MGMT-X 120A - Ch. 2 Quiz
An asset provides future benefits.
According to the FASB's conceptual framework, which of the following is an essential characteristic of an asset? The claims to an asset's benefits are legally enforceable. An asset is obtained at a cost. An asset provides future benefits. An asset is tangible.
is capable of making a difference in a decision.
Accounting information is considered to be relevant when it is capable of making a difference in a decision. can be depended on to represent the economic conditions and events that it is intended to represent. is understandable by reasonably informed users of accounting information. is verifiable and neutral.
timeliness and verifiability
Allowing firms to estimate rather than physically count inventory at interim (quarterly) periods is an example of a trade-off between timeliness and verifiability neutrality and consistency faithful representation and comparability verifiability and faithful representation.
is demonstrated by the use of supplementary information explaining the effects of financing arrangements.
Application of the full disclosure principle is theoretically desirable but not practical because the costs of complete disclosure exceed the benefits. requires that the financial statements be consistent and comparable. is demonstrated by the use of supplementary information explaining the effects of financing arrangements. is violated when important financial information is buried in the notes to the financial statements.
when the performance obligation is satisfied.
Revenue generally should be recognized when realized. at the time of cash collection. when the performance obligation is satisfied. at the end of production.
None of these answer choices are correct
The assumption that a company will not be sold or liquidated in the near future is known as the None of these answer choices are correct monetary unit assumption economic entity assumption periodicity assumption
is applicable to all forms of business organizations.
The economic entity assumption Group of answer choices is inapplicable to unincorporated businesses. is applicable to all forms of business organizations. recognizes the legal aspects of business organizations. requires periodic income measurement.
To enable the profession to more quickly solve emerging practical problems and to provide a foundation from which to build more useful standards.
What is a purpose of having a conceptual framework? To provide comparable information for different companies. To segregate activities among different companies. To make sure that economic activity can be identified with a particular legal entity. To enable the profession to more quickly solve emerging practical problems and to provide a foundation from which to build more useful standards.
Neutrality
Which of the following is an ingredient of faithful representation? Predictive value Materiality Neutrality Confirmatory value
Business entities will need far less assistance from accountants because the financial reporting process will be quite easy to apply.
Which of the following is not a benefit associated with the FASB Conceptual Framework Project? Practical problems should be more quickly solvable by reference to an existing conceptual framework. Business entities will need far less assistance from accountants because the financial reporting process will be quite easy to apply. A conceptual framework should increase financial statement users' understanding of and confidence in financial reporting. A coherent set of accounting standards and rules should result.
