Chapter 2 and Chapter 3 Exercises

Chapter 2 and Chapter 3 Exercises - 1 Chapter 2 Exercises...

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Chapter 2 Exercises (E2-2, E2-4, E2-7) and Chapter 3 Exercise (E3-5) E2-2 (Qualitative Characteristics) The qualitative characteristics that make accounting information useful for decision-making purposes are as follows: Relevance Timeliness Representational faithfulness Reliability Verifiability Comparability Predictive value Neutrality Consistency Feedback value Instructions Identify the appropriate qualitative characteristic(s) to be used given the information provided below. (a) Qualitative characteristics being employed when companies in the same industry are using the same accounting principles. (Comparability) (b) Quality of information that confirms users’ earlier expectations. (Feedback value) (c) Imperative for providing comparisons of a company from period to period. (Consistency) (d) Ignores the economic consequences of a standard or rule. (Neutrality) (e) Requires a high degree of consensus among individuals on a given measurement. (Verifiability) (f) Predictive value is an ingredient of this primary quality of information. (Relevance) (g) Two qualitative characteristics that are related to both relevance and reliability. (Comparability and Consistency) (h) Neutrality is an ingredient of this primary quality of accounting information. (Reliability) (i) Two primary qualities that make accounting information useful for decision-making purposes. (Relevance and Reliability) (j) Issuance of interim reports is an example of what primary ingredient of relevance. (Timeliness) 1
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E2-4 E2-4 (Assumptions, Principles, and Constraints) Presented below are the assumptions, principles, and constraints used in this chapter. 1. Economic entity assumption 5. Historical cost principle 9. Materiality 2. Going concern assumption 6. Matching principle 10. Industry practices 3. Monetary unit assumption 7. Full disclosure principle 11. Conservatism 4. Periodicity assumption 8. Cost-benefit relationship Instructions Identify by number the accounting assumption, principle, or constraint that describes each situation below. Do not use a letter more than once. (a)
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This note was uploaded on 02/19/2010 for the course ACC 421 taught by Professor Unknown during the Spring '10 term at University of Phoenix.

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Chapter 2 and Chapter 3 Exercises - 1 Chapter 2 Exercises...

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