ACC 318 || 100% Correct Answers.
What is conceptual framework is and why need a conceptual framework? correct answers
Conceptual framework is a consistent system of concepts that flow from an objective
- Defines boundaries of financial reporting
- What is needed to be recognized/measured
- How it is reported and measured
- Enables the FASB to issue more useful and consistent pronouncements over time
- To solve new and emerging practical problems
Describe the FASB effort to construct the conceptual framework? correct answers FASB issued 7
statements of financial accounting concepts that relate to financial reporting for business
enterprises. They provide the basis for CF. Includes objectives, qualitative characteristics, and
elements.
1st level of conceptual frame work- the why? correct answers To provide financial information
about the reporting entity that is useful to present and potential equity investors, lenders, and
other creditors in making decisions about providing resources to the entity
Faithful Representation correct answers numbers and descriptions match what really happened or
existed
Completeness correct answers all the information that is necessary for faithful representation is
provided
Neutrality correct answers that a company cannot select information to favor one set of interested
parties over another
free from error correct answers more accurate representation of a financial item
, Relevance correct answers the capacity of information to make a difference in a decision
predictive value correct answers value as an put to predictive processes used by investors to form
they own expectations about the future
confirm correct answers helps to confirm or correct prior expectations
material correct answers if omitting or misstating it could influence decisions that users make on
the basis of the reported financial information
3 primary ingredients of relevance correct answers predictive value, confirmatory value,
materiality
3 primary ingredients of Faithful representation (reliability) correct answers completeness,
neutrality, free from error
Four enhancing secondary qualities of accounting information correct answers comparable,
verifiability, timeliness, understandability
comparable correct answers information that is measured and reported in a similar manner for
different companies
verifiability correct answers occurs when independent measures, using the same methods, obtain
similar results
Timeliness correct answers have information available to decisions makers before it loses its
capacity to influence decisions
What is conceptual framework is and why need a conceptual framework? correct answers
Conceptual framework is a consistent system of concepts that flow from an objective
- Defines boundaries of financial reporting
- What is needed to be recognized/measured
- How it is reported and measured
- Enables the FASB to issue more useful and consistent pronouncements over time
- To solve new and emerging practical problems
Describe the FASB effort to construct the conceptual framework? correct answers FASB issued 7
statements of financial accounting concepts that relate to financial reporting for business
enterprises. They provide the basis for CF. Includes objectives, qualitative characteristics, and
elements.
1st level of conceptual frame work- the why? correct answers To provide financial information
about the reporting entity that is useful to present and potential equity investors, lenders, and
other creditors in making decisions about providing resources to the entity
Faithful Representation correct answers numbers and descriptions match what really happened or
existed
Completeness correct answers all the information that is necessary for faithful representation is
provided
Neutrality correct answers that a company cannot select information to favor one set of interested
parties over another
free from error correct answers more accurate representation of a financial item
, Relevance correct answers the capacity of information to make a difference in a decision
predictive value correct answers value as an put to predictive processes used by investors to form
they own expectations about the future
confirm correct answers helps to confirm or correct prior expectations
material correct answers if omitting or misstating it could influence decisions that users make on
the basis of the reported financial information
3 primary ingredients of relevance correct answers predictive value, confirmatory value,
materiality
3 primary ingredients of Faithful representation (reliability) correct answers completeness,
neutrality, free from error
Four enhancing secondary qualities of accounting information correct answers comparable,
verifiability, timeliness, understandability
comparable correct answers information that is measured and reported in a similar manner for
different companies
verifiability correct answers occurs when independent measures, using the same methods, obtain
similar results
Timeliness correct answers have information available to decisions makers before it loses its
capacity to influence decisions
