F1

Question 1

Gain contingencies should not be recognized prior to realization as a prudent reaction to the uncertainty surrounding the realization of the gain as reflected in the convention of conservatism.

Answer 1

Quality of Reliability for Gain Contingencies

Question 2

Conservatism is a prudent reaction to uncertainty to try to ensure that uncertainty and risks inherent in business situations are adequately considered. Recognition of a contingent loss is the recording of an amount representing uncertainty and risk in a business situation.

Answer 2

Recording of a contingent loss

Question 3

Consistency

Answer 3

is conformity from period to period with unchanging policies and procedures

Question 4

Financial information provided in general purpose financial reports does not include information about

Answer 4

Shareholders do not have a responsibility (or a right) to use the entity’s resources.

Question 5

Financial information provided in general purpose financial reports should include information

Answer 5

about the resources of the entity, the claims against the entity, and how effectively and efficiently the entity’s management and governing board have discharged their responsibilities to use the entity’s resources. Showing how everything breaks down in so far as responsibility is concerned.

Question 6

Characteristics enhancing Usefulness of information that is relevant and faithfully represented.

Answer 6

Timeliness, understandability, comparability and verifiability are characteristics that enhance the usefulness

Question 7

a key component of faithful representation

Answer 7

Neutrality, remember it is not an enhancing qualitative characteristic.

Question 8

What is the One Stop Shop for all US Accounting

Answer 8

The FASB Accounting Standards Codification is the single source of U.S. GAAP. U.S. public companies are required to follow U.S. GAAP.

Question 9

What is conservatism?

Answer 9

The rule of conservatism states that revenues and gains should be recognized when the earnings process is complete, but that expenses and losses should be expensed immediately. Reporting inventory at the lower of cost or market requires the recording of a loss on inventory when market is lower than cost in the period the loss is sustained, rather than when the inventory is sold, consistent with the rule of conservatism

Question 10

What is timeliness?

Answer 10

Timeliness is a characteristic that enhances the usefulness of information that is relevant and faithfully represented

Question 11

What is Predictive Value?

Answer 11

Predictive value is a component of relevance

Question 12

Define Replacement Cost

Answer 12

Replacement cost is defined as the amount of cash or its equivalent that would be paid to acquire or replace an asset currently. Replacement cost is an acquisition cost.

Question 13

Name the 2 qualitative characteristics that are fundamental to useful info

Answer 13

Relevance and faithful representation are the fundamental qualitative characteristics of useful financial information

Question 14

What is the underlying concept of financial statement prep and presentation?

Answer 14

Under the IASB framework, going concern is the underlying assumption of financial statement preparation and presentation.

Question 15

Name one operating procedure of a new standard for IASB

Answer 15

Before an exposure draft is issued for public comment, it must be approved by at least nine members of the IASB.

Question 16

Discuss the approval process of the IASB

Answer 16

The IASB must approve a new IFRS by a vote of at least nine of the fifteen members. NO ONE ELSE!!!!!

Question 17

Where does predictive value fall under?

Answer 17

“relevance,” it contains the following: contemplates predictive value, confirming value, and materiality.

Question 18

A financial report is RELEVANT if

Answer 18

financial information is relevant if it is capable of making a difference in the decisions made by users and has predictive and/or confirming value.

Question 19

Name a due process activity of FASB

Answer 19

A proposed accounting standards update is prepared by the FASB as part of the due-process activities.

Question 20

What occurs when a change in principle occurs?

Answer 20

A change in method of accounting for demo costs is a change in accounting principle inseparable from a change in estimate. When a change in accounting principle is considered inseparable from a change in estimate, the change is handled as a change in estimate - prospectively. No cumulative effect adjustment is made.