LESSON 1 QUIZ QUESTIONS EXAM
QUESTIONS WITH VERIFIED ANSWERS
Management accounting frameworks are usually based on modified versions of
generally accepted accounting principles and
Select one:
A. Regulatory accounting rules.
B. Tax accounting rules.
C. Statutory accounting rules.
D. Going-concern accounting rules. - ANSWER-A. Regulatory accounting rules.
What is one disadvantage to having one set of accounting rules for insurers?
Select one:
A. There is an increased lag time between the need for a change in rules and its
implementation.
B. There are increased costs in complying with the one, more-encompassing
framework.
C. Compromises must be made that are suboptimal to one or more sets of users.
D. Data collection may become less precise as users become lax in rule application. -
ANSWER-C. Compromises must be made that are suboptimal to one or more sets of
users.
In the United States, tax accounting rules for insurers are based on
Select one:
A. Generally accepted accounting principles.
B. Management accounting rules.
C. Regulatory accounting rules.
D. Statutory accounting principles. - ANSWER-D. Statutory accounting principles.
Accounting frameworks designed for a broad range of users may be referred to as
Select one:
A. Generally accepted accounting principles.
B. Management accounting.
C. Statutory accounting principles.
D. Regulatory/supervisory accounting. - ANSWER-A. Generally accepted accounting
principles.
A business wishes to cap large insurance claims of a given business unit when
evaluating the annual results of that unit. This would be an example of which one of the
following accounting frameworks?
Select one:
A. Generally accepted accounting principles
B. Regulatory/supervisory accounting
C. Management accounting
,D. Tax accounting - ANSWER-C. Management accounting
Which one of the following best describes the purpose of rule hierarchies within
accounting frameworks?
Select one:
A. To determine which accounting framework should be used
B. To resolve conflicts among rules that preparers of financial statements may
encounter when applying those rules
C. To resolve differences between the United States and the European Union
D. To resolve differences between the accounting rules that apply to private versus
publicly traded companies - ANSWER-B. To resolve conflicts among rules that
preparers of financial statements may encounter when applying those rules
Which one of the following best describes the framework for tax accounting rules?
Select one:
A. Tax accounting rules are based on GAAP accounting rules.
B. Tax accounting rules are based on statutory accounting rules.
C. Tax accounting rules are determined independently.
D. Tax accounting rules can be based on GAAP or statutory accounting rules, or can be
determined independently, based on the tax laws for the jurisdiction in question. -
ANSWER-D. Tax accounting rules can be based on GAAP or statutory accounting
rules, or can be determined independently, based on the tax laws for the jurisdiction in
question.
For Generally Accepted Accounting Principles (GAAP), the hierarchy is generally led by
Select one:
A. The organization which initially established the rules that are in conflict with each
other.
B. The International Accounting Standards Board (IASB).
C. The organization in charge of securities regulation for the jurisdiction in question.
D. The Financial Accounting Standards Board (FASB). - ANSWER-C. The organization
in charge of securities regulation for the jurisdiction in question.
What is the primary purpose of an emerging issues task force within an accounting
framework?
Select one:
A. To determine official accounting standards for new or emerging issues as they
appear
B. To provide a liaison between the United States and the European Union on
accounting issues
C. To provide guidance for decisions on emerging issues faster than is required for an
official accounting standard
D. To develop tax regulations that apply to issues that may be unknown at the present
time - ANSWER-C. To provide guidance for decisions on emerging issues faster than is
required for an official accounting standard
, For Generally Accepted Accounting Principles (GAAP), second position in the hierarchy
is held by
Select one:
A. The standards set by the organization determined to have the highest "position of
interest" in the conflict.
B. The American Institute of Certified Professional Accountants (AICPA).
C. The European Union (EU).
D. The standards set by the specified accounting standard setter for the jurisdiction in
question. - ANSWER-D. The standards set by the specified accounting standard setter
for the jurisdiction in question.
In the United States, the top organization in the rules hierarchy for Generally Accepted
Accounting Principles has designated which one of the following organizations as the
accounting standard setter (although its rules are subject to veto)?
Select one:
A. The Securities and Exchange Commission (SEC)
B. The Financial Accounting Standards Board (FASB)
C. The International Accounting Standards Board (IASB)
D. The American Institute of Certified Professional Accountants (AICPA) - ANSWER-B.
The Financial Accounting Standards Board (FASB)
The focus of the deferral-matching accounting approach is
Select one:
A. The balance sheet.
B. The income statement.
C. The value of assets.
D. The value of liabilities. - ANSWER-B. The income statement.
Under an asset-liability accounting approach, when is revenue recognized?
Select one:
A. Once the insurer gains control of the asset resulting from the revenue
B. Upon completion of an impairment test to ensure revenue viability
C. As service is rendered
D. Over the policy period - ANSWER-A. Once the insurer gains control of the asset
resulting from the revenue
A change in accounting estimate
Select one:
A. May require special disclosure of the change.
B. Could possibly require recalculation of prior period results.
C. Requires specific implementation guidance.
D. Generally affects only the latest reporting period. - ANSWER-D. Generally affects
only the latest reporting period.
