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CHAPTER 2 CONCEPTUAL FRAMEWORK UNDERLYING FINANCIAL ACCOUNTING TRUE-FALSE —Conceptual Answer No. Description F 1. Nature of conceptual framework. T 2. Conceptual framework definition. F 3. Levels of conceptual framework. T 4 International conceptual framework. F 5. Statements of Financial Accounting Concepts. T 6. Decision usefulness. F 7. Financial statement users. T 8. Relevance and reliability. T 9. Consistency. F 10. Relevance. F 11. Reliability. F 12. Basic elements. T 13. Comprehensive income. T 14. Going concern assumption. F 15. Economic entity assumption. F 16. Matching principle. T 17. Realizable revenues. T 18. Supplementary information. F 19. Materiality factors F 20. Conservatism. MULTIPLE CHOICE —Conceptual Answer No. Description c 21. GAAP defined. d 22. Purpose of conceptual framework. c 23. Conceptual framework. d S 24. Conceptual framework benefits. d 25. Objectives of financial reporting. a 26. Decision usefulness. d 27. Objectives of financial reporting. a P 28. Financial repoting objectives. c 29. Purpose of understandable information. a 30. Decision-usefulness criterion. c 31. Primary qualities of accounting information. b 32. Definition of relevance. b 33. Definition of reliability. d 34. Relevance and reliability.
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Test Bank for Intermediate Accounting, Twelfth Edition c 35. Timeliness characteristic. MULTIPLE CHOICE —Conceptual (cont.) Answer No. Description d 36. Verifiability characteristic. b 37. Neutrality characteristic. d 38. Neutrality characteristic. c 39. Definition of verifiability. a 40. Quality of predictive value. c 41. Quality of representational faithfulness. d 42. Consistency. b 43. Consistency characteristic. b 44. Comparability and consistency. d 45. Comparability. d 46. Elements of financial statements. c 47. Distinction between revenues and gains. c 48. Definition of a loss. d 49. Definition of comprehensive income. b 50. Components of comprehensive income. d P 51. Comprehensive income. b S 52. Earnings vs. comprehensive income. a S 53. Reporting financial statement elements. a S 54. Monetary unit assumption. c S 55. Periodicity assumption. c 56. Monetary unit assumption. d 57. Economic entity assumption. a 58. Economic entity assumption. b 59. Periodicity assumption. a 60. Going concern assumption. d 61. Going concern assumption. d 62. Implications of going concern assumption. a 63. Historical cost principle. d 64. Historical cost principle. c 65. Revenue recognition principle. d 66. Revenue recognition principle. d 67. Revenue recognition principle. d 68. Timing of revenue recognition. c 69. Realization concept. b 70. Definition of realized. b 71. Matching principle. b 72. Matching principle. b 73. Expense recognition. c 74. Full-disclosure principle. d 75. Constraints to limit the cost of reporting. a 76. Cost-benefit constraint. c 77. Materiality constraint. d 78. Materiality. d 79. Pervasive constraints. a 80. Conservatism constraint.
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