1. An item that is either unusual or infrequent (not both) is


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1. An item that is either unusual or infrequent (not both) is classified as a non-operating item in the “Other Gains/Losses” section of the income statement. As this may be a nonrecurring item, it is possible that this may diminish the FASBs criterion of _________________________, presented in Statement of Financial Accounting Concept 8 (and 2). A. timeliness B. predictive ability C. verifiability D. neutrality 2. To improve evaluating ROA when doing interfirm comparability, financial analysts have suggested eliminating _____________________________________________. A. interest expense after tax B. capital leases C. income tax expense D. stock option compensation 3. The rational investor is assumed to be risk averse. Therefore, the riskier investment is expected to generate higher returns. The _______________________ is an attempt to deal with both risks and returns. A. CAPM B. EMH C. HIP D. YCP 4. Which of the following is not a basic concept of income? A. psychic income B. real income C. money income D. gross income 5. The common stock issued by a corporation is measured by that corporation at its A. current value B. fair value C. historical cost (value) D. intrinsic value 6. One of the primary differences between IFRS and U.S. GAAP is that U.S. GAAP are considered A. principle based standards. B. required to be accepted by the SEC. C. rules based standards D. developed by the governments of the countries belonging to the IASB. 7. After the SEC was established, the first accounting organization to develop accounting standards was the A. CAP B. APB C. FASB D. AICPA 8. The SFAC which proposed that a statement of cash flows should replace the statement of changes in financial position is A. SFAC 1 B. SFAC 2 C. SFAC 5 D. SFAC 6 9. You are attempting to research if earnings management is actually occurring in large, publically traded corporations. This type of research is A. normative accounting research B. positive accounting research C. critical perspective research D. human information processing research 10. Which of the following items would not be reported as part of other comprehensive income? A. excess of the additional pension liability over the unrecognized prior service cost B. unrealized holding gains on available-for-sale securities C. foreign currency translation adjustments D. unrealized holding losses on trading securities 11. Companies which have a simple capital structure are required to report A. diluted earnings per share B. basic earnings per share C. both basic and diluted earnings per share D. only diluted earnings per share if they have potentially dilutive securities. 12. Besides culture, various environmental factors can influence the development of accounting standards in a country. Which of the following is typically not considered an environmental factor which can influence the development of accounting standards? A. political system B. legal system C. climate D. economic development 13. When the FASB needs a quick resolution to an accounting issue they may A. request the EITF to address the issue B. request the SEC to address the issue C. issue a new accounting standard D. ask for guidance from the FAF 14. According to agency theory, the expenditures incurred by the agent are referred to as A. monitoring costs B. relevant costs C. conflict costs D. bonding costs 15. One of the major criticisms that came from the committee members of SATTA was that A. most of the accounting research from 1922 to 1962 was deductive in nature B. most of the accounting research during the period 1922 to 1962 used the neoclassical economic theory of the firm C. Both A and B above D. Neither A or B above 16. The international accounting committee prior to the IASB was known as the A. IFRS Foundation B. IASC C. SAC D. IOSCO 17. A discontinued operation is a component of an entity that is an operating segment A. which is classified as held for sale B. whose sale is considered both unusual and infrequent C. whose sale must be

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