Exam (elaborations)
INTERMEDIATE ACCOUNTING 1-CHAPTER 2 EXAM Q&A
- Course
- Institution
INTERMEDIATE ACCOUNTING 1-CHAPTER 2 EXAM Q&A
[Show more]
Content preview
INTERMEDIATE ACCOUNTING 1-CHAPTER 2 EXAM Q&A
The Need for a Conceptual Framework - Answer--To develop a coherent set of
standards and rules.
-To solve new and emerging practical problems.
A conceptual framework underlying financial accounting is important because it can
lead to consistent standards and it prescribes the nature, function, and limits of financial
accounting and financial statements. - Answer-True
Overview of the Conceptual Framework - Answer-First Level = Basic Objectives
Second Level = Qualitative Characteristics and Elements
Third Level = Recognition, Measurement, and Disclosure Concepts.
Objective of financial reporting: - Answer-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.
Qualitative characteristics - Answer-1. Fundamental Qualities
2. Enhancing qualities
Fundamental Qualities-Qualitative characteristics - Answer-1. Relevance
2. Faithful representation
Relevance-Fundamental Qualities-Qualitative Characteristics - Answer--To be relevant,
accounting information must be capable of making a difference in a decision.
-Financial information has predictive value if it has value as an input to predictive
processes used by investors to form their own expectations about the future.
-Relevant information also helps users confirm or correct prior expectations.
-Information is material if omitting it or misstating it could influence decisions that users
make on the basis of the reported financial information.
Faithful Representation-Fundamental Qualities-Qualitative Characteristics - Answer--
Faithful representation means that the numbers and descriptions match what really
existed or happened.
-Completeness means that all the information that is necessary for faithful
representation is provided.
-Neutrality means that a company cannot select information to favor one set of
interested parties over another.
-An information item that is free from error will be a more accurate (faithful)
representation of a financial item.
Enhancing Qualities-Qualitative characteristics - Answer-1. Comparability
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller biggdreamer. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $11.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
81113 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now