TAMUCC ACCT 5312 Comprehensive Review |
EXAM ELABORATIONS
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. ** Answ** d
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.
** Answ** c
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. ** Answ** d
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 ** Answ** b
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 ** Answ** a
Neutrality is an ingredient of which fundamental quality of information?
a. Faithful representation.
b. Comparability.
,c. Relevance.
d. Understandability. ** Answ** a
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 ** Answ** b
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. ** Answ** d
What is prudence or conservatism?
a. Understating 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. ** Answ** b
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 ** Answ** a
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 ** Answ** c
What is the "expectations gap"?
a. The difference between what the public thinks the accountant should not do and what the
accountant knows they should do.
EXAM ELABORATIONS
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. ** Answ** d
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.
** Answ** c
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. ** Answ** d
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 ** Answ** b
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 ** Answ** a
Neutrality is an ingredient of which fundamental quality of information?
a. Faithful representation.
b. Comparability.
,c. Relevance.
d. Understandability. ** Answ** a
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 ** Answ** b
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. ** Answ** d
What is prudence or conservatism?
a. Understating 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. ** Answ** b
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 ** Answ** a
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 ** Answ** c
What is the "expectations gap"?
a. The difference between what the public thinks the accountant should not do and what the
accountant knows they should do.
