Question :
1. Which of the following underlying assumptions for the conceptual framework : 1224793
1. Which of the following underlying assumptions for the conceptual framework is the reason the dollar is used in the preparation of financial statements?
A. Economic entity
B. Continuity
C. Time period
D. Monetary unit
2. Which of the following is an assumption made in the preparation of the financial statements?
A. Financial statements are prepared for a specific entity that is distinct from the entity’s owners.
B. The current market value is assumed to be less relevant than the original cost paid.
C. The preparation of financial statements for a specific time period assumes that the balance sheet covers a designated period of time.
D. Financial statements are prepared assuming that inflation has a distinct effect on the monetary unit.
3. The time period assumption is necessary because:
A. inflation exists and causes confusing swings in financial statement amounts over time.
B. external users of financial statements want accurately-reported net income for a specific period of time.
C. financial statements users expect full disclosure of all events throughout the entire time period translated in dollars.
D. it is required by the federal government.
4. The going concern assumption is concerned with:
A. the company’s ability to continue operations long enough to carry out its existing obligations.
B. any information that is capable of influencing the decisions of anyone using the financial statements.
C. measuring ongoing business activities at their exchange price at the time of the initial external transaction.
D. offsetting management’s natural optimism by providing a prudent approach to uncertainty in financial statement items.
5. Which of the following concepts relates to separating the reporting of business and personal economic transactions?
A. Cost principle
B. Monetary unit assumption
C. Economic entity assumption
D. Objectivity assumption
6. “Revenues” are best described as:
A. decreases in resources resulting from the purchase of goods for the provision of services.
B. increases in resources resulting from the sale of goods or the provision of services.
C. assets used or consumed in the sale of products or services.
D. an increase in the financing activities section of the statement of cash flows.
7. Which of the following best describes the term “expenses”?
A. The cost of assets used in the investing activities of a business.
B. The amount of interest or claim that the owners have in the business.
C. The future economic resources of a business entity.
D. A decrease in resources resulting from the sale of goods or provision of services.
8. Which statement demonstrates the financial success or failure of the company over that specific period of time?
A. Statement of changes in stockholders’ equity
B. Statement of retained earnings
C. Balance sheet
D. Income statement
9. The resources used to generate revenues during a period are called:
A. net income.
B. expenses.
C. revenues.
D. dividends.
10. Which of the following is the correct date format for the financial statement heading?
A. Balance Sheet for the Year Ended June 30, 2012
B. Statement of Retained Earnings as of December 31, 2012
C. Income Statement for the Year Ending December 31, 2012
D. Statement of Retained Earnings at December 31, 2012
