TAMUCC ACCT 5312 Comprehensive
Review | EXAM ELABORATIONS
Question 1
The elements of financial statements include investments by owners. These are
increases in an entity’s net assets resulting from owners’
a. transfers of assets to the entity.
b. rendering services to the entity.
c. satisfaction of liabilities of the entity.
d. All of these answer choices are correct.
- ANSWER- All of these answer choices are correct.
Question 2
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 versus the benefits of the alternative methods of disclosing the
transactions involved.
- ANSWER- the nature of the activities that gave rise to the transactions
involved.
Question 3
One of the elements of financial statements is comprehensive income. As
described in Statement of Financial Accounting Concepts No. 6, “Elements of
Financial Statements,” comprehensive income is equal to
a. revenues minus expenses plus gains minus losses.
b. revenues minus expenses plus gains minus losses plus investments by owners
minus distributions to owners.
,c. revenues minus expenses plus gains minus losses plus investments by owners
minus distributions to owners plus assets minus liabilities.
d. None of these answer choices are correct.
- ANSWER- None of these answer choices are correct.
Question 4
Which of the following elements of financial statements is not a component of
comprehensive income?
a. Revenues
b. Distributions to owners
c. Losses
d. Expenses
- ANSWER- Distributions to owners
Question 5
Which of the following basic elements of financial statements is more associated
with the balance sheet than the income statement?
a. Equity
b. Revenue
c. Gains
d. Expenses
- ANSWER- Equity
Question 6
Neutrality is an ingredient of which fundamental quality of information?
a. Faithful representation
b. Comparability
c. Relevance
d. Understandability
- ANSWER- Faithful representation
,Question 7
According to Statement of Financial Accounting Concepts No. 2, neutrality is an
ingredient of the fundamental quality of
Relevance / Faithful Representation
a. Yes / Yes
b. No / Yes
c. Yes / No
d. No / No
- ANSWER- No / Yes
Question 8
Neutrality means that information
a. provides benefits which are at least equal to the costs of its preparation.
b. can be compared with similar information about an enterprise at other points in
time.
c. would have no impact on a decision maker.
d. cannot favor one set of interested parties over another.
- ANSWER- cannot favor one set of interested parties over another.
Question 9
What is prudence or conservatism?
a. Understanding assets and net income.
b. When in doubt, recognizing the option that is least likely to overstate assets
and income.
c. Recognizing the option that is least likely to overstate assets and income.
d. Recognizing revenue when earned and realized.
- ANSWER- When in doubt, recognizing the option that is least likely to
overstate assets and income.
, Question 10
The basic accounting concept that refers to the tendency of accountants to resolve
uncertainty in favor of understating assets and revenues and overstating liabilities
and expenses is known as
a. prudence or conservatism
b. the materiality concept.
c. the substance over form principle.
d. the industry practices concept.
- ANSWER- prudence or conservatism
Question 11
In matters of doubt and great uncertainty, accounting issues should be resolved by
choosing the alternative that has the least favorable effect on net income, assets,
and owners' equity. This guidance comes from
a. the cost constraint.
b. the industry practices constraint.
c. prudence or conservatism
d. the full disclosure principle.
- ANSWER- prudence or conservatism
Question 12
What is the "expectations gap"?
a. The difference between what the public thinks the accountant should do and
what the accountant knows they should do.
b. The difference between what the public thinks the accountant should not do
and what the accountant knows they should do.
c. The gap between expected and actual audit fees.
d. The difference between accounting rules and tax rules.
- ANSWER- The difference between what the public thinks the accountant
should not do and what the accountant knows they should do.
Review | EXAM ELABORATIONS
Question 1
The elements of financial statements include investments by owners. These are
increases in an entity’s net assets resulting from owners’
a. transfers of assets to the entity.
b. rendering services to the entity.
c. satisfaction of liabilities of the entity.
d. All of these answer choices are correct.
- ANSWER- All of these answer choices are correct.
Question 2
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 versus the benefits of the alternative methods of disclosing the
transactions involved.
- ANSWER- the nature of the activities that gave rise to the transactions
involved.
Question 3
One of the elements of financial statements is comprehensive income. As
described in Statement of Financial Accounting Concepts No. 6, “Elements of
Financial Statements,” comprehensive income is equal to
a. revenues minus expenses plus gains minus losses.
b. revenues minus expenses plus gains minus losses plus investments by owners
minus distributions to owners.
,c. revenues minus expenses plus gains minus losses plus investments by owners
minus distributions to owners plus assets minus liabilities.
d. None of these answer choices are correct.
- ANSWER- None of these answer choices are correct.
Question 4
Which of the following elements of financial statements is not a component of
comprehensive income?
a. Revenues
b. Distributions to owners
c. Losses
d. Expenses
- ANSWER- Distributions to owners
Question 5
Which of the following basic elements of financial statements is more associated
with the balance sheet than the income statement?
a. Equity
b. Revenue
c. Gains
d. Expenses
- ANSWER- Equity
Question 6
Neutrality is an ingredient of which fundamental quality of information?
a. Faithful representation
b. Comparability
c. Relevance
d. Understandability
- ANSWER- Faithful representation
,Question 7
According to Statement of Financial Accounting Concepts No. 2, neutrality is an
ingredient of the fundamental quality of
Relevance / Faithful Representation
a. Yes / Yes
b. No / Yes
c. Yes / No
d. No / No
- ANSWER- No / Yes
Question 8
Neutrality means that information
a. provides benefits which are at least equal to the costs of its preparation.
b. can be compared with similar information about an enterprise at other points in
time.
c. would have no impact on a decision maker.
d. cannot favor one set of interested parties over another.
- ANSWER- cannot favor one set of interested parties over another.
Question 9
What is prudence or conservatism?
a. Understanding assets and net income.
b. When in doubt, recognizing the option that is least likely to overstate assets
and income.
c. Recognizing the option that is least likely to overstate assets and income.
d. Recognizing revenue when earned and realized.
- ANSWER- When in doubt, recognizing the option that is least likely to
overstate assets and income.
, Question 10
The basic accounting concept that refers to the tendency of accountants to resolve
uncertainty in favor of understating assets and revenues and overstating liabilities
and expenses is known as
a. prudence or conservatism
b. the materiality concept.
c. the substance over form principle.
d. the industry practices concept.
- ANSWER- prudence or conservatism
Question 11
In matters of doubt and great uncertainty, accounting issues should be resolved by
choosing the alternative that has the least favorable effect on net income, assets,
and owners' equity. This guidance comes from
a. the cost constraint.
b. the industry practices constraint.
c. prudence or conservatism
d. the full disclosure principle.
- ANSWER- prudence or conservatism
Question 12
What is the "expectations gap"?
a. The difference between what the public thinks the accountant should do and
what the accountant knows they should do.
b. The difference between what the public thinks the accountant should not do
and what the accountant knows they should do.
c. The gap between expected and actual audit fees.
d. The difference between accounting rules and tax rules.
- ANSWER- The difference between what the public thinks the accountant
should not do and what the accountant knows they should do.
