Chapter 2 Accounting 300 Exam Review
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1. a. consistency Changing the method of inventory
valuation should be reported in the
financial statements under what
qualitative characteristic of
accounting information?
a. Consistency.
b. Verifiability.
c. Timeliness.
d. Comparability.
2. a. decision The pervasive criterion by which
usefulness accounting information can be judged
is that of
a. decision usefulness.
b. freedom from bias.
c. timeliness.
d. comparability.
3. a. faithful Neutrality is an ingredient of which
representation fundamental quality of information?
a. Faithful representation.
b. Comparability.
c. Relevance.
d. Understandability.
4. a. information that is What is meant by consistency when
measured and discussing financial accounting
reported in a similar information?
fashion across points a. Information that is measured and
in time reported in a similar fashion across
points in time.
b. Information is timely.
c. Information is measured similarly
across the industry.
d. Information is verifiable.
5. a. 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
6. a. provide information that is
useful to making those
investing and credit decisions
7. b. faithful represntation
What is a primary objective
of financial reporting as
indicated in the conceptual
framework?
a. 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.
b. Provide information that is
helpful to present investors,
creditors, and other users in
assessing the amounts,
timing, and uncertainty of
future cash flows.
c. Provide information that is
helpful to potential
investors, creditors, and
other users in assessing the
amounts, timing, and
uncertainty of future cash
flows.
d. None of the above.
What is a primary objective
of financial reporting as
indicated in the conceptual
framework?
a. provide information that is
useful to those making
investing and credit
decisions.
b. provide information that is
useful to management.
c. provide information about
those investing in the entity.
d. All of the above.
The quality of information
that means the numbers and
descriptions match what
really existed or happened is
a. relevance.
b. faithful representation.
c. completeness.
d. neutrality.
8. b. is capable of Accounting information is considered to 14. c. relevance The two fundamental qualities that make
making a be relevant when it and faithful accounting information useful for decision
difference in a a. can be depended on to represent the representation making are
decision economic conditions and events that it a. comparability and timeliness.
is intended to represent. b. materiality and neutrality.
b. is capable of making a difference in a c. relevance and faithful representation.
decision. d. faithful representation and comparability.
c. is understandable by reasonably
15. c. yes no According to Statement of Financial
informed users of accounting
Accounting Concepts No. 2, materiality is
information.
an ingredient of the fundamental quality of
9. b. relevance Which of the following is a fundamental Relevance Faithful Representation
characteristic of useful accounting a. Yes Yes
information? b. No Yes
a. Comparability. c. Yes No
b. Relevance. d. No No
c. Neutrality.
16. d. all of these Which of the following does not relate to
d. Materiality.
relate to relevance?
10. b. timeliness Company A issuing its annual financial relevance a. Materiality
reports within one month of the end of b. Predictive value
the year is an example of which c. Confirmatory value
ingredient of fundamental quality of d. All of these relate to relevance
accounting information?
17. d. consistency If the FIFO inventory method was used last
a. Neutrality.
period, it should be used for the current
b. Timeliness.
and following periods because of
c. Predictive value.
a. relevance.
d. Completeness.
b. neutrality.
11. c. faithful Which of the following is a primary c. understandability.
representation characteristic of useful accounting d. consistency.
information?
18. d. materiality . Which of the following is an ingredient of
a. Conservatism.
relevance?
b. Comparability.
a. Verifiability.
c. Faithful representation.
b. Neutrality.
d. Consistency.
c. Timeliness.
12. c. information that What is meant by comparability when d. Materiality.
is measured and discussing financial accounting
19. d. no yes According to Statement of Financial
reported in a information?
Accounting Concepts No. 2, completeness
similar fashion a. Information has predictive or
is an ingredient of the fundamental quality
across companies confirmatory value.
of
b. Information is reasonably free from
Relevance Faithful Representation
error.
a. Yes Yes
c. Information that is measured and
b. No Yes
reported in a similar fashion across
c. No No
companies.
d. No yes
d. Information is timely.
20. d.relevance What is the quality of information that
13. c. neturality Which of the following is an ingredient
enables users to better forecast future
of faithful representation?
operations?
a. Predictive value.
a. Faithful representation.
b. Materiality.
b. Materiality.
c. Neutrality.
c. Timeliness.
d. Confirmatory value.
d. Relevance.