1.According to the conceptual framework of accounting, users of…

1.According to the conceptual framework of accounting, users of financial statements
Select one:

to.
they do not have to possess any knowledge of economic and commercial activities.

b.
they must have a reasonable knowledge of economic and commercial activities.

c.
must be certified public accountants (CPAs)

d.
they must have a sophisticated and thorough knowledge of accounting information.

2. Which of the following is NOT a component (ingredient) of the characteristic known as Faithful Representation in the context of the FASB’s conceptual framework?
Select one:

to.
Neutrality (neutrality)

b.
Substantiality (materiality)

c.
complete (completeness)

d.
Free of Errors (free of errors)

3. Using the 2020 Statement of Income and Expenses, financial analysts studying Macy’s stock have determined that the company’s earnings per share for the first quarter of 2021 will be higher than reported at the end of 2020 by $0.30. Which qualitative characteristic of the accounting information best describes this situation?
Select one:

to.
confirmation value

b.
predictive value (predictive value)

c.
verifiability

d.
timely (opportunity)

4.In 2022, ABC, a home construction company, was sued by the SEC for its accounting practices. The company created a “change order” when it determined that additional work needed to be done on a project outside of the original contract provisions. Despite not having received approval or acceptance from customers, ABC recorded these additional charges associated with “change orders” as revenue on the Statement of Income and Expenses. This allowed them to reduce the negative effect of their high operating expenses on earnings per share.
Indicate which accounting principle was violated in this case.

Select one:

to.
Measuring principle

b.
Principle of full disclosure of information

c.
Revenue recognition principle

d.
Expense recognition principle

5.In 2020, ABC acquired a chain of 600 pharmacies. At the time of the purchase, the company valued the fixed assets acquired at more than $1.2 trillion. After accounting for these assets for more than a year using a cost basis of $1.2 trillion, in the third quarter of 2021, ABC arbitrarily adjusted the cost of these assets. In the quarterly report (10-Q) of September 30, 2021, the value of fixed assets in the accounting books was reduced by $212 million. These definitions were not associated with any impairment (deterioration) factors or due to error correction.
Indicate which accounting principle was violated in this case.

Select one:

to.
Revenue recognition principle

b.
Expense recognition principle

c.
Measuring principle

d.
Principle of full disclosure of information

6. On December 27, 2020, XYZ Companies credited to a revenue account (sales) the total cash it received in advance for products it will deliver in the next two years. If at the end of 2020, the products have not yet been delivered to the customer and the adjustment is omitted, the consequence will be that
Select one:

to.
the total debts will be overestimated.

b.
Total Sales is going to be underestimated.

c.
Total assets are going to be understated.

d.
total Retained Earnings is going to be overstated.

7Which of the following accounts will NOT appear on a Post-Closing Trial Balance?
Select one:

to.
Dividend Income

b.
accounts receivable

c.
Unearned Income (unearned income)

d.
Wages payable (Wages payable)