BU127 Final Exam UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
Statement of financial position - CORRECT ANSWER Reports the financial position (assets,
liabilities, and shareholders equity) of an accounting entity at one point in time.
Accounting entity - CORRECT ANSWER Is the organization for which financial data are to be
collected.
Statement of comprehensive income - CORRECT ANSWER Reports the change in
shareholders' equity during a period from business activities, excluding exchanges with shareholders.
Statement of earnings - CORRECT ANSWER Reports the revenues and expenses of the
accounting period.
Accounting period - CORRECT ANSWER The time period covered by the financial
statements.
Statement of changes in equity - CORRECT ANSWER Reports all changes to shareholders'
equity during the accounting period.
Retained Earnings - CORRECT ANSWER Reflect the net earnings that have been generated
since the creation of the company but not distributed yet to shareholders as dividends.
Notes - CORRECT ANSWER Provide supplemental information about the financial condition
of a company, without which the financial statements cannot be fully understood.
IFRS - CORRECT ANSWER Are guidelines for the measurement rules used to develop the
information in financial statements.
Report to management - CORRECT ANSWER Indicates managements' primary responsibility
for financial statement information and the steps to ensure the accuracy of the company's records.
, Audit report - CORRECT ANSWER Describes the auditors' opinion of the fairness of the
financial statement presentations and the evidence gather to support that opinion.
Audit - CORRECT ANSWER Is an examination of the financial reports to ensure that they
represent what they claim and form to IFRS.
Relevance - CORRECT ANSWER Can influence a decision; it has predictive and/or
confirmatory value.
Material amounts - CORRECT ANSWER Are amounts that are large enough to influence a
user's decision.
Faithful representation - CORRECT ANSWER Suggests that information provided in financial
statements must reflect the substance of the underlying transactions, which may differ from their legal
form.
Comparability - CORRECT ANSWER Accounting information across business is enhanced
when similar accounting methods have been applied.
Verifiable - CORRECT ANSWER Information is _____________, if independent accountants
can agree on the nature and amount of a transaction.
Timely - CORRECT ANSWER Information enhances the information's ability to predict future
values and to confirm past values.
Understandability - CORRECT ANSWER Is the quality of information that enables users to
comprehend its meaning.
Cost constraint - CORRECT ANSWER Suggests that information should be produced only if
the perceived benefits of increased decision usefulness exceed the expected costs of providing that
information.
Separate-entity assumption - CORRECT ANSWER States that the activities of each business
must be accounted for separately from the activities of its owners.
QUESTIONS AND CORRECT ANSWERS
Statement of financial position - CORRECT ANSWER Reports the financial position (assets,
liabilities, and shareholders equity) of an accounting entity at one point in time.
Accounting entity - CORRECT ANSWER Is the organization for which financial data are to be
collected.
Statement of comprehensive income - CORRECT ANSWER Reports the change in
shareholders' equity during a period from business activities, excluding exchanges with shareholders.
Statement of earnings - CORRECT ANSWER Reports the revenues and expenses of the
accounting period.
Accounting period - CORRECT ANSWER The time period covered by the financial
statements.
Statement of changes in equity - CORRECT ANSWER Reports all changes to shareholders'
equity during the accounting period.
Retained Earnings - CORRECT ANSWER Reflect the net earnings that have been generated
since the creation of the company but not distributed yet to shareholders as dividends.
Notes - CORRECT ANSWER Provide supplemental information about the financial condition
of a company, without which the financial statements cannot be fully understood.
IFRS - CORRECT ANSWER Are guidelines for the measurement rules used to develop the
information in financial statements.
Report to management - CORRECT ANSWER Indicates managements' primary responsibility
for financial statement information and the steps to ensure the accuracy of the company's records.
, Audit report - CORRECT ANSWER Describes the auditors' opinion of the fairness of the
financial statement presentations and the evidence gather to support that opinion.
Audit - CORRECT ANSWER Is an examination of the financial reports to ensure that they
represent what they claim and form to IFRS.
Relevance - CORRECT ANSWER Can influence a decision; it has predictive and/or
confirmatory value.
Material amounts - CORRECT ANSWER Are amounts that are large enough to influence a
user's decision.
Faithful representation - CORRECT ANSWER Suggests that information provided in financial
statements must reflect the substance of the underlying transactions, which may differ from their legal
form.
Comparability - CORRECT ANSWER Accounting information across business is enhanced
when similar accounting methods have been applied.
Verifiable - CORRECT ANSWER Information is _____________, if independent accountants
can agree on the nature and amount of a transaction.
Timely - CORRECT ANSWER Information enhances the information's ability to predict future
values and to confirm past values.
Understandability - CORRECT ANSWER Is the quality of information that enables users to
comprehend its meaning.
Cost constraint - CORRECT ANSWER Suggests that information should be produced only if
the perceived benefits of increased decision usefulness exceed the expected costs of providing that
information.
Separate-entity assumption - CORRECT ANSWER States that the activities of each business
must be accounted for separately from the activities of its owners.
