,Answer Key
Test name: chapter 1
1)
TERM PHRASE Term number
that matches
the phrase.
1 . Predictive value Information is useful in 1
projecting cash flows.
2 . Relevance Pertinent to the decision at 2
hand.
3 . Distribution to Information is available prior 5
owners to the decision.
4. Confirmatory Decrease in equity due to 3
value transfers to owners.
5 . Timeliness Information confirms 4
expectations.
2)
TERM PHRASE Term number
that matches
the phrase.
1 . Gain Along with relevance, a 5
fundamental decision-specific
quality.
2 . Materiality Results if an asset is sold for 1
more than book value.
3 . Completeness Contains all information 3
necessary for faithful
representation.
4 . Comprehensive The change in equity from 4
income nonowner transactions.
Version 1 1
, 5 . Faithful Concerns the decision-making 2
representation impact of both the amount and
nature of an item.
3)
TERM PHRASE Term number
that matches
the phrase.
1 . Neutrality Important in analysis between 2
firms.
2 . Comparability Accounting information should 1
be unbiased.
3 . Consistency The decision to include an 5
amount in the financial
statements.
4 . Cost-effectiveness Applying the same accounting 3
practices over time.
5 . Recognition Considers the value of using 4
information relative to cost of
providing it.
4)
TERM PHRASE Term number
that matches
the phrase.
1 . Monetary unit Implies consensus among 2
assumption different observers.
2 . Verifiability Assumes all transactions can be 3
identified with a particular
entity.
3 . Economic entity Assumes an entity will continue 4
assumption to operate indefinitely.
4. Going concern Requires reporting the 5
assumption financial life of an entity in
discrete time frames.
5 . Periodicity Ignores the possibility of 1
assumption inflation.
5)
TERM PHRASE Term number
that matches
the phrase.
1 . Historical cost Basis of measurement for fixed 1
Version 1 2
, assets.
2 . Materiality Discounts future cash flows. 5
3 . Revenue Occurs when goods or services 3
recognition are transferred to the
customer.
4 . Full disclosure Reporting of all information 4
that could affect decisions.
5 . Present value Application of GAAP sometimes 2
avoided under this constraint.
6)
TERM PHRASE Term number
that matches
the phrase.
1 . Financial Undermines representational 3
Accounting Standards faithfulness by being
Board inconsistent with neutrality.
2. Accounting It established GAAP before the 2
Principles Board FASB.
3 . Conservatism Its EITF Issues are GAAP when 1
entered in the Accounting
Standards Codification.
4 . American It has the authority to set U.S. 5
Institute of CPAs accounting standards.
(AICPA)
5 . Securities and It is the national organization 4
Exchange Commission for CPAs in the United States.
7)
TERM PHRASE Term number
that matches
the phrase.
1 . Expenses Net assets. 2
2 . Equity Outflows of resources to 1
generate revenues.
3 . Distributions to Cash dividends. 3
owners
4. Investments by Claims of creditors against 5
owners the assets of a business.
5. Liabilities Transfers of resources in 4
exchange for common and
preferred stock.
Version 1 3
Test name: chapter 1
1)
TERM PHRASE Term number
that matches
the phrase.
1 . Predictive value Information is useful in 1
projecting cash flows.
2 . Relevance Pertinent to the decision at 2
hand.
3 . Distribution to Information is available prior 5
owners to the decision.
4. Confirmatory Decrease in equity due to 3
value transfers to owners.
5 . Timeliness Information confirms 4
expectations.
2)
TERM PHRASE Term number
that matches
the phrase.
1 . Gain Along with relevance, a 5
fundamental decision-specific
quality.
2 . Materiality Results if an asset is sold for 1
more than book value.
3 . Completeness Contains all information 3
necessary for faithful
representation.
4 . Comprehensive The change in equity from 4
income nonowner transactions.
Version 1 1
, 5 . Faithful Concerns the decision-making 2
representation impact of both the amount and
nature of an item.
3)
TERM PHRASE Term number
that matches
the phrase.
1 . Neutrality Important in analysis between 2
firms.
2 . Comparability Accounting information should 1
be unbiased.
3 . Consistency The decision to include an 5
amount in the financial
statements.
4 . Cost-effectiveness Applying the same accounting 3
practices over time.
5 . Recognition Considers the value of using 4
information relative to cost of
providing it.
4)
TERM PHRASE Term number
that matches
the phrase.
1 . Monetary unit Implies consensus among 2
assumption different observers.
2 . Verifiability Assumes all transactions can be 3
identified with a particular
entity.
3 . Economic entity Assumes an entity will continue 4
assumption to operate indefinitely.
4. Going concern Requires reporting the 5
assumption financial life of an entity in
discrete time frames.
5 . Periodicity Ignores the possibility of 1
assumption inflation.
5)
TERM PHRASE Term number
that matches
the phrase.
1 . Historical cost Basis of measurement for fixed 1
Version 1 2
, assets.
2 . Materiality Discounts future cash flows. 5
3 . Revenue Occurs when goods or services 3
recognition are transferred to the
customer.
4 . Full disclosure Reporting of all information 4
that could affect decisions.
5 . Present value Application of GAAP sometimes 2
avoided under this constraint.
6)
TERM PHRASE Term number
that matches
the phrase.
1 . Financial Undermines representational 3
Accounting Standards faithfulness by being
Board inconsistent with neutrality.
2. Accounting It established GAAP before the 2
Principles Board FASB.
3 . Conservatism Its EITF Issues are GAAP when 1
entered in the Accounting
Standards Codification.
4 . American It has the authority to set U.S. 5
Institute of CPAs accounting standards.
(AICPA)
5 . Securities and It is the national organization 4
Exchange Commission for CPAs in the United States.
7)
TERM PHRASE Term number
that matches
the phrase.
1 . Expenses Net assets. 2
2 . Equity Outflows of resources to 1
generate revenues.
3 . Distributions to Cash dividends. 3
owners
4. Investments by Claims of creditors against 5
owners the assets of a business.
5. Liabilities Transfers of resources in 4
exchange for common and
preferred stock.
Version 1 3
