Intermediate Accounting Exam #1 questions and answers 100% verified.

Intermediate Accounting Exam #1 questions and answers 100% verified. providers of financial information - correct t oriented companies, not for profit entities, households external users of financial information - correct tors, creditors, employees, banks, labor unions, customers, suppliers, gov regulatory agencies conceptual framework - correct lying structure for the development of accounting standards GAAP - correct ally accepted accounting principles- body of accounting standards FASB - correct cial accounting standards board 3rd level of framework - correct raints, assumptions, principles (CAP) 2nd level of framework - correct tative characteristics, elements 1st levee of framework - correct tive: to provide financial information useful to capital providers qualitative characteristics - correct answers.DECISION USEFULNESS: 2 parts, relevance and faithful representation relevance - correct answers.3 parts: predictive, confirmatory value, materiality pertinent to a decision at hand faithful representation - correct answers.3 parts: completeness, neutrality, free from error, conservatism exists when there is an agreement between a measure and the phenomenon it purports to represent predictive value - correct useful in predicting the future confirmatory value - correct confirms expectations materiality - correct rns relative size of an item and its effect on decisions completeness - correct ins all necessary information neutrality - correct om from bias free from error - correct errors or omissions conservatism - correct ntants require greater verification before recognizing good news than bad news enhancing qualitative characteristics - correct rability, verifiability, timeliness and understandability comparability and consistency - correct tant for making interfirm comparisons applying the same accounting practices overtime verifiability - correct nsus among different measures timeliness - correct mation is available prior to a decision understandability - correct understand the information in the context of the decision being made constraints - correct -benefit, materiality, conservatism cost-benefit - correct res consideration of the costs and value of information elements of financial statements - correct ing blocks with which financial statements are constructed liabilities - correct ble future sacrifices of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events assets - correct ble future economic benefits obtained or controlled by a particular entity as a result of past transactions or events equity - correct answers.(net assets) called shareholders equity or stockholders equity for corporations. its the residual interest in the assets of an entity that remains after deducting its liabilities investments by owners - correct ases in equity of a business resulting from transfers to it from other entities of something of value to obtain or increase ownership interests in it distribution to owners - correct ases in equity from transfers to owners comprehensive income - correct e in business equity during a period from transactions and other events/circumstances from non owner sources. all changes in equity in period except those resulting from investments by/distributions to owners revenues - correct ws or other enhancements of assets of an entity or settlements of its liabilities during a period from delivering or producing goods, rendering services, or other activities that constitute the entities ongoing major/central functions expenses - correct ows or other using up of assets or incurrences of liabilities during a period from delivering or producing goods, rendering services, or other activities that constitute the entities ongoing major or central operations gains - correct ases in equity from peripheral or incidental transactions of an entity losses - correct sent decreases in equity arising from peripheral or incidental transactions of an entity 4 underlying assumptions - correct mic entity, going concern, monetary unit, periodicity economic entity - correct mic events can be identified with an economic entity going concern - correct ess will continue to operate indefinitely periodicity - correct s the life of a company to be divided into artificial time periods to provide timely information monetary unit - correct cial statement elements should be measured in a particular monetary unit recognition - correct should be recognized when it meets these 4 criteria 1. definition- item meets the definition of an element of financial statements 2. measurability- item has relevant attribute measurable with sufficient reliability 3. relevance- info about it is capable of making a difference in user decisions 4. reliability- info is representationally faithful, verifiable, neutral revenue recognition: realization principle - correct answers.2 criteria 1. earnings process complete or virtually complete 2. reasonable certainty as to the collectibility of the asset to be received expense recognition: matching principle - correct answers.-cause and effect relationship between revenue and its expense -associating an expense with the revenues recognized in a specific time period -systematic and rational allocation to specific time periods(depreciation, etc) -in period incurred, without regard to related revenues ***MEASUREMENT*** - correct t to be recognized. 5 ways 1. historical cost 2. net realizable value 3. current cost 4. present/discontinued slue of future cash flows 5. fair value historical cost - correct nal transaction value (given at initial exchange) net realizable value - correct t of cash in which an asset is expected to be converted in the ordinary course of business(example, anticipating bad debts etc) current cost - correct that would be incurred to purchase or reproduce the goods present value - correct future cash flows as the basis for accounting measurement and also asserts that the objective in valuing an asset or liability using percent value is to approximate its fair value fair value - correct that would be received to sell assets or paid to transfer a liability in an orderly transaction between market participants at the measurement date full disclosure principle - correct cial reports should include all information that could effect the decisions being made by external users