MULTIPLE CHOICE
1.Which of the following is not a true statement?
a.Comparability refers to accounting for similar transactions similarly and different circumstances differently.
b.Comparability refers to comparing alternatives in order to make a decision.
c.Comparability is an inherent quality of accounting numbers in the same sense that relevance and reliability are.
d.Uniformity influences comparability.
2.Which of the following is a true statement?
a.Transactions are events that may be either external or internal to an enterprise.
b.Events that are internal to the firm do not require entries in the firm’s accounts.
c.Transactions are economic or financial events that may or may not be recorded in the firm’s accounts.
d.“Simple events” do not have any significant economic variables that lead to essentially different recording.
3.The term “present magnitudes” refers to:
a.Conditions known at the time of an event
b.Conditions known only at a later date
c.Events that will significantly affect the financial statements
d.None of the above
4.Which of the following terms represent the two general types of relevant circumstances?
a.Present circumstances and future contingencies
b.Present conditions and future contingencies
c.Present magnitudes and future conditions
d.Present magnitudes and future contingencies
5.Circumstantial variables are environmental conditions that posses which of the following qualities?
a.Excessive measurement costs
b.A high degree of verifiability relative to other accounting methods
c.Both a and b
d.None of the above
6.Prescribing one method for generally similar transactions even though relevant circumstance may be present is referred to as:
a.Finite uniformity
b.Rigid uniformity
c.Inflexible uniformity
d.Measurable uniformity
7.Which of the following is a true statement?
a.Finite uniformity should be more representationally faithful than rigid uniformity.
b.Finite uniformity should be more verifiable than rigid uniformity.
c.Rigid uniformity is more relevant than finite uniformity.
d.Rigid uniformity can be obtained only at a greater cost than finite uniformity.
8.Where rigid uniformity is in effect, the underlying reasons may be attributable to all but which one of the following factors?
a.A desire for conservatism
b.An inability of the standard-setting organization to determine meaningful relevant circumstances
c.An attempt to increase representational faithfulness of the measurement
d.Recognition of the fact that an allocation is involved
9.Flexibility applies to which of the following situations?
a.Situations in which there are relevant circumstances and more than one possible accounting method exists
b.Situations in which there are relevant circumstances but only one possible accounting method exists
c.Situations in which there are no observable relevant circumstances and more than one possible accounting method exists
d.All of the above
10.The requirement by SFAS No. 2 that research and development costs be immediately expensed is an example of:
a.Elastic uniformity
b.Finite uniformity
c.Flexible uniformity
d.Rigid uniformity
11.The determination of whether a lease is a capital or operating lease is an example of:
a.Elastic uniformity
b.Finite uniformity
c.Flexible uniformity
d.Rigid uniformity
12.The treatment of loss contingencies required in SFAS No. 5 is an example of:
a.Elastic uniformity
b.Conservatism
c.Flexible uniformity
d.Rigid uniformity
13.Accounting for inventory and cost of goods sold and for depreciation is an example of:
a.Elastic uniformity
b.Finite uniformity
c.Flexibility
d.Rigid uniformity
14.Under which of the following circumstances should rigid uniformity be used?
a.If the event is not a simple event
b.If the event is a complex event in which finite uniformity cannot be instituted in a cost-effect manner.
c.Both a and b
d.None of the above, rigid uniformity should never be used.
15.Under which of the following circumstances should finite uniformity be used?
a.If the event is a simple event
b.If the event is a complex event in which relevant circumstances cannot be measured and implemented in a cost-effective manner.
c.If the event is a complex event in which relevant circumstances can be measured and implemented in a cost-effective manner.
d.Both a and b