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CHAPTER 2 CONCEPTUAL FRAMEWORK UNDERLYING FINANCIAL ACCOUNTING

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Question;108. The basic assumptions of accounting used by the International Accounting;Standards Board (IASB) include;a.;Monetary unit.;b.;Decision usefulness;c.;Timeliness.;d.;All of the choices are basic assumptions of;accounting.;109. Which of the following basic assumptions of accounting (used by the;International Accounting Standards Board) makes depreciation and amortization;policies justifiable and appropriate?;a.;Periodicity.;b.;Decision usefulness;c.;Monetary unit.;d.;Going concern.;110. Proponents;of historical cost ordinarily maintain that in comparison with all other;valuation alternatives for general purpose financial reporting, statements;prepared using historical costs are more;a. verifiable.;b. relevant.;c. indicative of the entity?s;purchasing power.;d. conservative.;111. Valuing assets at their liquidation values;rather than their cost is inconsistent;with the;a. periodicity;assumption.;b. expense;recognition principle.;c. materiality;equality.;d. historical;cost principle.;112. Revenue is recognized in the accounting;period in which the performance obligation is satisfied. This statement;describes the;a. consistency;characteristic.;b. expense;recognition principle.;c. revenue;recognition principle.;d. relevance;characteristic.;113. Generally, revenue from sales should be;recognized at a point when;a. management;decides it is appropriate to do so.;b. the;product is available for sale to the ultimate consumer.;c. the;entire amount receivable has been collected from the customer and there remains;no further warranty liability.;d. None of;these answers are correct.;114. Revenue should be recognized;a. at;the end of production.;b. at;the time of cash collection.;c. when;realized.;d. when;the performance obligation is satisfied.;115. The measurement principle includes the;a. fair;value principle only.;b. historical;cost principle only.;c. revenue;recognition principle and expense recognition principle.;d. historical;cost principle and the fair value principle.;116. The allowance for doubtful accounts, which;appears as a deduction from accounts receivable on a statement of financial;position and which is based on an estimate of bad debts, is an application of;the;a. consistency;characteristic.;b. expense;recognition principle.;c. materiality;quality.;d. revenue;recognition principle.;117. The accounting principle ofexpense recognition is best;demonstrated by;a. not;recognizing any expense unless some revenue is realized.;b. associating;effort (expense) with accomplishment (revenue).;c. recognizing;prepaid rent received as revenue.;d. establishing;an Appropriation for Contingencies account.

 

Paper#55033 | Written in 18-Jul-2015

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