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1. Which of the following is a primary characteristic of useful accounting information? Select one: a. Consistency. b. Conservatism. c. Faithful representation. d. Comparability. Answer: c. Faithful representation. 2. Generally accepted accounting principles Select one:...

1. Which of the following is a primary characteristic of useful accounting information? Select one: a. Consistency. b. Conservatism. c. Faithful representation. d. Comparability. Answer: c. Faithful representation. 2. Generally accepted accounting principles Select one: a. Have been specified in detail in the FASB conceptual framework. b. Are fundamental truths or axioms that can be derived from laws of nature. c. Derive their authority from legal court proceedings. d. Derive their credibility and authority from general recognition and acceptance by the accounting profession. Answer: d. Derive their credibility and authority from general recognition and acceptance by the accounting profession. 3. Neutrality is an ingredient of which fundamental quality of information? Select one: a. Comparability. b. Relevance. c. Understandability. d. Faithful representation. Answer: d. Faithful representation. 4. Which of the following are not true concerning a conceptual framework in accounting? Select one: a. It should be based on fundamental truths that are derived from the laws of nature. b. It should allow practical problems to be solved more quickly by reference to it. c. It should be a basis for standard-setting. d. All of the above (a-c) are true. Answer: a. It should be based on fundamental truths that are derived from the laws of nature. 5. What is meant by comparability when discussing financial accounting information? Select one: a. Information is timely. b. Information that is measured and reported in a similar fashion across companies. c. Information is reasonably free from error. d. Information has predictive or confirmatory value. Answer: b. Information that is measured and reported in a similar fashion across companies. 6. Which of the following is not a benefit associated with the FASB Conceptual Framework Project? Select one: a. Practical problems should be more quickly solvable by reference to an existing conceptual framework. b. A conceptual framework should increase financial statement users' understanding of and confidence in financial reporting. c. Business entities will need far less assistance from accountants because the financial reporting process will be quite easy to apply. d. A coherent set of accounting standards and rules should result. Answer: c. Business entities will need far less assistance from accountants because the financial reporting process will be quite easy to apply. 7. A soundly developed conceptual framework of concepts and objectives should Select one: a. Allow new and emerging practical problems to be more quickly solved. b. Increase financial statement users' understanding of and confidence in financial reporting. c. All of these. d. Enhance comparability among companies' financial statements. Answer: c. All of these. 8. The two fundamental qualities that make accounting information useful for decision making are Select one: a. Materiality and neutrality. b. Comparability and timeliness. c. Faithful representation and comparability. d. Relevance and faithful representation.  Answer: d. Relevance and faithful representation. 9. What is a primary objective of financial reporting as indicated in the conceptual framework? Select one: a. Provide information that is useful to those making investing and credit decisions. b. Provide information about those investing in the entity. c. Provide information that is useful to management. d. All of the above. Answer: a. Provide information that is useful to those making investing and credit decisions. 10. Financial information does not demonstrate consistency when Select one: a. A company fails to adjust its financial statements for changes in the value of the measuring unit. b. None of these. c. Firms in the same industry use different accounting methods to account for the same type of transaction. d. A company changes its estimate of the salvage value of a fixed asset. Answer: d. A company changes its estimate of the salvage value of a fixed asset. 11. The objectives of financial reporting include all of the following except to provide information that Select one: a. Identifies the economic resources (assets), the claims to those resources (liabilities), and the changes in those resources and claims. b. Is useful to the Internal Revenue Service in allocating the tax burden to the business community. c. Is helpful in assessing future cash flows. d. Is useful to those making investment and credit decisions. Answer: b. Is useful to the Internal Revenue Service in allocating the tax burden to the business community. 12. Which of the following is not an objective of financial reporting? Select one: a. All of these are objectives of financial reporting. b. To provide information that is helpful to investors and creditors and other users in assessing the amounts, timing, and uncertainty of future cash flows. c. To provide information about economic resources, the claims to those resources, and the changes in them. d. To provide information that is useful to those making investment and credit decisions. Answer: a. All of these are objectives of financial reporting. 