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41.     Under Statement of Financial Accounting Concepts No. 2, representational faithfulness is an ingredient of the primary quality of
          Reliability     Relevance
     a.     Yes     Yes
     b.     No     Yes
     c.     Yes     No
     d.     No     No

     42.     Financial information does not demonstrate consistency when
a.     firms in the same industry use different accounting methods to account for the same type of transaction.
b.     a company changes its estimate of the salvage value of a fixed asset.
c.     a company fails to adjust its financial statements for changes in the value of the measuring unit.
d.     none of these.

     43.     Financial information exhibits the characteristic of consistency when
a.     expenses are reported as charges against revenue in the period in which they are paid.
b.     accounting entities give accountable events the same accounting treatment from period to period.
c.     extraordinary gains and losses are not included on the income statement.
d.     accounting procedures are adopted which give a consistent rate of net income.

     44.     Information about different entities and about different periods of the same entity can be prepared and presented in a similar manner. Comparability and consistency are related to which of these objectives?
          Comparability     Consistency
     a.     Entities     Entities
     b.     Entities     Periods
     c.     Periods     Entities
     d.     Periods     Periods

     45.     When information about two different enterprises has been prepared and presented in a similar manner, the information exhibits the characteristic of
a.     relevance.
b.     reliability.
c.     consistency.
d.     none of these.

     46.     The elements of financial statements include investments by owners. These are increases in an entity's net assets resulting from owners'
a.     transfers of assets to the entity.
b.     rendering services to the entity.
c.     satisfaction of liabilities of the entity.
d.     all of these.

     47.     In classifying the elements of financial statements, the primary distinction between revenues and gains is
a.     the materiality of the amounts involved.
b.     the likelihood that the transactions involved will recur in the future.
c.     the nature of the activities that gave rise to the transactions involved.
d.     the costs versus the benefits of the alternative methods of disclosing the transactions involved.

     48.     A decrease in net assets arising from peripheral or incidental transactions is called a(n)
a.     capital expenditure.
b.     cost.
c.     loss.
d.     expense.

     49.     One of the elements of financial statements is comprehensive income. As described in Statement of Financial Accounting Concepts No. 6, "Elements of Financial Statements," comprehensive income is equal to
a.     revenues minus expenses plus gains minus losses.
b.     revenues minus expenses plus gains minus losses plus investments by owners minus distributions to owners.
c.     revenues minus expenses plus gains minus losses plus investments by owners minus distributions to owners plus assets minus liabilities.
d.     none of these.

     50.     Which of the following elements of financial statements is not a component of compre-hensive income?
a.     Revenues
b.     Distributions to owners
c.     Losses
d.     Expenses

     P51.     Which of the following is false with regard to the element "comprehensive income"?
a.     It is more inclusive than the traditional notion of net income.
b.     It includes net income and all other changes in equity exclusive of owners' invest-ments and distributions to owners.
c.     This concept is not yet being applied in practice.
d.     It excludes prior period adjustments (transactions that relate to previous periods, such as corrections of errors).
     S52.     According to the FASB conceptual framework, earnings
a.     are the same as comprehensive income.
b.     exclude certain gains and losses that are included in comprehensive income.
c.     include certain gains and losses that are excluded from comprehensive income.
d.     include certain losses that are excluded from comprehensive income.

     S53.     According to the FASB Conceptual Framework, the elements?assets, liabilities, and equity?describe amounts of resources and claims to resources at/during a
               Moment in Time     Period of Time
          a.     Yes     No
          b.     Yes     Yes
          c.     No     Yes
          d.     No     No

     S54.     Which of the following basic accounting assumptions is threatened by the existence of severe inflation in the economy?
a.     Monetary unit assumption.
b.     Periodicity assumption.
c.     Going-concern assumption.
d.     Economic entity assumption.

     S55.     During the lifetime of an entity accountants produce financial statements at artificial points in time in accordance with the concept of
          Objectivity     Periodicity
     a.     No     No
     b.     Yes     No
     c.     No     Yes
     d.     Yes     Yes

     56.     Under current GAAP, inflation is ignored in accounting due to the
a.     economic entity assumption.
b.     going concern assumption.
c.     monetary unit assumption.
d.     periodicity assumption.

     57.     The economic entity assumption
a.     is inapplicable to unincorporated businesses.
b.     recognizes the legal aspects of business organizations.
c.     requires periodic income measurement.
d.     is applicable to all forms of business organizations.

     58.     Preparation of consolidated financial statements when a parent-subsidiary relationship exists is an example of the
a.     economic entity assumption.
b.     relevance characteristic.
c.     comparability characteristic.
d.     neutrality characteristic.

     59.     During the lifetime of an entity, accountants produce financial statements at arbitrary points in time in accordance with which basic accounting concept?
a.     Cost/benefit constraint
b.     Periodicity assumption
c.     Conservatism constraint
d.     Matching principle

     60.     What accounting concept justifies the usage of accruals and deferrals?
a.     Going concern assumption
b.     Materiality constraint
c.     Consistency characteristic
d.     Monetary unit assumption

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