Chapter 09 - Chapter 9UNIFORMITY AND DISCLOSURE SOME POLICY MAKING DIRECTIONS TRUE\/FALSE 1 Events are economic occurrences that require accounting

Chapter 09 - Chapter 9UNIFORMITY AND DISCLOSURE SOME POLICY...

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Chapter 9—UNIFORMITY AND DISCLOSURE: SOME POLICY MAKING DIRECTIONS TRUE /FALSE 1.Events are economic occurrences that require accounting entries. 2.The concept of uniformity appears to overlap with consistency. 3.Transactions are economic or financial events that are recorded in the firm's accounts. 4.An event, as defined in SFAC No. 6 is, "a happening of consequence to an entity." 5.Because events that are internal to the firm are not considered "transactions," they do not require entries in the firm's accounts. 6.Relevant circumstances are an important aspect of the uniformity issue. 7.Future contingencies that are allocations do not have real information content for financial statement users. 8.Minimizing reported income would not be a motive guiding the selection of accounting methods. 9.Environmental conditions are elements beyond managerial control. 10.Rigid uniformity has been formulated as an alternative to finite uniformity. 11.In accounting, we presume that if rigid uniformity can be attained, it is superior to finite uniformity. Accounting Theory: 8 th edition Page 1 of 10
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Chapter 9—UNIFORMITY AND DISCLOSURE: SOME POLICY MAKING DIRECTIONS 12.Improving comparability may lessen relevance or reliability. 13.Rigid uniformity considers relevant circumstances. 14.Flexibility is an approach to the uniformity problem. 15.Flexibility applies to situations in which there are relevant circumstances and more than one possible accounting method exists. 16.Flexibility is not often used in generally accepted accounting principles. 17.Whenever possible, flexibility should be used in formulating accounting policy. 18.Finite uniformity should always be used in accounting for complex events. 19.Since the 1970s, the SEC appears to have shifted its emphasis toward informative disclosure rather than protective disclosure. 20.Lev advocated restricting disclosures to "good news" items only. 21.An organized disclosure policy that includes "bad news" is beneficial to all parties because uncertainty about the firm is reduced. 22.The SEC requires disclose of both retrospective and prospective information in the Management'sDiscussion and Analysis section of the annual report.
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