ACC301-sol-ch01 - EXERCISES 11. 1. False. 2. True. 3....

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EXERCISES 1–1. 1. False. Comprehensive income relates only to nonowner changes in equity. 2. True. 3. False. The tendency to recognize unfavorable events early is an example of conservatism. 4. False. The conceptual framework focuses on the needs of external users of financial information, primarily investors and creditors. 5. False. Concepts Statements are not considered authoritative pronouncements in the sense of establishing, superseding, or amending present GAAP. 6. True. 7. False. Recognition involves boiling down all the estimates and judgments into one number and using that one number to make a journal entry. Disclosure skips the journal entry and relies on a financial statement note to convey the information to users. 8. False. Changing business conditions and activities might warrant a change in accounting method to make financial statements more useful and informative. 1–2. 1. h, j 6. h 2. e, k, n 7. c 3. b 8. i 4. a 9. d 5. l 10. n 1–3. 1. General objective of providing useful information for decision makers . The statements should include information that is of value to present and potential investors and creditors, as well as other external decision makers. In addition, the information disclosed should be sophisticated enough that those with a reasonable understanding can study and understand the information. The most important aspect of this objective for financial reporting is to provide information that investors and creditors need to make economic decisions. 2. Objective of providing information for assessing prospective cash flows . Because investors and creditors are interested primarily in future cash flows, the financial disclosures should provide them with information that will help them assess the future cash flows. The information should provide some clues as to amounts, timing,
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This note was uploaded on 06/11/2009 for the course ACC 301 taught by Professor Pendarvis during the Spring '09 term at St. Leo.

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ACC301-sol-ch01 - EXERCISES 11. 1. False. 2. True. 3....

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