ACCT 327 Final (cline) Exam Questions and Answers (Verified Answers) Updated (Actual Exam) LATEST VERSION!!ACCT 327 Final (cline) Exam Questions and Answers (Verified Answers) Updated (Actual Exam) LATEST VERSION!!

ACCT 327 Final (cline) Exam Questions and Answers (Verified Answers)
Updated (Actual Exam) LATEST VERSION!!ACCT 327 Final (cline) Exam
Questions and Answers (Verified Answers) Updated (Actual Exam) LATEST
VERSION!!




Ch 1 (4%) - (answer)



Good credit and investment decisions are necessary for proper... - (answer)Capital Allocation



Why do we need a consistent framework - (answer)- useful accounting rules for decision-makers

- consistent accounting rules over time

- quick response to accounting issues that pop up



objective of financial reporting - (answer)to provide financial information about the reporting entity that
is useful to present/potential investors, lenders, and creditors in decisions about providing resources to
the entity: DECISION USEFULNESS



Fundamental decision useful characyeristics - (answer)Relevance and Faithful representation



Relevence - (answer)predictive value (trends), confirmatory value(were expectations met), materiality(is
this a big deal)



Faithful Representation - (answer)complete, neutral, free from error (conflicts w/ materiality)



Enhancing fundamental qualities - (answer)- comparability

- verifiability

- timeliness

- conservatism

,ACCT 327 Final (cline) Exam Questions and Answers (Verified Answers)
Updated (Actual Exam) LATEST VERSION!!ACCT 327 Final (cline) Exam
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- understandability



Asset - (answer)provide future econ benefit controlled by comp as result of past transaction
(real/premenant)



Liabilities - (answer)probable future sacrifices of econ benefits as a result of past transactions
(real/premenant)



Equity - (answer)left over after A-L, leftovers of earnings for investors (real/premenant)



Revenues and expenses - (answer)Arises from income statement activities that constitute the entity's
ongoing major or central operations. (nominal/temporary)



Gains and Losses - (answer)increases or decreases in equity from peripheral or incidental transactions of
an entity (nominal/temporary)



Assumptions - (answer)economic entity, going concern, monetary unit, periodicity (artificial time
periods)



Revenue Recognition Principle - (answer)Record revenue in the period in which it's earned

- Contract based approach

1. identify contract

2. performance obligations

3. transaction price

, ACCT 327 Final (cline) Exam Questions and Answers (Verified Answers)
Updated (Actual Exam) LATEST VERSION!!ACCT 327 Final (cline) Exam
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4. allocate trans price to perf ob

5. recog rev when perf ob satisified



Expense recognition principle (matching principle) - (answer)a company records the expenses it incurred
to generate the revenue reported

- depreciation used when cant so this (allocation)

- period costs (S&A exp) rec when incurred



measurment principle - (answer)historical cost

- verifiable

- not relevant

fair value

- not verifiable

- relevant (not faithful rep)

- conservatism

Level 1: observe input, quote price, identical, active mkt (stock)

Level 2: not quoted but observable corroborated (used car)

Level 3: Unobservable inputs, disclosure, assume (disc CF's)



Cost effectiveness constraint - (answer)standard-setting bodies choose rules:

decision-making benefits > costs of providing info