Exam 2: Conceptual Frameworks for Financial Reporting

When actual financial statements routinely report results that overstate or understate a company's financial position,which qualitative characteristic is violated?

Which statement best describes a private enterprise?

During the past year,Easy Supplies Ltd.'s assets decreased $33,000,its liabilities decreased $41,000,its share capital increased $5,000,and Easy recorded net profit of $12,000.What was the amount of dividends declared?

Identify the eight major components of the conceptual framework for accounting.Explain how these components interact with the demand for and supply of financial information.

JP Corporation had net income of $1,000,000 for 2017.After issuing its financial statements,the company realized that it had failed to include inventory from one of its small warehouses for several years.Specifically,it forgot to include $20,000 on December 31,2016 and $30,000 on December 31,2017.Which of the following is TRUE regarding JP's 2017 net income?

Fail-Safe Computer Inc.sells equipment with a 2-year warranty.Prior experience indicates that costs for warranty repairs average 3% in the first year,and 2% in the second year.Sales were $300,000 and $400,000 in fiscal 2016 and 2017 respectively.It paid $5,000 for materials and labour to make warranty-related repairs in 2016.What amount will be recorded as warranty expense in 2016?

Which statement best explains the qualitative characteristic of "relevance"?

What information does the income statement provide to users of financial information under the IFRS Conceptual Framework?

What decision would users of financial information not need to make under the IFRS Conceptual Framework?

Computer Inc.sells equipment with a 3-year warranty.Prior experience indicates that costs for warranty repairs average 3% in the first year,2% in the second year and 1% in the third year.In 2017,Computer Inc.had sales of $800,000.It paid $20,000 for materials and labour to make warranty-related repairs in 2017.What amount will be recorded as warranty expense in 2017?

Indicate the qualitative characteristic being described in each situation below:

Which is not a qualitative characteristic of financial information in the IFRS Conceptual Framework?

Which statement best explains the meaning of "recognition" in financial reporting?

Which of the following is/are constraints in the financial reporting process?

Which statement is correct?

What information does the balance sheet provide to users of financial information under the IFRS Conceptual Framework?

Lean Ltd.had a balance of $52,300 in the office supplies account at the start of the year.During the year,purchases of $141,700 were made and debited to the office supplies account.At the end of the year,a physical count of the office supplies indicated $41,800 on hand.What was the office supplies expense for the year?

Which qualitative characteristic of financial information alleviates "moral hazard"?

Which statement best explains the meaning of "comparability" in financial reporting?

ABC Manufacturing paid $250,000 to defend itself against a patent infringement lawsuit from CCB Limited.CCB has won,but ABC is planning to appeal the decision and continue pursuing its case.ABC is permitted to use its patent during the appeal process. Provide two arguments to support ABC capitalizing the $250,000 expenses associated with a lawsuit.Provide two arguments against ABC capitalizing the $250,000 expenses associated with a lawsuit.Which option would you recommend and why?