable FUTURE economic benefit
b. obtained or controlled by a company
c. as a result of PAST transactions or events
●● What is service potential?
Answer: the potential to benefit from the asset
●● what is the primary attribute of an asset?
Answer: service potential
●● What are the 3 aspects of a liability?
Answer: a. probable FUTURE sacrifices of eceonmic benefits
, b. arising from PRESENT obligations of a company (with little to no
discretion to avoid) to transfer assets or provide services in the future
c. as a result of PAST transactions or events
●● What is stockholders' equity?
Answer: residual interest in the assets of a company that remain after
deducting liabilities
●● How are the elements of a balance sheet measured?
Answer: U.S. GAAP follows a MIXED ATTRIBUTE MODEL.
Different types of assets and liabilities are valued using different
measurement bases.
●● GAAP seeks optimal mix of _______ and _____ information.
Answer: relevant and representationally faithful
●● Common historical values
Answer: •Historical cost (or acquisition cost)
•Historical proceeds or originally incurred liabilities
•Allocated historical amounts
•Initial present value and adjusted present value
●● Common current values
CORRECT ANSWERS COMPLETE STUDY
GUIDE
●● The _____ reports the financial position (assets, liabilities, and
equity) of a company at a particular date
Answer: balance sheet
●● Does the balance sheet attempt to show the total fair value of a
company?
Answer: no - it is meant to be useful to external users who wish to
estimate the company's fair value
●● T/F: The FMV of a company = the BV of a company
Answer: false
●● formally recording/reporting an element in the financial statement
Answer: recognition
●● To be recognized, the FASB Statement of Financial Accounting
Concepts No. 6 states that an item:
1.
,2.
3.
4.
Answer: 1. must meet the definition of an element
2. must be measurable
3. must be relevant
4. must be faithfully represented
●● What are the 3 aspects of an asset?
Answer: a. probable FUTURE economic benefit
b. obtained or controlled by a company
c. as a result of PAST transactions or events
●● What is service potential?
Answer: the potential to benefit from the asset
●● what is the primary attribute of an asset?
Answer: service potential
●● What are the 3 aspects of a liability?
Answer: a. probable FUTURE sacrifices of eceonmic benefits
, b. arising from PRESENT obligations of a company (with little to no
discretion to avoid) to transfer assets or provide services in the future
c. as a result of PAST transactions or events
●● What is stockholders' equity?
Answer: residual interest in the assets of a company that remain after
deducting liabilities
●● How are the elements of a balance sheet measured?
Answer: U.S. GAAP follows a MIXED ATTRIBUTE MODEL.
Different types of assets and liabilities are valued using different
measurement bases.
●● GAAP seeks optimal mix of _______ and _____ information.
Answer: relevant and representationally faithful
●● Common historical values
Answer: •Historical cost (or acquisition cost)
•Historical proceeds or originally incurred liabilities
•Allocated historical amounts
•Initial present value and adjusted present value
●● Common current values
