T7

Which of the following best defines the term “liability”?A . A resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entityB . A present obligation of the entity arising from past events, the settlement of which...

Which of the following is the best description of liquidity?A . The historical cost of an assetB . The fair value of an assetC . The ease of converting a noncash asset to cashD . Liabilities, minus equityView AnswerAnswer: C

What are the two guiding principles of accrual accounting?A . Expense recognition and matchingB . Revenue recognition and matchingC . Revenue recognition and measurementD . Cost and materialityView AnswerAnswer: B

The following requirements are characteristic of which term below? Must be reported on the balance sheet; must be owned or controlled by the company; and must possess expected future benefits.A . AssetsB . Owners’ equityC . Contributed capitalD . LiabilitiesView AnswerAnswer: A

What is the timing of revenue recognition?A . When it is probable that future economic benefits will flow to the company and reliable measurement of the amount of revenue is possibleB . When the company reports current and non-current classifications in its statement of financial positionC . When economic benefits...

What are balanced sheets and income statements linked by?A . Investing activitiesB . Retained earningsC . ExpensesD . Net incomeView AnswerAnswer: B

Employee benefits that are not short-term, post-employment or termination benefits are considered what kind of benefits?A . Short-term benefitsB . Post-employment benefitsC . Termination benefitsD . Long-term benefitsView AnswerAnswer: D

Predictive value is an ingredient of which of the following fundamental characteristics of information?A . CompleteB . ComparabilityC . RelevanceD . NeutralView AnswerAnswer: C

When does a present obligation exist?A . When the employee renders serviceB . When the company has no realistic alternative but to make the paymentsC . When a change in the company’s informal practices would cause unacceptable damage to its relationship with employeesD . When the company recognizes the expected...

Which of the following plans obliges an employer to pay a specified amount of benefits to the employee?A . Post-employment planB . Defined contribution planC . Defined benefit planD . Bonus planView AnswerAnswer: C