QUIZ #2
Question 1
1. Generally accepted accounting principles
A. are fundamental truths or axioms that can be derived from laws of nature.
B. have been specified in detail in the FASB conceptual framework.
C. derive their credibility and authority from general recognition and acceptance by the
accounting profession.
D. derive their authority from legal court proceedings.
0.885 points
Question 2
1. A soundly developed conceptual framework of concepts and objectives should
A. increase financial statement users’ understanding of and confidence in financial
reporting.
B. enhance comparability among companies’ financial statements.
C. allow new and emerging practical problems to be more quickly solved.
D. All of these answer choices are correct.
0.885 points
Question 3
1. Which of the following is not true concerning a conceptual framework in accounting?
A. It should be a basis for standard-se+ng.
B. It should allow practical problems to be solved more quickly by reference to it.
C. It should be based on fundamental truths that are derived from the laws of nature.
D. All of these answer choices are true.
0.885 points
Question 4
1. What is a purpose of having a conceptual framework?
A. To enable the profession to more quickly solve emerging practical problems.
B. To provide a foundation from which to build more useful standards.
C. Neither a nor b.
D. To enable the profession to more quickly solve emerging practical problems and to
provide a foundation from which to build more useful standards.
0.885 points
Question 5
1. Which of the following is not a benefit associated with the FASB Conceptual Framework Project?
A. A conceptual framework should increase financial statement users’ understanding of and
confidence in financial reporting.
B. A coherent set of accounting standards and rules should result.
C. Business entities will need far less assistance from accountants because the financial
reporting process will be quite easy to apply.
D. Practical problems should be more quickly solvable by reference to an existing
conceptual framework.
0.885 points
Question 6
1. In the conceptual framework for financial reporting, what provides “the why”–the purpose of
accounting?
A. Objective of financial reporting
B. Qualitative characteristics of accounting information
C. Elements of financial statements
D. Recognition, measurement, and disclosure concepts such as assumptions, principles, and
constraints
0.885 points
Question 7
1. The underlying theme of the conceptual framework is
A. understandability.
B. decision usefulness.
C. faithful representation.
D. comparability.
0.885 points
Question 8
1. The objective of general-purpose financial reporting is to provide financial information about a
reporting entity to each of the following except
A. potential equity investors.
B. potential lenders.
C. present investors.
D. All of these answers are correct.
0.885 points
Question 9
1. What is the primary objective of financial reporting as indicated in the conceptual framework?
A. Provide information that is useful to those making investing and credit decisions.
B. Provide information that is useful to management.
C. Provide information about those investing in the entity.
D. All of these answer choices are correct.
0.885 points
Question 10
1. If the LIFO inventory method was used last period, it should be used for the current and
following periods because of
A. timeliness.
B. comparability.
C. verifiability.
D. materiality.
0.885 points
Question 11
1. What is the following is a characteristic describing the primary quality of relevance?
A. Predictive value.
B. Verifiability.
C. Materiality.
D. Understandability.
0.885 points
Question 12
1. Which of the following is a fundamental quality of useful accounting information?
A. Comparability.
B. Relevance.
C. Neutrality.
D. Materiality.
0.885 points
Question 13
1. Which of the following is a primary quality of useful accounting information?
A. Faithful representation.
B. Consistency.
C. Conservatism.
D. Comparability.
Question 14
1. What is meant by comparability when discussing financial accounting information?
A. Information is timely.
B. Information that is measured and reported in a similar fashion across companies.
C. Information has predictive or confirmatory value.
D. Information is reasonably free from error.
0.885 points
Question 15
1. What is meant by consistency when discussing financial accounting information?
A. Information is timely.
B. Information is measured similarly across the industry.
C. Information is verifiable.
D. Information that is measured and reported in a similar fashion across points in
time.
0.885 points
Question 16
1. Which of the following is an ingredient of relevance?
A. Materiality.
B. Timeliness.
C. Verifiability.
D. Neutrality.
0.885 points
Question 17
1. Which of the following is an ingredient of faithful representation?
A. Materiality.
B. Predictive value.
C. Confirmatory value.
D. Neutrality.
0.885 points
Question 18
1. Changing the method of inventory valuation should be reported in the financial
statements under what qualitative characteristic of accounting information?
A. Verifiability.
B. Timeliness.
C. Comparability.
D. Consistency.
0.885 points
Question 19
1. Company A issuing its annual financial reports within one month of the end of the year is
an example of which enhancing quality of accounting information?
A. Comparability.
B. Timeliness.
C. Understandability.
D. Verifiability.
0.885 points
Question 20
1. What is the quality of information that is capable of making a difference in a decision?
A. Faithful representation.
B. Relevance.
