Exam 2: Conceptual Framework for Financial Reporting

The basic assumptions of accounting used by the International Accounting Standards Board (IASB) include

The International Accounting Standards Board has given companies the option of using fair value to report financial liabilities.

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.

A soundly developed conceptual framework of concepts and objectives should

Under International Financial Reporting Standards (IFRS) companies must consider both quantitative and qualitative factors in determining whether an item is material.

The International Accounting Standards Board (IASB) uses a conceptual framework based on individual concepts developed by each member of the standard-setting body.

Under International Financial Reporting Standards (IFRS) supplementary information may be information that is high in relevance but low in reliability.

Which of the following is not a basic assumption underlying the financial accounting structure?

The International Accounting Standards Board's (IASB) conceptual framework includes the concept of prudence or conservatism which means when in doubt, choose the solution that will be least likely to overstate assets or income and/or understate liabilities or expenses.

Changing the method of inventory valuation should be reported in the financial statements under what qualitative characteristic of accounting information?

Enhancing qualities as described by the International Accounting Standards Board's (IASB's) Conceptual Framework, include all of the following except:

The cost constraint included in the International Accounting Standards Board's conceptual framework states that financial information should be free from cost to users of the information.

When should an expenditure be recorded as an asset rather than an expense?

Proponents of historical cost ordinarily maintain that in comparison with all other valuation alternatives for general purpose financial reporting, statements prepared using historical costs are more

One assumption made by the IASB conceptual framework is that the reporting entity is a going concern.

Company A issuing its annual financial reports within one month of the end of the year is an example of which enhancing quality of accounting information?

Which of the following basic assumptions of accounting (used by the International Accounting Standards Board) makes depreciation and amortization policies justifiable and appropriate?

Timeliness is one of the basic assumptions of accounting used by the International Accounting Standards Board (IASB).

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.

Which of the following is not a basic element of financial statements?