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When a company provides information that is of sufficient importance to influence the judgment and decisions of an informed user, which principle of Level 3 of the conceptual framework is being represented?

A.

Faithful representation

B.

Measurement

C.

Full disclosure

D.

Going concern

Which of the following is the best description of liquidity?

A.

The historical cost of an asset

B.

The fair value of an asset

C.

The ease of converting a noncash asset to cash

D.

Liabilities, minus equity

Who appoints International Accounting Standards Board (IASB) members?

A.

Standards Advisory Council (SAC)

B.

International Accounting Standards Committee (IASC) Foundation

C.

International Financial Reporting Interpretations Committee (IFRIC)

D.

International Accounting Standards Board (IASB) staff

The International Accounting Standards Board (IASB) has given companies the option to use fair value as the basis for measurement of financial assets and liabilities. Which of the following best defines fair value?

A.

A residual interest in the assets of the entity after deducting all its liabilities

B.

Faithful representation of the amount paid for a given item

C.

Amount for which an asset could be exchanged or a liability settled between knowledgeable, willing parties in an arm’s length transaction

D.

Quality of information that confirms users’ earlier expectations

Employee benefits provided in exchange for the end of an employee’s employment are considered what kind of benefits?

A.

Short-term benefits

B.

Post-employment benefits

C.

Termination benefits

D.

Long-term benefits

When does a present obligation exist?

A.

When the employee renders service

B.

When the company has no realistic alternative but to make the payments

C.

When a change in the company’s informal practices would cause unacceptable damage to its relationship with employees

D.

When the company recognizes the expected cost of profit-sharing and bonus payments