Question

[38] The recognition of research and development costs is based on which principle?

A. Associating cause and effect. B. Systematic and rational allocation. C. Immediate recognition. D. Tracing specific costs to specific revenues.

[39] Notes to the financial statements

A. Provide some useful information that cannot be provided in financial statements.

B. Correct improper presentation in the financial statements.

C. Provide recognition of financial amounts.

D. Present management’s responses to auditor comments.

[40] Giaconda, Inc., acquires an asset for which it will measure the fair value by discounting future cash flows of the asset. Which of the following terms best describes this fair value measurement approach?

A. Market. B. Income. C. Cost. D. Observable inputs.

[41] The primary current source of generally accepted accounting principles for nongovernmental U.S. entities is the

A. Securities and Exchange Commission.

B. Financial Accounting Foundation.

C. Financial Accounting Standards Board.

D. American Institute of Certified Public Accountants.

[42] Which of the following statements best describes an operating procedure for issuing a new Accounting Standards Update?

A. The Emerging Issues Task Force must approve a discussion paper before it is disseminated to the public.

B. The Exposure Draft is modified per public opinion before issuing a Discussion Paper.

C. A new update is issued only after a majority vote by the members of the FASB.

D. A new FASB statement can be rescinded by a majority vote of the AICPA membership.

[43] Which of the following reports would a company file to meet the U.S. Securities and Exchange Commission’s requirements for unaudited, interim financial statements reviewed by an independent accountant?

A. Form 10-Q. B. Form 10-K. C. 14A proxy statement. D. Form S-1.

[44] Which of the following is the annual report that is filed with the United States Securities and Exchange Commission?

A. Form 8-K. B. Form 10-K. C. Form S-1. D. Form 10-Q.

Answer 1

Ans 38. Answer is B i.e Systematic and rational allocation. Systematic and rational allocations provide for objectivity and consistency, which are important characteristics of accounting.

Ans 39. Notes to financial statement provide some other information which can not be provided under financial statement and it is a integral part of financial statement. Hence answer is A i.e notes to financial statement Provide some useful information that cannot be provided in financial statements.

Ans 40. answer is B, term INCOME Best describe the valuation adopted by company beacause market approach – uses prices and other relevant information generated by market transactions involving identical or comparable (similar) assets, liabilities, or a group of assets and liabilities (e.g. a business), cost reflects the amount that would be required currently to replace the service capacity of an asset (current replacement cost) AND INCOME converts future amounts (cash flows or income and expenses) to a single current (discounted) amount, reflecting current market expectations about those future amounts.

Ans 41. Answer is C, The Financial Accounting Standards Board (FASB) is an organization that is responsible for establishing accounting and financial reporting standards for companies and nonprofit organizations in the United States, following generally accepted accounting principles (GAAP).

Ans 42. Answer is C, A new update is issued only after a majority vote by the members of the FASB.

Ans 43. Answer is A . Form 10- Q, Form 10-Q upon the completion of each quarter to disclose unaudited financial statements and give an overview of the company’s financial situation.

Ans 44. Answer is B. Form 10-K, The annual report on Form 10-K, which must be filed, may contain more detailed information about the company’s financial condition than the annual report and will include the annual financial statements of the company.