SFAS No. 82 eliminated the constant dollar income disclosures required by SFAS
No.33.
The SEC requires disclose of both retrospective and prospective information in the
Management’s Discussion and Analysis section of the annual report.
SFAS No. 87 was the first accounting standard to argue that the cost of providing
pension benefits should be spread over the remaining service life of employees.
The IASB has not yet promulgated a conceptual framework.
An objective of translation under SFAS No. 52 is to avoid reporting
foreign-currency-denominated operations as if they had occurred in U.S. dollars.
ABP Opinion No. 8 was consistent with the revenue-expense approach.
There are often trade-offs between objectivity and the usefulness of numbers generated
by the measurement process.
The measurement date for determining the value of a stock option is usually the
exercise date.
Predicting future legal changes that have not yet been enacted should be a major
consideration in the recognition of future events.
The quality of understandability is a characteristic influenced by both users and
preparers of accounting information.
SFAS No. 33 specified replacement cost as the basis of the primary financial
statements.
A constructive obligation is one that is implied rather than expressly written.
From a theoretical standpoint, which of the following represents the approach to interim
reporting with the most validity?
a. The integral view
b. The disjointed view
c. The discrete view
d. The linked view
Which of the following concepts applies to users of financial statements?
a. Comparability
b. Consistency
c. Uniformity
d. Both b and c
Which of the following is a true statement regarding APB Opinion No. 5?
a. It took a legalistic approach to determining whether a lease was in substance a
purchase.
b. The stated objective was to clarify ARB 38, not change it.
c. Cancellability was viewed as mitigating the executory nature of lease contracts.
d. It greatly increased the number of leases that were capitalized.
Which of the following is not true regarding capital market research?
a. Studies have found a low correlation between the variability of accounting earnings
and beta.
b. Studies have found a strong association between accounting-based ratios and the
market measure of risk.
c. Studies have found that supplemental segment (line of business) disclosures resulted
in a revision of systematic risk, indicating that such information is useful for risk
assessments.
d. At least one study has found that pension information is not useful for risk
assessments.
Which of the following valuation methods is frequently referred to as a process of
orderly liquidation?
a. Exit valuation
b. Entry value
c. Replacement cost
d. Historical cost
Which of the following is not true regarding agency theory?
a. It is also called contracting theory.
b. Its underlying assumption is that individuals act in their own best self-interest.
c. Few agency relationships between parties may be defined or governed by accounting
numbers.
d. It is concerned with the various costs of monitoring and enforcing relations among
management, owners, creditors, and government.
Which of the following is not a true statement?
a. Consolidated reporting emerged in the early 1900s in response to the growth of
holding companies.
b. Consolidation reporting presumes that the accounting fiction of a group entity is
more meaningful than defining the reporting entity in legal terms.
c. There are moves afoot to curtail consolidated reporting.
d. The relevant circumstance in the reporting of intercorporate equity investments
centers on the notion of investor control, but, in practice, the magnitude of ownership
has been the guiding criterion.
Which of the following is not a formal definition of assets that has been used by the
accounting profession in the United States?
a. Something represented by a debit balance that is or would be properly carried
forward upon a closing of books of account according to the rules or principles of
accounting, on the basis that it represents either a property right or value acquired, or an
expenditure made which has created a property or is properly applicable to the future
b. Economic resources of an enterprise that are recognized and measured in conformity
with generally accepted accounting principles as well as certain deferred charges that
are not resources but that are recognized and measured in conformity with generally
accepted accounting principles
c. Probable future economic benefits obtained or controlled by a particular entity as a
result of past transactions or events
d. Only those economic resources that can be severed from the firm and sold
The research approach that examines the association between accounting data reported
in annual financial statements and the levels of stock prices is called:
a. Cross-sectional valuation
b. Investor survey analysis
c. Accounting information usefulness research
d. Time series analysis
Which of the following is a true statement?
a. The SEC initially required the accounting profession to consult with it before setting
any specific accounting principles.
b. The SEC was created by Congress to oversee the accounting profession.
c. The SEC was given authority to prescribe the form and content of financial
information filed with the SEC.
d. The SEC formed the Committee on Accounting Procedure to develop a
comprehensive set of accounting principles.
Which of the following is a value judgment found in SFAC No. 1?
a. Accounting reports should become the only relevant source of information about
enterprises.
b. Cash basis accounting is extremely useful in assessing and predicting earning power
and cash flows of an enterprise.
c. Information is not costless to provide, so benefits of usage should exceed costs of
production.
d. Users of accounting information have limited ability regarding financial information
and reporting.
Computations and comparisons of accounting ratios is possible because:
a. The zero point in accounting implies “nothingness” in terms of dollar amount.
b. Accounting measures are on an interval scale.
c. Assets and liabilities are listed in the order of liquidity in the balance sheet.
d. Accounting is a basic classification system.
The nonoperating section of the income statement includes:
a. Extraordinary items.
b. Extraordinary items and discontinued operations.
c. Extraordinary items, accounting principle changes, and discontinued operations.
d. Extraordinary items, accounting principle changes, discontinued operations, and prior
period adjustments.
Which of the following documents was the first to be based on an orientation toward
user relevance?
a. “Objectives of Financial Statements” (Trueblood Committee Report)
b. “Basic Concepts and Accounting Principles Underlying Financial Statements of
Business Enterprises” (APB Statement 4)
c. “A Statement of Basic Accounting Theory” (ASOBAT)
d. “Statement of Accounting Theory and Theory Acceptance” (SATTA)
Which of the following statements does not apply to intrastatement tax allocation?
a. It is also referred to as intraperiod tax allocation.
b. It includes showing prior period adjustments net of tax effect.
c. It includes showing extraordinary items, changes in accounting principle, and
operations of discontinued segments net of tax effect.
d. It is difficult to employ, and its costs appear to outweigh its benefits.
In the terminology suggested by the FASB, which of the following terms refers to the
separate business enterprises that enter into a business combination?
a. Constituent companies
b. Combined companies
c. Subsidiary companies
d. Consolidated companies
Which of the following has/have been the accepted valuation system for published
financial statements throughout the financial history of the United States?
a. Historical cost
b. Income tax valuation
c. Discounted cash flows
d. General price level
Which of the following accounting standards began a shift toward an asset-liability
orientation in pension reporting?
a. APB Opinion 8
b. SFAS No. 87
c. SFAS No. 106
d. SFAS No. 132