Quiz/2

Which of the following is an application of rational and systematic allocation?

Amortization of intangible assets.

According to the FASB's conceptual framework, which of the following is an essential characteristic of an asset?

An asset provides future benefits.

Which of the following is considered a pervasive constraint by Statement of Financial Accounting Concepts No. 8?

Cost constraint

A company has a factory building that originally cost the company $250,000. The current fair value of the factory building is $3 million. The president would like to report the difference as a gain. The write-up would represent a violation of which accounting assumption or principle?

Historical cost

Which of the following statements concerning the cost-benefit relationship is not true?

If needed by financial statement users, management should gather information not included in the financial statements that would not otherwise be gathered for internal use.

What is prudence or conservatism?

When in doubt, recognizing the option that is least likely to overstate assets and income

Accounting information is considered to be relevant when it

is capable of making a difference in a decision

The second level of the conceptual framework includes each of the following except

principles

Materiality is used in all of the following situations of providing financial information, except

where it would not make a difference in the actions of a decision maker.

According to the FASB's conceptual framework, predictive value is an ingredient of

yes-relevance no-faithful representation