Why is faithful representation important in accounting documentation?
A. It ensures neutrality on the part of the company's accounting department
B. It guarantees that all information is free from error
C. It is useful if information represents what it purports to represent
D. It indicates that accountants have confirmed all of the data
The International Accounting Standards Board (IASB) has given companies the option to use fair value as the basis for measurement of financial assets and liabilities. Which of the following best defines fair value?
A. A residual interest in the assets of the entity after deducting all its liabilities
B. Faithful representation of the amount paid for a given item
C. Amount for which an asset could be exchanged or a liability settled between knowledgeable, willing parties in an arm's length transaction
D. Quality of information that confirms users' earlier expectations
One of the reasons preparers use the conceptual framework is to:
A. Develop accounting policies in the absence of specific standards
B. Document a historical record of all judgments
C. Develop alternate interpretations of specific standards
D. Encourage change to standards as Board members change
Which of the following is true of liabilities?
A. Current liabilities come due in less than a year
B. Current liabilities come due in less than 18 months
C. Noncurrent liabilities come due in less than a year
D. Both current and noncurrent liabilities come due in less than a year
Current assets comprise assets that can be converted to cash. They must be converted within what time period?
A. Before the end of the fiscal year
B. Within a year
C. Within a fiscal year
D. Within two years
Defined benefit pension commitments often represent a company's largest single financial liability. IAS 19 was amended as of January, 2014. What does this amendment require?
A. That surplus or deficit of a pension fund be detailed in the financial statement
B. That any existing deficit of a pension fund be detailed in the financial statement
C. That any projected deficit of a pension fund be detailed in the financial statement
D. That companies state whether they have a defined benefit or defined contribution plan in the financial statement
Who appoints International Accounting Standards Board (IASB) members?
A. Standards Advisory Council (SAC)
B. International Accounting Standards Committee (IASC) Foundation
C. International Financial Reporting Interpretations Committee (IFRIC)
D. International Accounting Standards Board (IASB) staff
What is the present value of any economic benefits available in the form of refunds from or reductions in the future contributions to the defined benefits plan called?
A. Net defined benefit liability (asset)
B. Asset ceiling
C. Fair value
D. Net present value
Which of the following is the term that describes total net sales minus total expenses?
A. Operating expenses
B. Net income
C. Total income
D. Current assets
Companies desire more current assets than current liabilities. What is the difference between current assets and current liabilities called?
A. Net income
B. Total liabilities
C. Net working capital
D. Noncurrent liabilities
