Exam 2: Conceptual Framework Underlying Financial Reporting

MAX Auto Repair has implemented a policy that requires all expenditures below $10 to be expensed.This is an application of

A soundly developed conceptual framework of concepts and objectives should

Fraudulent financial reporting is a business reality.While it cannot be eliminated, the risk of fraudulent reporting can be decreased.Which of the following considerations is least likely to lessen that risk?

During a major renovation project of its head office, a worker was seriously injured.While the company believes that it was not at fault, it does include the incident in the notes to its financial statements.This is consistent with which of the following principles:

In classifying the elements of financial statements, the primary distinction between revenues and gains is

Valuing assets at their liquidation values rather than their cost is inconsistent with the

Management Discussion and Analysis (MD&A) is

During the lifetime of an entity, accountants produce financial statements at arbitrary points in time in accordance with which basic accounting concept?

The operations of a resource company's oil sands operations results in environmental damage.While the extent of the damage can not yet be determined, the situation is disclosed in its financial statements.This best demonstrates

Which of the following statements about materiality is not correct?

Under the currently proposed definition of an asset, what is the most important aspect to consider when deciding whether the item should be recognized as an asset?

The elements of financial statements include investments by owners.These are increases in an entity's net assets resulting from owners'

Proponents of historical cost ordinarily maintain that in comparison with all other valuation alternatives for general purpose financial reporting, statements prepared using historical costs are more:

You want to improve the qualitative characteristics of your firm's financial statements. Which of the following options would most likely improve the timeliness of your company's financial statements?

Enhancing qualitative characteristics are an essential part of the conceptual framework of accounting.These include, among others, timeliness.Which of the items below would be most indicative of timeliness?

Which of the following serves as the justification for the periodic recording of amortization expense?

Representational faithfulness is an ingredient of the primary quality of

Generally accepted accounting principles

To measure the fair value of an asset, an entity should determine

The adoption of international GAAP can be seen as an application of which of the following quality enhancing characteristics: