Intermediate Accounting Exam #1 || With Questions & Solutions (Rated A+)
Intermediate Accounting Exam #1 || With Questions & Solutions (Rated A+)
According to Statement of Financial Accounting Concepts No. 2, predictive value is an ingredient of the fundamental quality of:
Relevance: Faith...
, Intermediate Accounting Exam #1 ||
With Questions & Solutions (Rated A+)
According to Statement of Financial Accounting Concepts No. 2, predictive value is
an ingredient of the fundamental quality of:
Relevance: Faithful Representation:
a. yes no
b. yes yes
c. no no
d. no yes - ANSWER - a: yes; no
Financial information exhibits the characteristic of consistency when:
a. expenses are reposted as charges against revenue in the period in which they are
paid
b. companies apply the same accounting treatment to similar events, from period to
period
c. extraordinary gains and losses are not included on the income statement
d. accounting procedures are adopted which give a consistent rate of net income -
ANSWER - b. companies apply the same accounting treatment to similar events,
from period to period
In classifying the elements of financial statements, the primary distinction between
revenues and gains is
a. the materiality of the amounts involved
b. the likelihood that the transactions involved will recur in the future
c. the nature of the activities that gave rise to the transactions involved
d. the costs verses the benefits of the alternative methods of disclosing the
transactions involved - ANSWER - c. the nature of the activities that gave rise to the
transactions involved
Which of the following basic accounting assumptions is threatened by the existence
of severe inflation in the economy?
a. monetary unit assumption
b. periodicity assumption
c. going-concern assumption
d. economic entity assumption - ANSWER - a. monetary unit assumption
What accounting concept justifies the usage of depreciation and amortization
policies?
a. going-concern assumption
b. fair value principle
c. full disclosure principle
d. monetary unit assumption - ANSWER - a. going-concern assumption
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