Far - The Financial Reporting Environment: Cash Flow Information And Present Value

20 Questions | Total Attempts: 160

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Far - The Financial Reporting Environment: Cash Flow Information And Present Value

FAR- study for the CPA exam. Cash flow information and present value.


Questions and Answers
  • 1. 
    According to the FASB’s conceptual framework, the expected cash flow (ECF) approach to measuring present value
    • A. 

      Determines the single most likely amount or best estimate.

    • B. 

      Encompasses all expectations about possible cash flows.

    • C. 

      Uses a single set of estimated cash flows.

    • D. 

      Is limited to assets and liabilities with contractual cash flows.

  • 2. 
    According to the FASB’s conceptual framework, which of the following is an essential characteristic of a liability?
    • A. 

      Liabilities must be legally enforceable.

    • B. 

      The identity of the recipient entity must be known to the obligated entity before the time of settlement.

    • C. 

      Liabilities represent an obligation that has arisen as the result of a previous transaction.

    • D. 

      Liabilities must require the obligated entity to pay cash to a recipient entity.

  • 3. 
    According to the FASB’s conceptual framework, noncurrent payables are usually measured and reported at
    • A. 

      Present value of future cash flows.

    • B. 

      Current market value.

    • C. 

      Historical proceeds.

    • D. 

      Settlement value.

  • 4. 
    A preliminary prospectus, permitted under SEC Regulations, is known as the
    • A. 

      Qualified prospectus.

    • B. 

      Unaudited prospectus.

    • C. 

      “Blue-sky” prospectus.

    • D. 

      “Red-herring” prospectus.

  • 5. 
    According to the FASB’s conceptual framework, comprehensive income includes which of the following?Loss on Discontinued Operations? Invenstments by Owners?
    • A. 

      Neither

    • B. 

      Investments by Owners

    • C. 

      Both

    • D. 

      Loss on Discontinued Operations

  • 6. 
    According to the FASB’s conceptual framework, which of the following enhances information that is relevant and faithfully represented?
    • A. 

      Neutrality.

    • B. 

      Materiality.

    • C. 

      Comparability.

    • D. 

      Confirmatory value.

  • 7. 
    The resource providers of not-for-profit entities have which of the following as their primary concerns?  I. Financial return on investmentII .Services rendered by the not-for-profit entityIII. The continuing ability of the not-for-profit entity to render servicesIV. Determining compliance with laws, rules, and regulations 
    • A. 

      II, III, and IV.

    • B. 

      I, II, and III.

    • C. 

      II and III.

    • D. 

      I and IV.

  • 8. 
    A company that is a large accelerated filer must file its Form 10-Q with the United States Securities and Exchange Commission within how many days after the end of the period?
    • A. 

      45 days.

    • B. 

      40 days.

    • C. 

      60 days.

    • D. 

      30 days.

  • 9. 
    Which of the following assumptions means that money is the common denominator of economic activity and provides an appropriate basis for accounting measurement and analysis?
    • A. 

      Going concern.

    • B. 

      Periodicity.

    • C. 

      Economic entity.

    • D. 

      Monetary unit.

  • 10. 
    Under IFRS, all of the following are conditions that must be met for recognizing revenue from a sale of goods, except
    • A. 

      The entity has received the full consideration from the sale.

    • B. 

      The amount of the transaction can be reliably measured.

    • C. 

      The entity has transferred the significant risks and rewards of ownership.

    • D. 

      Transaction costs can be reliably measured.

  • 11. 
    According to the FASB’s conceptual framework, which of the following attributes should notbe used to measure inventory?
    • A. 

      Replacement cost.

    • B. 

      Historical cost.

    • C. 

      Net realizable value.

    • D. 

      Present value of future cash flows.

  • 12. 
    The FASB’s conceptual framework explains both financial and physical capital maintenance concepts. Which capital maintenance concept is applied to currently reported net income, and which is applied to comprehensive income?
    • A. 

      Currently Reported Net Income= Financial Capital - Comprehensive Income = Financial Capital

    • B. 

      Currently Reported Net Income= Physical Capital - Comprehensive Income = Physical Capital

    • C. 

      Currently Reported Net Income= Physical Capital - Comprehensive Income = Financial Capital

    • D. 

      Currently Reported Net Income= Financial Capital - Comprehensive Income = Physical Capital

  • 13. 
    The reporting model described in the guidance on not-for-profit financial statements applies to
    • A. 

      Business entities and nongovernmental not-for-profit entities.

    • B. 

      Governmental not-for-profit entities that also use proprietary fund accounting.

    • C. 

      Business entities and governmental not-for-profit entities.

    • D. 

      Nongovernmental not-for-profit entities.

  • 14. 
    Form 10-K is filed with the SEC to update the information a company supplied when filing a registration statement under the Securities Exchange Act of 1934. Form 10-K is a report that is currently filed
    • A. 

      Annually within 90 days of the end of a company’s fiscal year for non-accelerated filers.

    • B. 

      Monthly within 2 weeks of the end of each month.

    • C. 

      Quarterly within 45 days of the end of each quarter.

    • D. 

      Semiannually within 30 days of the end of a company’s second and fourth fiscal quarters.

  • 15. 
    According to the FASB’s conceptual framework, the objective of general-purpose financial reporting is most likely based on
    • A. 

      Reporting on how well management has discharged its responsibilities.

    • B. 

      Generally accepted accounting principles.

    • C. 

      The need for conservatism.

    • D. 

      The needs of the users of the information.

  • 16. 
    Materiality and relevance are both defined by
    • A. 

      What influences or makes a difference to a decision maker.

    • B. 

      The perceived benefits to be denied that exceed the perceived costs associated with it.

    • C. 

      The consistency in the application of methods over time.

    • D. 

      Quantitative criteria set by the Financial Accounting Standards Board.

  • 17. 
    Financial information is most likely to be verifiable when an accounting transaction occurs that
    • A. 

      Is promptly recorded in a fixed amount of monetary units.

    • B. 

      Allocates revenues or expense items in a rational and systematic manner.

    • C. 

      Involves an arm’s-length transaction between two independent parties.

    • D. 

      Furthers the objectives of the entity.

  • 18. 
    The objective of present value when used to determine an accounting measurement for initial recognition purposes is to
    • A. 

      Estimate fair value.

    • B. 

      Capture the value of an asset or liability in the context of a given entity.

    • C. 

      Estimate value in use.

    • D. 

      Calculate the effective-settlement amount of assets.

  • 19. 
    Which of the following does not describe a difference between the business-type activities and the governmental-type activities of a governmental entity?
    • A. 

      Business-type activities adopt budgets, but they often lack the legal force of the budget for governmental-type activities.

    • B. 

      Business-type activities involve a direct exchange of money in return for goods delivered or services rendered.

    • C. 

      Business-type activities have heavy investments in revenue-producing capital assets.

    • D. 

      Compared between governments than are governmental-type activities.

  • 20. 
    Under SFAC No. 6, Elements of Financial Statements, interrelated elements of financial statements include:Notes to financial statements?Distributions to owners?
    • A. 

      Notes to Financial Statements

    • B. 

      Neither

    • C. 

      Distributions to Owners

    • D. 

      Distributions to Owners and Notes to Financial Statements

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