CFAS (Midterm): Key Standards and Applications
Asset, Liability and Equity - correct answer ✔✔The elements directly related to the measurement of
financial position
At a moment in time - correct answer ✔✔Elements of Financial position describe amounts of resources
and claims against resources
Asset and Liability - correct answer ✔✔Elements directly related tp the measurement of financial
performance
Asset - correct answer ✔✔Present economic resource controlled by the entity as a result of past events
Liability - correct answer ✔✔Present obligation of the entity to transfer an economic resource as a result
of the past events
Equity - correct answer ✔✔Residual interest in the assets of an entity that remains after deducting its
liabilities. In a business enterprise, the equity is the ownership interest.
Income - correct answer ✔✔Increase in asset or decrease in liability that results in increase in equity
other than contribution form equity holders
Expense - correct answer ✔✔Decrease in asset or an increase in liability that results in decrease in
equity other than distribution from equity holders
Revenue - correct answer ✔✔Arise in the course of ordinary activities of the entity and is referred to by
a variety of different names including sales, fees, dividends royalties and rent
Which statement in relation to income is true?
a. income encompasses both revenue and gain
b. Revenue encompasses both income and gain
, c. Gain encompasses both income and revenue
d. Income encompasses revenue only - correct answer ✔✔a
Which is not within the new definition of an asset - correct answer ✔✔Future economic benefit is
expected to flow to the entity
Criteria need not be satisfied fir a liability ti exist - correct answer ✔✔The settlement is expected to
result of past event
Present Ovligation exists as result of past events if - correct answer ✔✔The entity has already obtained
economic benefit and must transfer economic resource
Rights that have the potential to produce economic benefits and correspond to an obligation of another
entity include all, except
a. right to receive cash
b. right to receive goods
c. right to exchange economic resources with another entity in favorable terms
d. right over property, plant and equipment - correct answer ✔✔d
Economic resource could produce economic benefit if an entity is entitle to all, except
a. receive contractual cash flows
b. exchange economic resources with another entity on unfavorable terms
c. to receive cash by selling the economic resource
d. to extinguish in liability by tranferring an economic resource - correct answer ✔✔b
Control - correct answer ✔✔Present ability to direct the use of an economic resource and obtain that
may flow from it
Obligation - correct answer ✔✔Duty or responsibility that an entity has no practical ability to avoid
Asset, Liability and Equity - correct answer ✔✔The elements directly related to the measurement of
financial position
At a moment in time - correct answer ✔✔Elements of Financial position describe amounts of resources
and claims against resources
Asset and Liability - correct answer ✔✔Elements directly related tp the measurement of financial
performance
Asset - correct answer ✔✔Present economic resource controlled by the entity as a result of past events
Liability - correct answer ✔✔Present obligation of the entity to transfer an economic resource as a result
of the past events
Equity - correct answer ✔✔Residual interest in the assets of an entity that remains after deducting its
liabilities. In a business enterprise, the equity is the ownership interest.
Income - correct answer ✔✔Increase in asset or decrease in liability that results in increase in equity
other than contribution form equity holders
Expense - correct answer ✔✔Decrease in asset or an increase in liability that results in decrease in
equity other than distribution from equity holders
Revenue - correct answer ✔✔Arise in the course of ordinary activities of the entity and is referred to by
a variety of different names including sales, fees, dividends royalties and rent
Which statement in relation to income is true?
a. income encompasses both revenue and gain
b. Revenue encompasses both income and gain
, c. Gain encompasses both income and revenue
d. Income encompasses revenue only - correct answer ✔✔a
Which is not within the new definition of an asset - correct answer ✔✔Future economic benefit is
expected to flow to the entity
Criteria need not be satisfied fir a liability ti exist - correct answer ✔✔The settlement is expected to
result of past event
Present Ovligation exists as result of past events if - correct answer ✔✔The entity has already obtained
economic benefit and must transfer economic resource
Rights that have the potential to produce economic benefits and correspond to an obligation of another
entity include all, except
a. right to receive cash
b. right to receive goods
c. right to exchange economic resources with another entity in favorable terms
d. right over property, plant and equipment - correct answer ✔✔d
Economic resource could produce economic benefit if an entity is entitle to all, except
a. receive contractual cash flows
b. exchange economic resources with another entity on unfavorable terms
c. to receive cash by selling the economic resource
d. to extinguish in liability by tranferring an economic resource - correct answer ✔✔b
Control - correct answer ✔✔Present ability to direct the use of an economic resource and obtain that
may flow from it
Obligation - correct answer ✔✔Duty or responsibility that an entity has no practical ability to avoid
