D103 OA2 Intermediate Accounting I Quiz 2026 UPDATE
1. According to the FASB’s conceptual framework, what are the two primary qualitative
characteristics that make accounting information useful for decision-making?
A. Comparability and Consistency
B. Understandability and Neutrality
C. Timeliness and Verifiability
D. Relevance and Faithful Representation
Answer: D
Rationale: Relevance and Faithful Representation are the fundamental qualitative
characteristics in the FASB conceptual framework.
2. Which of the following is considered an ‘enhancing’ qualitative characteristic rather than a
fundamental one?
A. Confirmatory Value
B. Materiality
C. Completeness
D. Verifiability
Answer: D
,Rationale: Enhancing characteristics include comparability, verifiability, timeliness, and
understandability.
3. The process of admitting information into the financial statements is known as:
A. Realization
B. Allocation
C. Matching
D. Recognition
Answer: D
Rationale: Recognition is the process of formally recording or incorporating an item into
the financial statements.
4. Under the revenue recognition principle, when is revenue generally recognized?
A. When the cash is collected from the customer
B. When the performance obligation is satisfied
C. When the order is received
D. At the end of the accounting period
Answer: B
Rationale: Revenue is recognized when a company satisfies its performance obligation by
transferring a promised good or service to a customer.
, 5. Which financial statement provides information about an entity’s operating, investing, and
financing activities?
A. Income Statement
B. Statement of Retained Earnings
C. Balance Sheet
D. Statement of Cash Flows
Answer: D
Rationale: The Statement of Cash Flows categorizes cash receipts and payments into
operating, investing, and financing activities.
6. A multi-step income statement is primarily used to:
A. Show only two groupings: revenues and expenses
B. Highlight intermediate components of income like gross profit and operating income
C. Report comprehensive income in a separate statement
D. Calculate the dividends paid to shareholders
Answer: B
Rationale: A multi-step income statement separates operating from non-operating
activities and calculates gross profit.
7. How should ‘Discontinued Operations’ be reported on the income statement?
A. Net of tax, after income from continuing operations
1. According to the FASB’s conceptual framework, what are the two primary qualitative
characteristics that make accounting information useful for decision-making?
A. Comparability and Consistency
B. Understandability and Neutrality
C. Timeliness and Verifiability
D. Relevance and Faithful Representation
Answer: D
Rationale: Relevance and Faithful Representation are the fundamental qualitative
characteristics in the FASB conceptual framework.
2. Which of the following is considered an ‘enhancing’ qualitative characteristic rather than a
fundamental one?
A. Confirmatory Value
B. Materiality
C. Completeness
D. Verifiability
Answer: D
,Rationale: Enhancing characteristics include comparability, verifiability, timeliness, and
understandability.
3. The process of admitting information into the financial statements is known as:
A. Realization
B. Allocation
C. Matching
D. Recognition
Answer: D
Rationale: Recognition is the process of formally recording or incorporating an item into
the financial statements.
4. Under the revenue recognition principle, when is revenue generally recognized?
A. When the cash is collected from the customer
B. When the performance obligation is satisfied
C. When the order is received
D. At the end of the accounting period
Answer: B
Rationale: Revenue is recognized when a company satisfies its performance obligation by
transferring a promised good or service to a customer.
, 5. Which financial statement provides information about an entity’s operating, investing, and
financing activities?
A. Income Statement
B. Statement of Retained Earnings
C. Balance Sheet
D. Statement of Cash Flows
Answer: D
Rationale: The Statement of Cash Flows categorizes cash receipts and payments into
operating, investing, and financing activities.
6. A multi-step income statement is primarily used to:
A. Show only two groupings: revenues and expenses
B. Highlight intermediate components of income like gross profit and operating income
C. Report comprehensive income in a separate statement
D. Calculate the dividends paid to shareholders
Answer: B
Rationale: A multi-step income statement separates operating from non-operating
activities and calculates gross profit.
7. How should ‘Discontinued Operations’ be reported on the income statement?
A. Net of tax, after income from continuing operations
