Modifying conventions include all of the following except:a. Periodicity.b. Cost-benefit.c. Materiality.d. Conservatism.
Which of the following is not part of the conceptual framework project?
Now turn to “Answers to self-test” at the end of the chapter to check your answers.6.16.4 Questions Name the assumptions underlying generally accepted accounting principles. Comment on the validity of the stable unit of measurement assumption during periods of high inflation. Why does the accountant use the business entity concept? When is the going-concern assumption not to be used? What is meant by the term accrual basis of accounting? What is its alternative? Whatdoes it mean to say that accountants record substance rather than form? If a company changes an accounting principle because the change better meets the information needs of users, what disclosures must be made? What is the exchange-price (or cost) principle? What is the significance of adhering to this principle? What two requirements generally must be met before recognizing revenue in a period? Under what circumstances, if any, is the receipt of cash an acceptable time to recognize revenue? What two methods may be used in recognizing revenues on long-term construction contracts? Define expense. What principles guide the recognition of expense? How does an expense differ from a loss? What is the full disclosure principle? What role does cost-benefit play in financial reporting? What is meant by the accounting term conservatism? How does it affect the amounts reported in the financial statements? Does materiality relate only to the relative size of dollar amounts? Identify the three major parts of the conceptual framework project. What arethe two primary qualitative characteristics?6.16.5 Exercises Exercise A Match the items in Column A with the proper descriptions in Column B.Column A Column BGoing concern (continuity). a. An assumption relied on in the preparation of the primary financial statements that would be unreasonable when the inflation rate is high.Consistency. b. Concerned with relative dollar amounts.Disclosure. c. The usual basis for the recording of assets.Periodicity. d. Required if the accounting treatment differs from that previously used for a particular item.Conservatism. e. An assumption that would be unreasonable to use in reporting on a firm that had become insolvent.