ACCREV

Which of the following is not true?

• Accounting is concerned primarily with quantitative information used by persons who must make economic decisions among alternative actions.

• Governmental accounting is also known as municipal or fund accounting.

• The branch of accounting concerned with the presentation of financial information to assist management in planning and controlling operations is called managerial accounting.

• Financial accounting emphasizes special purpose information based on presumption that significant numbers of users need similar information.

A conceptual framework of accounting should

• Lead to uniformity of financial statements among entities within the same industry

• Guide the PICPA in developing generally accepted auditing standards

• Define the basic objectives, terms and concepts of accounting

• Eliminate alterative accounting principles and methods

An entity initially records prepayments in balance sheet accounts and makes reversing entries when appropriate. Which of the following year-end adjusting entries should be reversed?

• The entry to record depreciation expense for the period

• The entry to record the portion of service fees received in advance that is earned by year-end

• The entry to record supplies used during the period

• The entry to record service fees earned by year-end but not billed

An entity shall prepare how many statements of financial position as a result of retrospective application, retrospective restatement and reclassification of items in financial statements?

• Two

• Three

• Four

• One

The basis for classifying assets as current or noncurrent is the period of time normally required by to convert cash invested in

• Inventory back to cash, or 12 months, whichever is shorter

• Receivables back into cash, or 12 months, whichever is longer

• Tangible fixed assets back into cash, or 12 months, whichever is longer

• Inventory back into cash, or 12 months, whichever is longer

Events after the end of the reporting period are events, favorable or unfavorable, that

• Occur between the end of the reporting period and date of the next annual financial statements

• Occur between the end of the reporting period and date of the next interim or annual financial statements

• Occur between the end of the reporting period and the date when the financial statements are authorized for issue

• Occur between the end of the reporting period and date of the next interim statements

What is retrospective application of a change in accounting policy?

• Applying a new accounting policy to transactions as if that policy had always been applied

• Applying a new accounting policy to transactions occurring after the date at which the policy is changed

• Correcting the recognition, measurement and disclosure of amounts of elements of financial statements as if a prior period error never occurred

• All of these

Which of the following is a requirement for a component of an entity to be classified as discontinued operation?

• Its activities must permanently cease prior to the financial statements being authorized for issue.

• It must comprise a separately reportable segment.

• Its asset must have been classified as held for sale in previous financial statements.

• It must have been a cash generating unit or group of cash generating units while being held for use.

Operating segments are identified on the basis of internal reports about components of an entity that are regularly reviewed by a chief operating decision maker in order to allocate resources to the segment and assess its performance.

• Management approach

• Risk and reward approach

• Matrix approach

• Geographical segment approach

The advantage of relating an entity’s bad debt experience to accounts receivable is that this approach

• Gives a reasonably accurate measurement of receivables in the statement of financial position

• Relates bad debt expense to the period of sale

• Is the only generally accepted method for measuring accounts receivable

• Makes estimates of uncollectible accounts unnecessary