Historical cost is
Select one:
QUESTIONS WITH VERIFIED ANSWERS
Management accounting frameworks are usually based on modified versions of
generally accepted accounting principles and
Select one:
A. Regulatory accounting rules.
B. Tax accounting rules.
C. Statutory accounting rules.
D. Going-concern accounting rules. - ANSWER-A. Regulatory accounting rules.
What is one disadvantage to having one set of accounting rules for insurers?
Select one:
A. There is an increased lag time between the need for a change in rules and its
implementation.
B. There are increased costs in complying with the one, more-encompassing
framework.
C. Compromises must be made that are suboptimal to one or more sets of users.
D. Data collection may become less precise as users become lax in rule application. -
ANSWER-C. Compromises must be made that are suboptimal to one or more sets of
users.
In the United States, tax accounting rules for insurers are based on
Select one:
A. Generally accepted accounting principles.
B. Management accounting rules.
C. Regulatory accounting rules.
D. Statutory accounting principles. - ANSWER-D. Statutory accounting principles.
Accounting frameworks designed for a broad range of users may be referred to as
Select one:
A. Generally accepted accounting principles.
B. Management accounting.
C. Statutory accounting principles.
D. Regulatory/supervisory accounting. - ANSWER-A. Generally accepted accounting
principles.
A business wishes to cap large insurance claims of a given business unit when
evaluating the annual results of that unit. This would be an example of which one of the
following accounting frameworks?
Select one:
A. Generally accepted accounting principles
B. Regulatory/supervisory accounting
C. Management accounting
,D. Tax accounting - ANSWER-C. Management accounting
Which one of the following best describes the purpose of rule hierarchies within
accounting frameworks?
Select one:
A. To determine which accounting framework should be used
B. To resolve conflicts among rules that preparers of financial statements may
encounter when applying those rules
C. To resolve differences between the United States and the European Union
D. To resolve differences between the accounting rules that apply to private versus
publicly traded companies - ANSWER-B. To resolve conflicts among rules that
preparers of financial statements may encounter when applying those rules
Which one of the following best describes the framework for tax accounting rules?
Select one:
A. Tax accounting rules are based on GAAP accounting rules.
B. Tax accounting rules are based on statutory accounting rules.
C. Tax accounting rules are determined independently.
D. Tax accounting rules can be based on GAAP or statutory accounting rules, or can be
determined independently, based on the tax laws for the jurisdiction in question. -
ANSWER-D. Tax accounting rules can be based on GAAP or statutory accounting
rules, or can be determined independently, based on the tax laws for the jurisdiction in
question.
For Generally Accepted Accounting Principles (GAAP), the hierarchy is generally led by
Select one:
A. The organization which initially established the rules that are in conflict with each
other.
B. The International Accounting Standards Board (IASB).
C. The organization in charge of securities regulation for the jurisdiction in question.
D. The Financial Accounting Standards Board (FASB). - ANSWER-C. The organization
in charge of securities regulation for the jurisdiction in question.
What is the primary purpose of an emerging issues task force within an accounting
framework?
Select one:
A. To determine official accounting standards for new or emerging issues as they
appear
B. To provide a liaison between the United States and the European Union on
accounting issues
C. To provide guidance for decisions on emerging issues faster than is required for an
official accounting standard
D. To develop tax regulations that apply to issues that may be unknown at the present
time - ANSWER-C. To provide guidance for decisions on emerging issues faster than is
required for an official accounting standard
, For Generally Accepted Accounting Principles (GAAP), second position in the hierarchy
is held by
Select one:
A. The standards set by the organization determined to have the highest "position of
interest" in the conflict.
B. The American Institute of Certified Professional Accountants (AICPA).
C. The European Union (EU).
D. The standards set by the specified accounting standard setter for the jurisdiction in
question. - ANSWER-D. The standards set by the specified accounting standard setter
for the jurisdiction in question.
In the United States, the top organization in the rules hierarchy for Generally Accepted
Accounting Principles has designated which one of the following organizations as the
accounting standard setter (although its rules are subject to veto)?
Select one:
A. The Securities and Exchange Commission (SEC)
B. The Financial Accounting Standards Board (FASB)
C. The International Accounting Standards Board (IASB)
D. The American Institute of Certified Professional Accountants (AICPA) - ANSWER-B.
The Financial Accounting Standards Board (FASB)
The focus of the deferral-matching accounting approach is
Select one:
A. The balance sheet.
B. The income statement.
C. The value of assets.
D. The value of liabilities. - ANSWER-B. The income statement.
Under an asset-liability accounting approach, when is revenue recognized?
Select one:
A. Once the insurer gains control of the asset resulting from the revenue
B. Upon completion of an impairment test to ensure revenue viability
C. As service is rendered
D. Over the policy period - ANSWER-A. Once the insurer gains control of the asset
resulting from the revenue
A change in accounting estimate
Select one:
A. May require special disclosure of the change.
B. Could possibly require recalculation of prior period results.
C. Requires specific implementation guidance.
D. Generally affects only the latest reporting period. - ANSWER-D. Generally affects
only the latest reporting period.
Historical cost is
Select one:
