1.​ Which of the following is most likely not an objective of financial statements?

​
A To provide information about the performance of an entity.​
B To provide information about the financial position of an entity.​
C To provide information about the users of an entity’s financial statements.

2.​ International financial reporting standards are currently developed by which entity?​
A The IFRS Foundation.​
B The International Accounting Standards Board.​
C The International Organization of Securities Commissions.

3.​ US generally accepted accounting principles are currently developed by which entity?​
A The Securities and Exchange Commission.​
B The Financial Accounting Standards Board.​
C The Public Company Accounting Oversight Board.

4.​ A core objective of the International Organization of Securities Commissions is to:​

A eliminate systemic risk.​
B protect users of financial statements.​
C ensure that markets are fair, efficient, and transparent.

5.​ According to the Conceptual Framework for Financial Reporting, which of the following is
not an enhancing qualitative characteristic of information in financial statements?​
A Accuracy.​
B Timeliness.​
C Comparability.

6.​ Which of the following is not a constraint on the financial statements according to the
Conceptual Framework?​
A Understandability.​
B Benefit versus cost.​
C Balancing of qualitative characteristics.
 7.​ The assumption that an entity will continue to operate for the foreseeable future is called:​
A accrual basis.​
B comparability.​
C going concern.

8.​ The assumption that the effects of transactions and other events are recognized when
they occur, not when the cash flows occur, is called:​
A relevance.​
B accrual basis.​
C going concern.

9. Neutrality of information in the financial statements most closely contributes to which

qualitative characteristic?​
A Relevance.​
B Understandability.​
C Faithful representation.

10. Valuing assets at the amount of cash or equivalents paid or the fair value of the
consideration given to acquire them at the time of acquisition most closely describes which
measurement of financial statement elements?​
A Current cost.​
B Historical cost.​
C Realizable value.

11. The valuation technique under which assets are recorded at the amount that would be
received in an orderly disposal is:​
A Current cost.​
B Present value.​
C Realizable value.

12. Which of the following is not a required financial statement according to IAS No. 1?​
A Statement of financial position.​
B Statement of changes in income.​
C Statement of comprehensive income.

13. Which of the following elements of financial statements is most closely related to
measurement of performance?​
A Assets.​
B Expenses.​
C Liabilities.
14. Which of the following elements of financial statements is most closely related to
measurement of financial position?​
A Equity.​
B Income.​
C Expenses.

15. Which of the following disclosures regarding new accounting standards provides the most
meaningful information to an analyst?​
A The impact of adoption is discussed.​
B The standard will have no material impact.​
C Management is still evaluating the impact.

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1.​ Providing information about the performance and financial position of companies so that
users can make economic decisions best describes the role of:​
A. auditing.​
B. financial reporting.​
C. financial statement analysis.

2.​ Which of the following best describes the role of financial statement analysis?​
A. To provide information about a company’s performance​
B. To provide information about a company’s changes in financial position​
C. To form expectations about a company’s future performance and financial
position

3.​ The role of financial statement analysis is best described as:​

A. providing information useful for making investment decisions.​
B. evaluating a company for the purpose of making economic decisions.​
C. using financial reports prepared by analysts to make economic decisions.

4.​ A company’s financial position would best be evaluated using the:​

A. balance sheet.​
B. income statement.​
C. statement of cash flows.

5.​ A company’s profitability for a period would best be evaluated using the:​
A. balance sheet.​
 B. income statement.​
C. statement of cash flows.

6.​ The financial statement that presents a shareholder’s residual claim on assets is the:​
A. balance sheet.​
B. income statement.​
C. cash flow statement.

7.​ A company’s profitability over a period of time is best evaluated using the:​
A. balance sheet.​
B. income statement.​
C. cash flow statement
8.​ The income statement is best used to evaluate a company’s:​
A. financial position.​
B. sources of cash flow.​
C. financial results from business activities.

9.​ Accounting policies, methods, and estimates used in preparing financial statements are
most likely to be found in the:​
A. auditor’s report.​
B. management commentary.​
C. notes to the financial statements.

10.​Information about management and director compensation are least likely to be found in
the:

A. auditor’s report.​
B. proxy statement.​
C. notes to the financial statements.

11.​Information about a company’s objectives, strategies, and significant risks are most likely
to be found in the:

A. auditor’s report.​
B. management commentary.​
C. notes to the financial statements.
 12.​Which of the following best describes why the notes that accompany the financial
statements are required? The notes:

A. permit flexibility in statement preparation.​

B. standardize financial reporting across companies.​
C. provide information necessary to understand the financial statements.

13.​What type of audit opinion is preferred when analyzing financial statements?

A. Qualified.​
B. Adverse.​
C. Unqualified.

14.​An auditor determines that a company’s financial statements are prepared in accordance
with applicable accounting standards except with respect to inventory reporting. This
exception is most likely to result in an audit opinion that is:

A. adverse.​
B. qualified.​
C. unqualified.

15.​An independent audit report is most likely to provide:

A. Absolute assurance about the accuracy of the financial statements.​

B. reasonable assurance that the financial statements are fairly presented.​
C. a qualified opinion with respect to the transparency of the financial statements.

16.​Interim financial reports released by a company are most likely to be:

A. monthly.​
B. unaudited.​
C. unqualified.

17.​Which of the following sources of information used by analysts is found outside a

company’s annual report?

A. Auditor’s report​
B. Company analysis​
C. Management’s discussion and analysis

18.​Ratios are an input into which step in the financial statement analysis framework?

A. Process data.​
B. Collect input data.​
C. Analyze/interpret the processed data.
 19.​Which phase in the financial statement analysis framework is most likely to involve
producing updated reports and recommendations?

A. Follow-up​
B. Analyze/interpret the processed data​
C. Develop and communicate conclusions and recommendations