CONCEPTUAL FRAMEWORK UNDERLYING FINANCIAL ACCOUNTING
TRUE-FALSE—Conceptual
Answer No. Description
F 1. Nature of conceptual framework.
T 2. Conceptual framework definition.
F 3. Levels of conceptual framework.
T 4 International conceptual framework.
F 5. Statements of Financial Accou...
TRUE-FALSE—Conceptual
Answer No. Description
F 1. Nature of conceptual framework.
T 2. Conceptual framework definition.
F 3. Levels of conceptual framework.
T 4 International conceptual framework.
F 5. Statements of Financial Accounting
Concepts.
T 6. Decision usefulness.
F 7. Financial statement users.
T 8. Relevance and reliability.
T 9. Consistency.
F 10. Relevance.
F 11. Reliability.
F 12. Basic elements.
T 13. Comprehensive income.
T 14. Going concern assumption.
F 15. Economic entity assumption.
F 16. Matching principle.
T 17. Realizable revenues.
T 18. Supplementary information.
F 19. Materiality factors
F 20. Conservatism.
MULTIPLE CHOICE—Conceptual
Answer No. Description
c 21. GAAP defined.
d 22. Purpose of conceptual framework.
c 23. Conceptual framework.
d S
24. Conceptual framework benefits.
d 25. Objectives of financial reporting.
a 26. Decision usefulness.
d 27. Objectives of financial reporting.
a P
28. Financial repoting objectives.
c 29. Purpose of understandable
information.
a 30. Decision-usefulness criterion.
c 31. Primary qualities of accounting
information.
b 32. Definition of relevance.
b 33. Definition of reliability.
d 34. Relevance and reliability.
c 35. Timeliness characteristic.
,2-2 Test Bank for Intermediate Accounting, Twelfth Edition
MULTIPLE CHOICE—Conceptual (cont.)
Answer No. Description
d 36. Verifiability characteristic.
b 37. Neutrality characteristic.
d 38. Neutrality characteristic.
c 39. Definition of verifiability.
a 40. Quality of predictive value.
c 41. Quality of representational faithfulness.
d 42. Consistency.
b 43. Consistency characteristic.
b 44. Comparability and consistency.
d 45. Comparability.
d 46. Elements of financial statements.
c 47. Distinction between revenues and gains.
c 48. Definition of a loss.
d 49. Definition of comprehensive income.
b 50. Components of comprehensive income.
d P
51. Comprehensive income.
b S
52. Earnings vs. comprehensive income.
a S
53. Reporting financial statement elements.
a S
54. Monetary unit assumption.
c S
55. Periodicity assumption.
c 56. Monetary unit assumption.
d 57. Economic entity assumption.
a 58. Economic entity assumption.
b 59. Periodicity assumption.
a 60. Going concern assumption.
d 61. Going concern assumption.
d 62. Implications of going concern assumption.
a 63. Historical cost principle.
d 64. Historical cost principle.
c 65. Revenue recognition principle.
d 66. Revenue recognition principle.
d 67. Revenue recognition principle.
d 68. Timing of revenue recognition.
c 69. Realization concept.
b 70. Definition of realized.
b 71. Matching principle.
b 72. Matching principle.
b 73. Expense recognition.
c 74. Full-disclosure principle.
d 75. Constraints to limit the cost of reporting.
a 76. Cost-benefit constraint.
c 77. Materiality constraint.
d 78. Materiality.
d 79. Pervasive constraints.
a 80. Conservatism constraint.
b 81. Conservatism constraint.
a 82. Trade-offs between characteristics of accounting
information.
c 83. Trade-offs between characteristics of accounting
information.
c P
84. Conservatism constraint.
, Conceptual Framework Underlying Financial 2-3
Accounting
MULTIPLE CHOICE—CPA Adapted
Answer No. Description
a 85. Quality of predictive value.
b 86. Consistency characteristic.
b 87. Classification of gains and losses.
b 88. Earnings concept.
a 89. Components of comprehensive
income.
b 90. Components of comprehensive
income.
d 91. Components of comprehensive
income.
d 92. Components of comprehensive
income.
a 93. Definition of recognition.
P
Note: these questions also appear in the Problem-Solving Survival Guide.
S
Note: these questions also appear in the Study Guide.
EXERCISES
Item Description
E2-94 Examination of the conceptual
framework. E2-95 Accounting concepts—
identification.
E2-96 Accounting concepts—
identification. E2-97 Accounting
concepts—matching.
E2-98 Accounting concepts—fill in the
blanks. E2-99 Basic assumptions.
E2-100 Revenue
recognition. E2-101
Historical cost
principle. E2-102 Matching
concept.
CHAPTER LEARNING OBJECTIVES
1. Describe the usefulness of a conceptual framework.
2. Describe the FASB’s efforts to construct a conceptual framework.
3. Understand the objectives 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.
7. Explain the application of the basic principles of accounting.
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