Financial 1 PassMaster Questions - Becker CPA Review,...

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Unformatted text preview: Becker CPA Review, PassMaster Questions Lecture: Financial 1 1 2009 DeVry/Becker Educational Development Corp. All rights reserved. CPA PassMaster QuestionsFinancial 1 Export Date: 10/30/08 Becker CPA Review, PassMaster Questions Lecture: Financial 1 2 2009 DeVry/Becker Educational Development Corp. All rights reserved. Sources of GAAP CPA-00001 Type1 M/C A-D Corr Ans: D PM#1 F 1-01 1. CPA-00001 FARE Nov 95 #1, Released 2006 Page 6 According to the FASB conceptual framework, the objectives of financial reporting for business enterprises are based on: a. Generally accepted accounting principles. b. Reporting on management's stewardship. c. The need for conservatism. d. The needs of the users of the information. CPA-00001 Explanation Choice "d" is correct. The FASB conceptual framework states that the objectives of financial reporting stem from the informational needs of the external users of the information. SFAC 1 para. 28 Choice "a" is incorrect. Generally accepted accounting principles (GAAP) are derived from and based on the objectives of financial reporting, not the other way around. Choice "b" is incorrect. Information concerning management's stewardship is only one aspect of the information financial statements are intended to provide. SFAC 1 para. 50 Choice "c" is incorrect. Conservatism is an underlying concept for financial accounting but is not the basis for the objectives. SFAC 2 para. 91-97 CPA-00004 Type1 M/C A-D Corr Ans: B PM#2 F 1-01 2. CPA-00004 FARE Nov 95 #2 Page 7 According to the FASB conceptual framework, the usefulness of providing information in financial statements is subject to the constraint of: a. Consistency. b. Cost-benefit. c. Reliability. d. Representational faithfulness. CPA-00004 Explanation Choice "b" is correct. The pervasive constraint on providing information in financial statements is that the cost should be outweighed by the benefit to be derived from providing the information. SFAC 1 para. 23, SFAC 2 para. 133 Choice "a" is incorrect. Consistency is an underlying concept for financial statements (and a secondary quality of accounting information), but it is not a constraint on providing information. SFAC 2 para. 120 Choice "c" is incorrect. Reliability is a primary quality of accounting information and an underlying concept for financial statements, but it is not a constraint on providing information. SFAC 2 para. 58 Choice "d" is incorrect. Representational faithfulness is an underlying concept for financial statements (as an element of reliability), but it is not a constraint on providing information. SFAC 2 para. 63 CPA-00006 Type1 M/C A-D Corr Ans: D PM#4 F 1-01 3. CPA-00006 FARE Nov 95 #5 Page 9 According to the FASB conceptual framework, which of the following attributes would not be used to measure inventory?...
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Financial 1 PassMaster Questions - Becker CPA Review,...

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