Multiple Choice Questions
1. The information provided by financial reporting pertains to:
a. Individual companies, rather than to industries or the economy as a whole or to members of society as consumers
b. Individual companies and industries, rather than to the economy as a whole or to members of society as consumers
c. Individual companies and the economy as a whole, rather than to industries or to members of society as consumers
d. Individual companies, industries, and the economy as a whole, rather than to members of society as consumers
2. Which of the following is considered a constraint on useful information by Statement of Financial Accounting Concepts No. 8?
a. Benefits costs
b. Conservatism
c. Timeliness
d. Verifiability
3. According to Statement of Financial Accounting Concepts No. 8, to be relevant an earnings report is expected to have which of the following?

4. Which characteristic states that accounting information should be supported by sufficient evidence to allow two or more qualified individuals to arrive at similar measures and conclusions?
a. Matching
b. Verifiability
c. Periodicity
d. Monetary unit
5. Under Statement of Financial Accounting Concepts No. 8, which of the following enhances decision-useful information?
a. Timeliness
b. Neutrality
c. Confirmatory value
d. Materiality
6. Under Statement of Financial Accounting Concepts No. 6, which of the following means the process of formally recording and reporting an item in the financial statements of a company?
a. Allocation
b. Verification
c. Recognition
d. Realization
7. Accruing net losses on obsolete inventory is an example of the accounting concept of:
a. Conservatism
b. Historical cost
c. Consistency
d. Materiality
8. The valuation of a promise to receive cash in the future at present value on the financial statements of a company is valid because of the accounting concept of:
a. Entity
b. Materiality
c. Going concern
d. Neutrality
9. An accrued expense is an expense:
a. Incurred but not paid
b. Incurred and paid
c. Paid but not incurred
d. Not reasonably estimable
10. A patent purchased in 2016 and being amortized over a 10-year life was determined to be worthless in 2019. The write-off of the asset in 2019 is an example of which of the following expense recognition principles?
a. Associating cause and effect
b. Immediate consumption
c. Systematic and rational allocation
d. Objectivity

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