Test-bank-for-Intermediate-Accounting-IFRS-Edition-
volume-1-by-Donald-E-Kieso-Jerry-J-Weygandt-Terry
CHAPTER 2
CONCEPTUAL FRAMEWORK UNDERLYING FINANCIAL
ACCOUNTING
CHAPTER LEARNING OBJECTIVES
1. Describe the usefulness of a conceptual framework.
2. Describe efforts to construct a conceptual framework.
3. Understand the objective of financial reporting.
4. Identify the qualitative characteristics of accounting information.
5. Define the basic elements of financial statements.
6. Describe the basic assumptions of accounting.
GENIUSDOCLIB
7. Explain the application of the basic principles of accounting.
8. Describe the impact that constraints have on reporting accounting information.
TRUE-FALSE—Conceptual
1. The conceptual framework for accounting has been discovered through empirical research.
2. A conceptual framework is a coherent system of interrelated objectives and fundamentals that can lead
to consistent standards.
3. The International Accounting Standards Board (IASB) uses a conceptual framework based on individual
concepts developed by each member of the standard-setting body.
4. A soundly developed conceptual framework enables the International Accounting Standards Board
(IASB) to issue more useful and consistent pronouncements over time.
5. A soundly developed conceptual framework enables the International Accounting Standards Board
(IASB) to quickly solve new and emerging practical problems by referencing basic theory.
6. The IASB has issued a conceptual framework that is broadly consistent with that of the United States.
7. The International Accounting Standards Board’s (IASB’s) Conceptual Framework includes
supplementary information.
, 2-2 Test Bank for Intermediate Accounting: IFRS Edition
8. The International Accounting Standards Board’s (IASB’s) Conceptual Framework includes the elements
of financial statements.
9. The 2nd level of the IASB’s conceptual framework provides the qualitative characteristics that make
accounting information useful and the elements of financial statements.
10. One of the challenges in developing a common conceptual framework will be to agree on how the
framework should be organized since the FASB and IASB conceptual frameworks are organized in very
different ways.
11. The first level of the conceptual framework identifies the recognition and measurement concepts used
in establishing accounting standards.
12. Decision usefulness is the underlying theme of the conceptual framework.
13. Users of financial statements are assumed to have no knowledge of business and financial accounting
matters by financial statement preparers.
14. The foundation of the International Accounting Standards Board’s (IASB’s) Conceptual Framework is
found on the third level of the Framework and includes assumptions, principles, and constraints.
15. An implicit assumption of the International Accounting Standards Board’s (IASB’s) Conceptual
Framework is that users need to be experts in business and financial accounting matters to understand
the information contained in financial statements.
GENIUSDOCLIB
16. Relevance and reliability are the two primary qualities that make accounting information useful for
decision making.
17. The idea of consistency does not mean that companies cannot switch from one accounting method to
another.
18. Timeliness and neutrality are two ingredients of relevance.
19. Verifiability and predictive value are two ingredients of reliability.
20. The second level of the International Accounting Standards Board’s (IASB’s) Conceptual Framework
serves as a bridge between the “why” of accounting and the “how” of accounting.
21. In the International Accounting Standards Board’s (IASB’s) Conceptual Framework, qualitative
characteristics are considered either relevant or prudent.
22. In the International Accounting Standards Board’s (IASB’s) Conceptual Framework, qualitative
characteristics distinguish better information from inferior information for decision-making purposes.
23. In the International Accounting Standards Board’s (IASB’s) Conceptual Framework, an enhancing
qualitative characteristic is predictive value.
24. In the International Accounting Standards Board’s (IASB’s) Conceptual Framework, an ingredient of a
fundamental qualitative characteristic is understandability.
, From https://buytestbank.eu/Test-bank-for-Intermediate-Accounting-IFRS-Editionvolume-1-by-
Donald-E-Kieso-Jerry-J-Weygandt-Terry-D-Warfiel
25. To be a faithful representation as described by the International Accounting Standards Board’s (IASB’s)
Conceptual Framework, information must be confirmatory.
26. An enhancing quality as described by the International Accounting Standards Board’s (IASB’s)
Conceptual Framework is comparability.
27. Moon, Inc. applies different accounting treatments to similar events from period to period. Moon, Inc.
is violating verifiability as described by the International Accounting Standards Board’s (IASB’s)
Conceptual Framework.
28. The International Accounting Standards Board’s (IASB) definition of retained earnings is “the residual
interest in the assets of the entity after deducting all its liabilities.”
29. The historical cost principle would be of limited usefulness if not for the going concern assumption.
30. The economic entity assumption means that economic activity can be identified with a particular legal
entity.
31. Materiality is one of the basic assumptions of accounting used by the International Accounting
Standards Board (IASB).
32. Periodicity is one of the basic assumptions of accounting used by the International Accounting
Standards Board (IASB).
GENIUSDOCLIB
33. Timeliness is one of the basic assumptions of accounting used by the International Accounting
Standards Board (IASB).
34. The periodicity basic assumptions of accounting (used by the International Accounting Standards
Board) makes depreciation and amortization policies justifiable and appropriate.
35. The IASB conceptual framework specifically identifies accrual basis accounting as one of its
fundamental assumptions.
36. One of two assumptions made by the IASB conceptual framework is that the reporting entity is a going
concern.
37. The expense recognition principle states that debits must equal credits in each transaction.
38. Revenues are realizable when assets received or held are readily convertible into cash or claims to cash.
39. Supplementary information may include details or amounts that present a different perspective from
that adopted in the financial statements.
40. Companies consider only quantitative factors in determining whether an item is material.
41. The International Accounting Standards Board has given companies the option of using fair value to
report financial liabilities.
