ACC 101_Midterm Review Quiz

In the event of conflict between the economic substance of a transaction and its legal form, the economic substance shall prevail. This concept is known as

• Form over substance
• Substance over form
• Faithful representation
• Completeness

The ingredients of faithful representation are

• Completeness and neutrality
• Completeness and free from error
• Completeness, neutrality and free from error
• Completeness, neutrality, free from error and conservatism

Which of the following is the best description of "faithful representation" in relation to information in financial statements?

• Influence on the economic decision of users
• Inclusion of a degree of caution
• Freedom from material error
• Comprehensibility to users

The financial accounting information is directed toward the common needs of users and is independent of presumptions about particular needs and desires of specific users.

• Relevance
• Verifiability
• Neutrality
• Completeness

It is the exercise of care and caution in dealing with uncertainties in measurement so as not to overstate assets and income or not to understate liabilities and expenses.

• Completeness
• Prudence
• Faithful representation
• Neutrality

The enhancing qualitative characteristics of financial information are

• Completeness, understandability, validity and timeliness
• Comparability, understandability, validity and timeliness
• Understandability, compatibility, verifiability and timeliness
• Comparability, understandability, verifiability and timeliness

Which of the following enhances the usefulness of financial information?

• Accounting entity
• Going concern
• Verifiability
• Time period

Allowing firms to estimate rather than physically count inventory at interim (quarterly) periods is an example of a trade-off between

• verifiability and reliability.
• reliability and comparability.
• timeliness and verifiability.
• neutrality and consistency.

When products (goods or services), merchandise, or other assets are exchanged for cash or claims to cash is a definition of

• allocated.
• realized.
• realizable.
• earned.

Which of the following is not an enhancing qualitative characteristic:

• Understandability
• Profit-oriented
• Timeliness
• Comparability