Exam 2: Conceptual Framework Underlying Financial Accounting

Verifiability and predictive value are two ingredients of reliability.

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

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

In the International Accounting Standards Board's (IASB's) Conceptual Framework, an enhancing qualitative characteristic is

Which assumption or principle requires that all information significant enough to affect a decision of reasonably informed users should be reported in the financial statements?

The accounting principle of expense recognition is best demonstrated by

The IASB conceptual framework specifically identifies accrual basis accounting as one of its fundamental assumptions.

In the International Accounting Standards Board's (IASB's) Conceptual Framework, an enhancing qualitative characteristic is predictive value.

The IASB has issued a conceptual framework that is broadly consistent with that of the United States.

Relevance and reliability are the two primary qualities that make accounting information useful for decision making.

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

Under International Financial Reporting Standards (IFRS) companies need not report immaterial items within the body of the financial statements, but must disclose them in the notes or supplementary information that accompany the financial statements.

Materiality is one of the basic assumptions of accounting used by the International Accounting Standards Board (IASB).

In the International Accounting Standards Board's (IASB's) Conceptual Framework, a fundamental qualitative characteristic is

Under International Financial Reporting Standards (IFRS) product costs are charged off in the immediate period and period costs may be carried into future periods.

The basic assumptions of accounting used by the International Accounting Standards Board (IASB) include

Which of the following is an ingredient of faithful representation?

The expense recognition principle states that debits must equal credits in each transaction.

The idea of consistency does not mean that companies cannot switch from one accounting method to another.

Which of the following is an ingredient of relevance?