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CHAPTER 2 CONCEPTUAL FRAMEWORK UNDERLYING FINANCIAL ACCOUNTING

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Question;139. Materiality;is used in all of the following situations of providing financial information, except;a. where;an amount is of relative large size and importance.;b. where;it would impact the judgment of a reasonable person.;c. where;it would not make a difference in the actions of decision maker.;d. where;omission of the information would result in bias.;140. Expensing the cost of copy paper when the;paper is acquired is an example of;a. Materiality.;b. Cost;constraint.;c. Conservatism.;d. Industry;practices.;141. 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;a. consistency;quality.;b. expense;recognition principle.;c. materiality;quality.;d. historical;cost principle.;142. Which of the following statements about;materiality is correct?;a. An;item must make a difference or it need not be disclosed.;b. Materiality;is a matter of relative size or importance.;c. An;item is material if its inclusion or omission would influence or change the;judgment of a reasonable person.;d. All of;these answers are correct.;143. The International Accounting Standards Board?s conceptual framework;includes a cost constraint. Which of the following best describes the cost;constraint?;a.;The benefits of the information must be greater;than the costs of providing it.;b.;Financial information should be free from cost to;users of the information.;c.;Costs of providing financial information are not;always evident or measurable, but must be considered.;d.;All of the choices are correct.;144. The International Accounting Standards Board?s (IASB) conceptual;framework includes a cost-benefit constraint. Which of the following is true;regarding this constraint?;a.;Benefits are more difficult to quantify than costs.;b.;The IASB seeks input on costs and benefits as part;of their due process.;c.;Benefits to preparers may include access to capital;at a lower cost.;d.;All of the choices are correct.;145. The International Accounting Standards Board?s (IASB) conceptual;framework includes a materiality constraint. Which of the following is true;regarding this constraint?;a.;The IASB?s rule for materiality is any item under;5% of net income is considered immaterial.;b.;Materiality factors into both internal and external;accounting decisions.;c.;An item is immaterial if its inclusion or omission;would influence or change the judgment of a reasonable person.;d.;All of the choices are correct.;146. The International Accounting Standards Board?s (IASB) conceptual;framework;a.;Includes the concept of prudence or conservatism;which means when in doubt, choose the solution that will be least likely to;overstate assets or income and/or understate liabilities or expenses.;b.;Excludes the concept of prudence or conservatism;because it is inconsistent with neutrality, which encompasses freedom from;bias.;c.;Includes the concept of prudence or conservatism;which means when in doubt, choose the solution that will be least likely to;understate assets or income and/or overstate liabilities or expenses.;d.;Includes the concept of prudence or conservatism as;a desirable, but not required;quality of financial reporting information.;147. The International Accounting Standards Board?s (IASB) conceptual;framework includes which of the following constraints?;a.;Prudence;b.;Conservatism;c.;Cost;d.;All of the choices are constraints in the IASB?s;conceptual framework.

 

Paper#55036 | Written in 18-Jul-2015

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