Exam 2: Conceptual Framework Underlying Financial Reporting

Decision makers vary widely in the types of decisions they make, the methods of decision making they employ, the information they already possess or can obtain from other sources, and their ability to process information.Consequently, for information to be useful there must be a linkage between these users and the decisions they make.This link is

A decrease in net assets arising from peripheral or incidental transactions is called a(n)

Financial information exhibits the characteristic of comparability when

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

Financial information does not demonstrate comparability when

The allowance for doubtful accounts, which appears as a deduction from accounts receivable on a balance sheet and which is based on an estimate of bad debts, is an application of the

The economic entity assumption

Which of the following elements of financial statements is not a component of comprehensive income?

Charging off the cost of a wastebasket with an estimated useful life of 10 years as an expense of the period when purchased is an example of the application of the

Revenue is generally recognized when performance is achieved and it is measurable and collectible.This statement describes the

Where there is a significant uncertainty with respect to the measurement of an item

A local business man owns several different companies.His accountant prepares separate annual financial statements for each of these businesses.This is an application of which of the following principles:

Schmidt Ltd.aims to improve the qualitative characteristics of its financial statements. Your assistant has presented you with options shown below.Which of those options would most likely improve the comparability of your company's financial statements?

The overriding criterion by which accounting information can be judged is that of

Principles-based GAAP is sometimes criticized for being

Which of the following best describes the importance of qualitative characteristics as part of the conceptual framework of financial reporting?

Accounting information is considered to be relevant when it

Which of the following is an implication of the going concern assumption?

The accounting principle of matching is best demonstrated by

What accounting concept justifies the usage of accruals and deferrals?