FINANCIAL ACCOUNTING AND REPORTING {FRA}
REAL EXAM QUESTIONS AND CORRECT DETAILED
ANSWERS 2025//ALREADY GRADED A+
Which of the following are included in the Accounting Standards Codification?
I. Financial Accounting Standards Board (FASB) statements of financial accounting
standards
II. International Financial Reporting Standards (IFRS) - (answer)I only- Financial
Accounting Standards Board (FASB) statements of financial accounting standards
students for leadership and management roles in various industries. It focuses on critical thinking, decision-making, problem-solving, and understanding organizational processes. A typical business program might cover
topics like accounting, finance, marketing, management, economics, e
The objectives of financial reporting for business enterprises, as set forth by the
FASB conceptual framework, are based on: - (answer)the needs of users of the
information
According to the FASB and International Accounting Standards Board conceptual
framework, relevance includes which of the following qualitative characteristics?
I. Predictive Value
II. Confirmatory Value - (answer)Both I and II
According to the FASB and IASB conceptual framework, neutrality is a component
of:
I. faithful representation
II. relevance - (answer)I only-faithful representation
Which of the following is a fundamental qualitative characteristic of financial
reporting?
, I. Relevance
II. Faithful representation - (answer)Both I and II
According to the FASB and IASB conceptual framework, which of the following is
an enhancing (rather than fundamental) qualitative characteristic of financial
reporting?
I. Comparability
II. Verifiability - (answer)Both I and II
students for leadership and management roles in various industries. It focuses on critical thinking, decision-making, problem-solving, and understanding organizational processes. A typical business program might cover
topics like accounting, finance, marketing, management, economics, e
According to the FASB and IASB conceptual framework, both timeliness and
understandability are: - (answer)Enhancing qualitative characteristics of useful
financial information
An entity's revenue might result from which of the following according to the
FASB conceptual framework? - (answer)A decrease in a liability from primary
operations
Which of the following is a correct statement regarding deferred revenue? -
(answer)Deferred revenue is reported as a liability until the services have been
performed.
Accordingly to the FASB conceptual framework, essential characteristics of an
asset include which of the following?
I. An asset is intangible
II. Claims to the asset's benefits are legally enforceable
, III. An asset provides future benefits - (answer)III only- An asset provides future
benefits
students for leadership and management roles in various industries. It focuses on critical thinking, decision-making, problem-solving, and understanding organizational processes. A typical business program might cover
topics like accounting, finance, marketing, management, economics, e
The underlying concept that governs gain contingencies under GAAP is: -
(answer)conservatism
Which of the following is an element of comprehensive income? -
(answer)Administrative expenses
The Pastorini Corp. reported the following items on the income statement. Which
of the following items would be reported as income from continuing operations?
I. Large loss from a foreign currency transaction
II. A union strike that shuts down operations for three months
III. Damage to a factory from a flood in an area that never had flood damage
before - (answer)I, II, and III
Which of the following accounting changes would receive prospective treatment
in the income statement?
I. Change in depreciation method
II. Change in useful life of an asset - (answer)Both I and II
Which of the following accounting changes is treated as a change in accounting
principle?
I. A change from first-in-first out inventory valuation to average cost
, II. A change from the direct write-off method of recognizing bad debt expense to
the allowance method - (answer)I only-A change from first-in-first out inventory
valuation to average cost
students for leadership and management roles in various industries. It focuses on critical thinking, decision-making, problem-solving, and understanding organizational processes. A typical business program might cover
topics like accounting, finance, marketing, management, economics, e
An accounting change whose cumulative effect on prior periods is impracticable
to determine should be accounted for: - (answer)on a prospective basis
Which of the following are reported as adjustments to the beginning balance of
retained earnings for the earliest period presented?
I. correction of an error in a period that is not being presented
II. cumulative effect of a change in inventory from FIFO to weighted average -
(answer)Both I and II
Rex Corp. changed from straight line depreciation to double declining balance,
resulting in an additional expense of $20,000 after tax for Year 5. Also in Year 5,
Rex Corp. failed to accrue bad debt expense of $30,000 (after tax) in its income
statement. What amount should Rex Corp. report as a prior period adjustment in
Year 5? - (answer)$30,000
In its consolidated financial statements in the current year, Benson Corp. included
a subsidiary it acquired several years ago that was appropriately excluded from
consolidation last year. How should this be reported? - (answer)By retrospective
application of all prior periods presented
REAL EXAM QUESTIONS AND CORRECT DETAILED
ANSWERS 2025//ALREADY GRADED A+
Which of the following are included in the Accounting Standards Codification?
I. Financial Accounting Standards Board (FASB) statements of financial accounting
standards
II. International Financial Reporting Standards (IFRS) - (answer)I only- Financial
Accounting Standards Board (FASB) statements of financial accounting standards
students for leadership and management roles in various industries. It focuses on critical thinking, decision-making, problem-solving, and understanding organizational processes. A typical business program might cover
topics like accounting, finance, marketing, management, economics, e
The objectives of financial reporting for business enterprises, as set forth by the
FASB conceptual framework, are based on: - (answer)the needs of users of the
information
According to the FASB and International Accounting Standards Board conceptual
framework, relevance includes which of the following qualitative characteristics?
I. Predictive Value
II. Confirmatory Value - (answer)Both I and II
According to the FASB and IASB conceptual framework, neutrality is a component
of:
I. faithful representation
II. relevance - (answer)I only-faithful representation
Which of the following is a fundamental qualitative characteristic of financial
reporting?
, I. Relevance
II. Faithful representation - (answer)Both I and II
According to the FASB and IASB conceptual framework, which of the following is
an enhancing (rather than fundamental) qualitative characteristic of financial
reporting?
I. Comparability
II. Verifiability - (answer)Both I and II
students for leadership and management roles in various industries. It focuses on critical thinking, decision-making, problem-solving, and understanding organizational processes. A typical business program might cover
topics like accounting, finance, marketing, management, economics, e
According to the FASB and IASB conceptual framework, both timeliness and
understandability are: - (answer)Enhancing qualitative characteristics of useful
financial information
An entity's revenue might result from which of the following according to the
FASB conceptual framework? - (answer)A decrease in a liability from primary
operations
Which of the following is a correct statement regarding deferred revenue? -
(answer)Deferred revenue is reported as a liability until the services have been
performed.
Accordingly to the FASB conceptual framework, essential characteristics of an
asset include which of the following?
I. An asset is intangible
II. Claims to the asset's benefits are legally enforceable
, III. An asset provides future benefits - (answer)III only- An asset provides future
benefits
students for leadership and management roles in various industries. It focuses on critical thinking, decision-making, problem-solving, and understanding organizational processes. A typical business program might cover
topics like accounting, finance, marketing, management, economics, e
The underlying concept that governs gain contingencies under GAAP is: -
(answer)conservatism
Which of the following is an element of comprehensive income? -
(answer)Administrative expenses
The Pastorini Corp. reported the following items on the income statement. Which
of the following items would be reported as income from continuing operations?
I. Large loss from a foreign currency transaction
II. A union strike that shuts down operations for three months
III. Damage to a factory from a flood in an area that never had flood damage
before - (answer)I, II, and III
Which of the following accounting changes would receive prospective treatment
in the income statement?
I. Change in depreciation method
II. Change in useful life of an asset - (answer)Both I and II
Which of the following accounting changes is treated as a change in accounting
principle?
I. A change from first-in-first out inventory valuation to average cost
, II. A change from the direct write-off method of recognizing bad debt expense to
the allowance method - (answer)I only-A change from first-in-first out inventory
valuation to average cost
students for leadership and management roles in various industries. It focuses on critical thinking, decision-making, problem-solving, and understanding organizational processes. A typical business program might cover
topics like accounting, finance, marketing, management, economics, e
An accounting change whose cumulative effect on prior periods is impracticable
to determine should be accounted for: - (answer)on a prospective basis
Which of the following are reported as adjustments to the beginning balance of
retained earnings for the earliest period presented?
I. correction of an error in a period that is not being presented
II. cumulative effect of a change in inventory from FIFO to weighted average -
(answer)Both I and II
Rex Corp. changed from straight line depreciation to double declining balance,
resulting in an additional expense of $20,000 after tax for Year 5. Also in Year 5,
Rex Corp. failed to accrue bad debt expense of $30,000 (after tax) in its income
statement. What amount should Rex Corp. report as a prior period adjustment in
Year 5? - (answer)$30,000
In its consolidated financial statements in the current year, Benson Corp. included
a subsidiary it acquired several years ago that was appropriately excluded from
consolidation last year. How should this be reported? - (answer)By retrospective
application of all prior periods presented
