ACC 310 Chapter 2

LO 2.1 The Conceptual Framework is intended to do all of the following except:

• 1. Enhance financial statement comparability across companies and over time.

• 1. Increase users’ understanding of and confidence in financial reporting.

• 1. Serve as a guide to the FASB in establishing accounting standards.

• 1. Provide a definitive solution in situations where an accounting standard does not exist.

LO 2.2 Which of the following is not an objective of general purpose financial reporting?

• 1. Provide useful financial information to investors and creditors.

• 1. Enable investors and creditors to assess amounts, timing, and uncertainty of future net cash inflows to the company.

• 1. Provide information about a company’s financial performance.

• 1. Inform investors about the amount to invest in the company’s stock.

LO 2.1 The information provided by financial reporting pertains to:

1. 
   

• 1. individual companies, rather than to industries or the economy as a whole or to members of society as consumers.

• 1. individual companies and industries, rather than to the economy as a whole or to members of society as consumers.

• 1. individual companies and industries, rather than to the economy as a whole or to members of society as consumers.

• 1. individual companies, industries, and the economy as a whole, rather than to members of society as consumers.

LO 2.3 Which of the following is considered a constraint on useful information by Statement of Financial Accounting Concepts No. 8?

• 1. benefits > costs

• 1. conservatism

• 1. timeliness

• 1. verifiability

LO 2.3 According to Statement of Financial Accounting Concepts No. 8, to be relevant accounting information is expected to have which of the following?

• Not predictive or confirmatory

• Predictive and confirmatory

• Not predictive but confirmatory

• Not confirmatory but predictive

LO 2.3 Which characteristic states that accounting information should be supported by sufficient evidence to allow two or more qualified individuals to arrive at similar measures and conclusions?

• 1. Matching

• 1. Verifiability

• 1. Periodicity

• 1. Monetary unit

LO 2.3 Under Statement of Financial Accounting Concepts No. 8, which of the following enhances decision-useful information?

• 1. Timeliness

• 1. Neutrality

• 1. Confirmatory value

• 1. Materiality

LO 2.4 Under Statement of Financial Accounting Concepts No. 8, which of the following means the process of formally recording and reporting an item in the financial statements of a company?

• 1. Allocation

• 1. Verification

• 1. Recognition

• 1. Realization

LO 2.4 Accruing net losses on obsolete inventory is an example of the accounting concept of:

• 1. faithful representation.

• 1. historical cost.

• 1. consistency.

• 1. materiality.

LO 2.4 The valuation of a promise to receive cash in the future at present value on the financial statements of a company is valid because of the accounting concept of:

• 1. entity.

• 1. materiality

• 1. going concern.

• 1. neutrality