ch02 - CHAPTER 2 CONCEPTUAL FRAMEWORK UNDERLYING FINANCIAL...

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Unformatted text preview: CHAPTER 2 CONCEPTUAL FRAMEWORK UNDERLYING FINANCIAL ACCOUNTING MULTIPLE CHOICE —Conceptual Answer No. Description c 1. GAAP defined. d 2. Purpose of conceptual framework. d 3. Objectives of financial reporting. c 4. Purpose of understandable information. a 5. Decision-usefulness criterion. c 6. Primary qualities of accounting information. b 7. Definition of relevance. b 8. Definition of reliability. d 9. Relevance and reliability. c 10. Timeliness characteristic. d 11. Verifiability characteristic. b 12. Neutrality characteristic. d 13. Neutrality characteristic. c 14. Definition of verifiability. a 15. Quality of predictive value. c 16. Quality of representational faithfulness. d 17. Consistency. b 18. Consistency characteristic. b 19. Comparability and consistency. d 20. Comparability. d 21. Elements of financial statements. c 22. Distinction between revenues and gains. c 23. Definition of a loss. d 24. Definition of comprehensive income. b 25. Components of comprehensive income. d 26. Economic entity assumption. a 27. Economic entity assumption. b 28. Periodicity assumption. a 29. Going concern assumption. d 30. Going concern assumption. d 31. Implications of going concern assumption. a 32. Historical cost principle. d 33. Historical cost principle. c 34. Revenue recognition principle. d 35. Revenue recognition principle. d 36. Revenue recognition principle. d 37. Timing of revenue recognition. Test Bank for Intermediate Accounting, Eleventh Edition MULTIPLE CHOICE —Conceptual (cont.) Answer No. Description c 38. Realization concept. b 39. Definition of realized. b 40. Matching principle. b 41. Matching principle. b 42. Expense recognition. c 43. Full-disclosure principle. a 44. Cost-benefit constraint. c 45. Materiality constraint. d 46. Materiality. d 47. Pervasive constraints. a 48. Conservatism constraint. b 49. Conservatism constraint. a 50. Trade-offs between characteristics of accounting information. c 51. Trade-offs between characteristics of accounting information. MULTIPLE CHOICE —CPA Adapted Answer No. Description a 52. Quality of predictive value. a 53. Definition of recognition. b 54. Consistency characteristic. b 55. Classification of gains and losses. b 56. Earnings concept. a 57. Components of comprehensive income. b 58. Components of comprehensive income. d 59. Components of comprehensive income. d 60. Components of comprehensive income. EXERCISES Item Description E2-61 Basic assumptions. E2-62 Revenue recognition. E2-63 Historical cost principle. E2-64 Accounting concepts—identification. E2-65 Accounting concepts—identification. E2-66 Accounting concepts—matching. E2-67 Accounting concepts—fill in the blanks. E2-68 Matching concept....
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ch02 - CHAPTER 2 CONCEPTUAL FRAMEWORK UNDERLYING FINANCIAL...

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