13. Which of the following is an ingredient of relevance? Select one: a. Neutrality. b. Timeliness. c. Verifiability. d. Materiality. Answer: d. Materiality. 14. What is a primary objective of financial reporting as indicated in the conceptual framework? Select one: a. Provide information that is helpful to potential investors, creditors, and other users in assessing the amounts, timing, and uncertainty of future cash flows. b. Provide information that is helpful to present and potential investors, creditors, and other users in assessing the amounts, timing, and uncertainty of future cash flows. c. None of the above. d. Provide information that is helpful to present investors, creditors, and other users in assessing the amounts, timing, and uncertainty of future cash flows. Answer: b. Provide information that is helpful to present and potential investors, creditors, and other users in assessing the amounts, timing, and uncertainty of future cash flows. 15. Neutrality means that information Select one: 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. Cannot favor one set of interested parties over another. d. Would have no impact on a decision maker.  Answer: c. Cannot favor one set of interested parties over another. 16. The characteristic that is demonstrated when a high degree of consensus can be secured among independent measurers using the same measurement methods is Select one: a. Relevance. b. Faithful representation. c. Verifiability. d. Neutrality. Answer: c. Verifiability. 17. Which of the following is a fundamental characteristic of useful accounting information? Select one: a. Neutrality. b. Materiality. c. Comparability. d. Relevance. Answer: d. Relevance. 18. The underlying theme of the conceptual framework is Select one: a. Decision usefulness. b. Comparability. c. Understandability. d. Faithful representation. Answer: a. Decision usefulness. 19. Accounting information is considered to be relevant when it Select one: a. Is verifiable and neutral. b. Is understandable by reasonably informed users of accounting information. c. Is capable of making a difference in a decision. d. Can be depended on to represent the economic conditions and events that it is intended to represent.  Answer: c. Is capable of making a difference in a decision. 20. What is a purpose of having a conceptual framework? Select one: a. Both a and b. b. To enable the profession to more quickly solve emerging practical problems. c. To provide a foundation from which to build more useful standards. d. Neither a nor b. Answer: a. Both a and b. 21. The quality of information that means the numbers and descriptions match what really existed or happened is Select one: a. Completeness. b. Neutrality. c. Relevance. d. Faithful representation. Answer: d. Faithful representation. 22. In the conceptual framework for financial reporting, what provides "the why"--the purpose of accounting? Select one: a. Elements of financial statements. b. Objective of financial reporting. c. Qualitative characteristics of accounting information. d. Recognition, measurement, and disclosure concepts such as assumptions, principles, and constraints. Answer: b. Objective of financial reporting. 23. Which of the following is an ingredient of faithful representation? Select one: a. Confirmatory value. b. Materiality. c. Neutrality. d. Predictive value.  Answer: c. Neutrality. 24. The pervasive criterion by which accounting information can be judged is that of Select one: a. Comparability. b. Decision usefulness. c. Freedom from bias. d. Timeliness. Answer: b. Decision usefulness. 25. What is meant by consistency when discussing financial accounting information? Select one: a. Information is timely. b. Information is measured similarly across the industry. c. Information that is measured and reported in a similar fashion across points in time. d. Information is verifiable. Answer: c. Information that is measured and reported in a similar fashion across points in time. 26. Company A issuing its annual financial reports within one month of the end of the year is an example of which ingredient of fundamental quality of accounting information? Select one: a. Completeness. b. Predictive value. c. Neutrality. d. Timeliness. Answer: d. Timeliness. 27. Which of the following does not relate to relevance? Select one: a. Materiality. b. Predictive value. c. Confirmatory value. d. All of these.  Answer: d. All of these. 28. What is the quality of information that enables users to better forecast future operations? Select one: a. Materiality. b. Faithful representation. c. Relevance. d. Timeliness. Answer: c. Relevance. 29. If the FIFO inventory method was used last period, it should be used for the current and following periods because of Select one: a. Relevance. b. Neutrality. c. Understandability. d. Consistency. Answer: d. Consistency. 30. Changing the method of inventory valuation should be reported in the financial statements under what qualitative characteristic of accounting information? Select one: a. Comparability. b. Consistency. c. Verifiability. d. Timeliness. Answer: a. Comparability.