30 CFA Practice Questions Level 1 Free with Instant Answers on Financial Reporting Standards

To help you decide whether to pursue CFA designation, let’s take a look at our 30 CFA Practice Questions Level 1 Free with Instant Answers on Financial Reporting Standards. You will learn a great deal and add a great knowledge and skills to your exam preparation. Generally, FRA is one of the most important topic area in the CFA exam, even both level 1 and level 2. So, mastering all basics of this topic is the first priority you need to focus if want to get high scores. To capture these key fundamentals, all the CFA exam questions with instant answers are designed in the multiple choice format in order for keeping you easy following in each, more importantly, grasp the content immediately.
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1) Transparency, 2) Comprehensiveness, 3) Consistency

• Characteristics Of A Coherent Financial Reporting Framework:
• Principles For Presenting Financial Statements (IAS No. 1):
• Principles For Preparing Financial Statements (IAS No. 1):
• GAAP Vs. IASB - Financial Statement Elements

resources the entity controls and from which is expects to derive economic benefit in the future

• Assets
• Income
• Equity
• Expenses

1) fair presentation, 2) going concern basis, 3) accrual basis, 4) consistency, 5) materiality.

• GAAP Vs. IASB - Financial Statement Elements
• Principles For Preparing Financial Statements (IAS No. 1):
• Principles For Presenting Financial Statements (IAS No. 1):
• Required Financial Statements (IAS):

1) Understandability, 2) Comparability, 3) Relevance, 4) Reliability

• Required Financial Statements (IAS):
• GAAP Vs. IASB - Objective of Financial Statements
• IFRS "Qualitative Characteristics" Of Financial Statements
• GAAP Vs. IASB - Qualitative characteristics

IASB places more emphasis on the going concern assumption

• IASB Stated Goals:
• GAAP Vs. IASB - Purpose of Framework
• Accrual Basis
• GAAP Vs. IASB - Assumptions

IASB lists income and expenses as elements related to performanceFASB uses revenues, expenses, gains, losses and comprehensive income.FASB defines asset as future economic benefitIASB defines asset as resource where future economic benefit can be expectedFASB does NOT allow value of most assets to adjust upward

• GAAP Vs. IASB - Financial Statement Elements
• GAAP Vs. IASB - Qualitative characteristics
• GAAP Vs. IASB - Assumptions
• GAAP Vs. IASB - Objective of Financial Statements

FASB - relevance and reliabilityIASB comparability and understandability

• GAAP Vs. IASB - Qualitative characteristics
• GAAP Vs. IASB - Financial Statement Elements
• GAAP Vs. IASB - Assumptions
• GAAP Vs. IASB - Purpose of Framework

SEC registration statement filed prior to the sale of new securities to the public.

• Form 8-K:
• Form 10-K:
• Form S-1:
• Form 10-Q:

FASB different objectives for business and non-business FSRIASB has one objective for both

• GAAP Vs. IASB - Purpose of Framework
• GAAP Vs. IASB - Objective of Financial Statements
• GAAP Vs. IASB - Qualitative characteristics
• GAAP Vs. IASB - Financial Statement Elements

amount at which two parties in an arm's-length transaction would exchange asset

• Realizable Value
• Form S-1:
• Present value
• Fair Value

FS reflect transactions at time they occur, not when cash is paid

• Accrual Basis
• Fair Value
• Form 8-K:
• Present value

1) Developing standards that require transparency, comparability, and quality, 2) promoting the use of global standards, 3) accounting for the needs of small firms and emerging markets, 4) achieving convergence between national standards.

• Present value
• Realizable Value
• Assets
• IASB Stated Goals:

decreases in economic benefit, either decreasing assets or increasing liabilities in a way that decreases owners equity. Losses include expenses.

• Expenses
• Income
• Equity
• Assets

1) Aggregation, 2) No offsetting, 3) Classified balance sheet, 4) Minimum required information, 5) Comparative information.

• Principles For Preparing Financial Statements (IAS No. 1):
• GAAP Vs. IASB - Financial Statement Elements
• Principles For Presenting Financial Statements (IAS No. 1):
• Required Financial Statements (IAS):

SEC form used to report on any material event, including asset acquisitions, changes in management, or changes to accounts.

• Form 144:
• Form 8-K:
• Form S-1:
• Form 10-K:

SEC Unaudited quarterly statements and disclosures.

• Form 10-Q:
• Form 10-K:
• Form 8-K:
• Form S-1:

obligations that are expected to require an outflow of resources

• Expenses
• Liabilities
• Assets
• Income

SEC required annual filing with audited annual statements and disclosures.

• Form 144:
• Form 8-K:
• Form 10-Q:
• Form 10-K:

discounted value of the assets expected future cash flows

• Fair Value
• Present value
• Realizable Value
• Assets

FASB framework not on top of GAAP heirarchy.IASB requires mgmnt to consider the framework if no explicit standard exists but FASB does not.

• GAAP Vs. IASB - Qualitative characteristics
• GAAP Vs. IASB - Assumptions
• GAAP Vs. IASB - Purpose of Framework
• GAAP Vs. IASB - Financial Statement Elements

an increase in economic benefits, either increasing assets or decreasing liabilities in a way that increases owners equity. includes revenues and gains

• Income
• Assets
• Expenses
• Equity

Professional organizations of accountants and auditors that establish financial reporting standards. Main ones are the Financial Accounting Standards Board (FASB, in USA) and International Accounting Standards Board (IASB, int'l). IASB is the body which sets International Financial Reporting Standards (IFRS).

• Regulatory Bodies
• Standard Setting Bodies
• Present value
• IASB Stated Goals:

amount at which firm could sell asset

• Liabilities
• Present value
• Realizable Value
• Fair Value

!) Balance sheet 2) income statement 3) cash flow statement 4) statement of changes in owners' equity 5) explanatory notes.

• Principles For Preparing Financial Statements (IAS No. 1):
• Required Financial Statements (IAS):
• GAAP Vs. IASB - Financial Statement Elements
• IASB Stated Goals:

owners residual interest in the assets after deducting the liabilities.

• Assets
• Expenses
• Income
• Equity

Government agencies that have legal authority to enforce compliance with financial reporting standards. E.g. the SEC in the USA or FSA in the UK.

• Regulatory Bodies
• Accrual Basis
• Equity
• Fair Value

SEC form used when a firm issues new securities to qualified buyers.

• Form 10-Q:
• Form 144:
• Form 10-K:
• Form 8-K:

SEC Used whenever a firm files a proxy statement prior to the annual meeting or shareholder vote.

• Form 144:
• Form S-1:
• Form Def-14A:
• Form 8-K:

SEC forms for changes in beneficial ownership; used to track sales of firms' stock by insiders.

• Form 144:
• Forms 3, 4, And 5:
• Form Def-14A:
• Form S-1:

1) protect investors2) ensure fairness, efficiency & transparency3) Reduce systematic risk

• Required Financial Statements (IAS):
• International Organization of Securities Commissions (IOSCO2)
• Principles For Preparing Financial Statements (IAS No. 1):
• Standard Setting Bodies