ACCT 321 Chapter 2 Practice Homework(with solved
solutions)
A conceptual framework establishes the concepts that provide guidance on
A. identifying the boundaries of financial reporting.
B. selecting the transactions, other events, and circumstances to be represented,
C. how transactions, events and circumstances should be recognized and measured.
D. all of these answer choices are correct. correct answers All of these answer choices are correct
The conceptual framework for financial reporting consists of how many levels?
A. 1
B. 2
C. 3
D. 4 correct answers 3
In the conceptual framework for financial reporting, what provides "the how" - the
implementation of accounting?
A. Measurement, recognition and disclosure concepts such as assumptions, principles, and
constraints.
B. Qualitative characteristics of accounting information.
C. Elements of financial statements.
D. Objective of financial reporting. correct answers Measurement, recognition and disclosure
concepts such as assumptions, principles, and constraints.
A conceptual framework is necessary for which of the following reasons?
A. It allows the profession to quickly solve new and emerging issues.
B. It enables standard setters to issue more useful and consistent pronouncements over time.
C. It increases financial statement users' understanding of and confidence in financial reporting.
D. All of these answer choices are correct. correct answers All of these answer choices are
correct
Which level of the conceptual framework is devoted to elements of financial statements and the
qualitative characteristics?
A. 4th
B. 3rd
C. 2nd
D. 1st correct answers 2nd
Which level of the conceptual framework is devoted to the "why" - the purpose of accounting?
A. First
B. Second
C. Third
D. All of these correct answers First
The objective of general-purpose financial reporting in the conceptual framework is
A. decision usefulness.
, B. understandability.
C. reliability.
D. comparability. correct answers Decision usefulness;The objective of general-purpose
financial reporting is to provide financial information about the entity that is useful in making
decisions about providing resources to the entity.
(T/F) The objective of the conceptual framework is to provide financial information about the
reporting entity primarily to company management and other internal users. correct answers
False,The objective of the conceptual framework is to provide financial information about the
reporting entity primarily to present and potential equity investors, lenders, and other creditors in
making decisions about providing resources to the entity.
(T/F)
(a)In preparing financial reports, it is assumed that users of the reports have reasonable
knowledge of business and economic activities.select an option
(b)The fundamental qualitative characteristics that make accounting information useful are
relevance and verifiability.select an option
(c)Verifiability is solely an enhancing characteristic for faithful representation.select an option
(d)Relevant information only has predictive value, confirmatory value, or both.select an option
(e)Comparability pertains to the reporting of information in a similar manner for different
companies as well as a company reporting under the same accounting policies over time.select
an option
(f)Information that is a faithful representation is characterized as having predictive or
confirmatory value. correct answers (a) true
(b) false
(c) false
(d) false
(e) true
(f) false
(a.) Sprull Inc. switches from FIFO to average-cost to FIFO over a 2-year period. Which
qualitative characteristic of accounting information is not followed?
(b.) Assume that the profession permits the savings and loan industry to defer losses on
investments it sells because immediate recognition of the loss may have adverse economic
consequences on the industry. Which qualitative characteristic of accounting information is not
followed? (Do not use relevance or faithful representation.)
(c.) The chairman of the SEC at one time noted, "If it becomes accepted or expected that
accounting principles are determined or modified in order to secure purposes other than
economic measurement, we assume a grave risk that confidence in the credibility of our financial
information system will be undermined." Which qualitative characteristic of accounting
information should ensure that such a situation will not occur? (Do not use correct answers (a.)
comparability (consistency)
(b.) neutrality
(c.) neutrality
(d.) Relevance and faithful representation
(e.) timeliness
solutions)
A conceptual framework establishes the concepts that provide guidance on
A. identifying the boundaries of financial reporting.
B. selecting the transactions, other events, and circumstances to be represented,
C. how transactions, events and circumstances should be recognized and measured.
D. all of these answer choices are correct. correct answers All of these answer choices are correct
The conceptual framework for financial reporting consists of how many levels?
A. 1
B. 2
C. 3
D. 4 correct answers 3
In the conceptual framework for financial reporting, what provides "the how" - the
implementation of accounting?
A. Measurement, recognition and disclosure concepts such as assumptions, principles, and
constraints.
B. Qualitative characteristics of accounting information.
C. Elements of financial statements.
D. Objective of financial reporting. correct answers Measurement, recognition and disclosure
concepts such as assumptions, principles, and constraints.
A conceptual framework is necessary for which of the following reasons?
A. It allows the profession to quickly solve new and emerging issues.
B. It enables standard setters to issue more useful and consistent pronouncements over time.
C. It increases financial statement users' understanding of and confidence in financial reporting.
D. All of these answer choices are correct. correct answers All of these answer choices are
correct
Which level of the conceptual framework is devoted to elements of financial statements and the
qualitative characteristics?
A. 4th
B. 3rd
C. 2nd
D. 1st correct answers 2nd
Which level of the conceptual framework is devoted to the "why" - the purpose of accounting?
A. First
B. Second
C. Third
D. All of these correct answers First
The objective of general-purpose financial reporting in the conceptual framework is
A. decision usefulness.
, B. understandability.
C. reliability.
D. comparability. correct answers Decision usefulness;The objective of general-purpose
financial reporting is to provide financial information about the entity that is useful in making
decisions about providing resources to the entity.
(T/F) The objective of the conceptual framework is to provide financial information about the
reporting entity primarily to company management and other internal users. correct answers
False,The objective of the conceptual framework is to provide financial information about the
reporting entity primarily to present and potential equity investors, lenders, and other creditors in
making decisions about providing resources to the entity.
(T/F)
(a)In preparing financial reports, it is assumed that users of the reports have reasonable
knowledge of business and economic activities.select an option
(b)The fundamental qualitative characteristics that make accounting information useful are
relevance and verifiability.select an option
(c)Verifiability is solely an enhancing characteristic for faithful representation.select an option
(d)Relevant information only has predictive value, confirmatory value, or both.select an option
(e)Comparability pertains to the reporting of information in a similar manner for different
companies as well as a company reporting under the same accounting policies over time.select
an option
(f)Information that is a faithful representation is characterized as having predictive or
confirmatory value. correct answers (a) true
(b) false
(c) false
(d) false
(e) true
(f) false
(a.) Sprull Inc. switches from FIFO to average-cost to FIFO over a 2-year period. Which
qualitative characteristic of accounting information is not followed?
(b.) Assume that the profession permits the savings and loan industry to defer losses on
investments it sells because immediate recognition of the loss may have adverse economic
consequences on the industry. Which qualitative characteristic of accounting information is not
followed? (Do not use relevance or faithful representation.)
(c.) The chairman of the SEC at one time noted, "If it becomes accepted or expected that
accounting principles are determined or modified in order to secure purposes other than
economic measurement, we assume a grave risk that confidence in the credibility of our financial
information system will be undermined." Which qualitative characteristic of accounting
information should ensure that such a situation will not occur? (Do not use correct answers (a.)
comparability (consistency)
(b.) neutrality
(c.) neutrality
(d.) Relevance and faithful representation
(e.) timeliness