42. Under International Financial Reporting Standards (IFRS) product costs are charged off in the
immediate period and period costs may be carried into future periods.
volume-1-by-Donald-E-Kieso-Jerry-J-Weygandt-Terry
CHAPTER 2
CONCEPTUAL FRAMEWORK UNDERLYING FINANCIAL
ACCOUNTING
CHAPTER LEARNING OBJECTIVES
1. Describe the usefulness of a conceptual framework.
2. Describe efforts to construct a conceptual framework.
3. Understand the objective of financial reporting.
4. Identify the qualitative characteristics of accounting information.
5. Define the basic elements of financial statements.
6. Describe the basic assumptions of accounting.
GENIUSDOCLIB
7. Explain the application of the basic principles of accounting.
8. Describe the impact that constraints have on reporting accounting information.
TRUE-FALSE—Conceptual
1. The conceptual framework for accounting has been discovered through empirical research.
2. A conceptual framework is a coherent system of interrelated objectives and fundamentals that can lead
to consistent standards.
3. The International Accounting Standards Board (IASB) uses a conceptual framework based on individual
concepts developed by each member of the standard-setting body.
4. A soundly developed conceptual framework enables the International Accounting Standards Board
(IASB) to issue more useful and consistent pronouncements over time.
5. A soundly developed conceptual framework enables the International Accounting Standards Board
(IASB) to quickly solve new and emerging practical problems by referencing basic theory.
6. The IASB has issued a conceptual framework that is broadly consistent with that of the United States.
7. The International Accounting Standards Board’s (IASB’s) Conceptual Framework includes
supplementary information.
, 2-2 Test Bank for Intermediate Accounting: IFRS Edition
8. The International Accounting Standards Board’s (IASB’s) Conceptual Framework includes the elements
of financial statements.
9. The 2nd level of the IASB’s conceptual framework provides the qualitative characteristics that make
accounting information useful and the elements of financial statements.
10. One of the challenges in developing a common conceptual framework will be to agree on how the
framework should be organized since the FASB and IASB conceptual frameworks are organized in very
different ways.
11. The first level of the conceptual framework identifies the recognition and measurement concepts used
in establishing accounting standards.
12. Decision usefulness is the underlying theme of the conceptual framework.
13. Users of financial statements are assumed to have no knowledge of business and financial accounting
matters by financial statement preparers.
14. The foundation of the International Accounting Standards Board’s (IASB’s) Conceptual Framework is
found on the third level of the Framework and includes assumptions, principles, and constraints.
15. An implicit assumption of the International Accounting Standards Board’s (IASB’s) Conceptual
Framework is that users need to be experts in business and financial accounting matters to understand
the information contained in financial statements.
GENIUSDOCLIB
16. Relevance and reliability are the two primary qualities that make accounting information useful for
decision making.
17. The idea of consistency does not mean that companies cannot switch from one accounting method to
another.
18. Timeliness and neutrality are two ingredients of relevance.
19. Verifiability and predictive value are two ingredients of reliability.
20. The second level of the International Accounting Standards Board’s (IASB’s) Conceptual Framework
serves as a bridge between the “why” of accounting and the “how” of accounting.
21. In the International Accounting Standards Board’s (IASB’s) Conceptual Framework, qualitative
characteristics are considered either relevant or prudent.
22. In the International Accounting Standards Board’s (IASB’s) Conceptual Framework, qualitative
characteristics distinguish better information from inferior information for decision-making purposes.
23. In the International Accounting Standards Board’s (IASB’s) Conceptual Framework, an enhancing
qualitative characteristic is predictive value.
24. In the International Accounting Standards Board’s (IASB’s) Conceptual Framework, an ingredient of a
fundamental qualitative characteristic is understandability.
, From https://buytestbank.eu/Test-bank-for-Intermediate-Accounting-IFRS-Editionvolume-1-by-
Donald-E-Kieso-Jerry-J-Weygandt-Terry-D-Warfiel
25. To be a faithful representation as described by the International Accounting Standards Board’s (IASB’s)
Conceptual Framework, information must be confirmatory.
26. An enhancing quality as described by the International Accounting Standards Board’s (IASB’s)
Conceptual Framework is comparability.
27. Moon, Inc. applies different accounting treatments to similar events from period to period. Moon, Inc.
is violating verifiability as described by the International Accounting Standards Board’s (IASB’s)
Conceptual Framework.
28. The International Accounting Standards Board’s (IASB) definition of retained earnings is “the residual
interest in the assets of the entity after deducting all its liabilities.”
29. The historical cost principle would be of limited usefulness if not for the going concern assumption.
30. The economic entity assumption means that economic activity can be identified with a particular legal
entity.
31. Materiality is one of the basic assumptions of accounting used by the International Accounting
Standards Board (IASB).
32. Periodicity is one of the basic assumptions of accounting used by the International Accounting
Standards Board (IASB).
GENIUSDOCLIB
33. Timeliness is one of the basic assumptions of accounting used by the International Accounting
Standards Board (IASB).
34. The periodicity basic assumptions of accounting (used by the International Accounting Standards
Board) makes depreciation and amortization policies justifiable and appropriate.
35. The IASB conceptual framework specifically identifies accrual basis accounting as one of its
fundamental assumptions.
36. One of two assumptions made by the IASB conceptual framework is that the reporting entity is a going
concern.
37. The expense recognition principle states that debits must equal credits in each transaction.
38. Revenues are realizable when assets received or held are readily convertible into cash or claims to cash.
39. Supplementary information may include details or amounts that present a different perspective from
that adopted in the financial statements.
40. Companies consider only quantitative factors in determining whether an item is material.
41. The International Accounting Standards Board has given companies the option of using fair value to
report financial liabilities.
42. Under International Financial Reporting Standards (IFRS) product costs are charged off in the
immediate period and period costs may be carried into future periods.
