Exam 2: Financial Reporting: Its Conceptual Framework

Which of the following types of information was specifically identified by the FASB as being useful in assessing the amounts, timing, and uncertainty of a company's future cash flows?

The FASB and IASB concluded that the most general objective of financial reporting is to

List the three phases of the FASB and IASB convergence project that have been placed on hold in order in order that the two boards focus on finalizing convergence on several other topics.

The IASB and FASB joint boards have identified the primary user groups of financial information as all of the following except

When investors and creditors make investment and credit decisions, they need information to assist them in assessing future cash receipts. Their focus is on assessing the potential of generating

The city of Anchorage sold land for its appraised value to the Big Bear Oil Company on June 1, 2014, that originally cost the city $950,000. On June 1, 2014, the land was appraised at a value of $1,400,000, and on December 31, 2014, the land's value was estimated to be $1,450,000. On Big Bear Oil Company's balance sheet at December 31, 2014, the land should be valued at

The accounting projects portion of the FASB's conceptual framework project deals with all of the following except

A list of statements follows: a.GAAP identifies the___________ of financial reporting b.Financial reporting should, above all, provide information that is_______ to external decision makers. c.A company's financial statements and other means of financial reporting should include explanations and interpretations by its management to help external users understand the financial information provided. This represents management's to________out siders. d.Financial reporting should provide information about how and the company's management___________ and_________ goverming board have dis charged their responsibilities to use the company's resources. e.A specific objective of financial reporting is to provide information about how a company's cash flow can cause changes in the company's __________and_________ Required: Fill in the words necessary to complete the statements.

Which of the following is a phase of the joint FASB and IASB conceptual framework project?

The state legislature is currently debating a bill that, if passed, would require the Roberts Company to go out of business. Which of the following principles or assumptions related to the preparation of Roberts financial statements is most directly affected by this impending vote of the legislature?

Below are the sources of information used in external decision making. Required: Match each element with the appropriate statement by placing the appropriate letter in the space provided.

All of the following items are classified as accounting assumptions and conventions except for

Information is communicated to external users by the management of the company. Those users cannot dictate desired financial results to the company.

The primary purpose of financial reporting is to provide useful and relevant information to the internal stakeholder's of the company.

The accounting projects portion of the FASB's conceptual framework project deals with

Expenses are recognized and matched against revenues on the basis of three principles. Which of the following is not one of these principles?

A list of statements follows: a.GAAP states that the two primary qualitative characteristics that make accounting information useful for decision-making purposes are _________and________ b.Corporations prepare quaterly financial statements in order to help achieve_____________ an ingredient of the primary quality of relevance. c.Expensing the purchase of waste paper baskets that have a three-ye ar estimated useful life at the date of accuisition is a permissible procedure according to the_________ constraint. d.The three components of relevance are _________,_________and________ e.______is the overall qualitative characteristic to be used in judging the quality of accountinge. Required: Fill in the words necessary to complete the statements.

Similar to the constraints in the FASB's qualitative characteristics, the joint IASB/FASB boards have identified which constraint

What additional supplementary information should be included as part of the financial statements under GAAP?

Presented below are five inappropriate accounting procedures that are being used by the Playground Equipment Corporation. a.On the year-end balance sheet, Playground Equipment Corporation reported its inventory at market value, which was greater than cost. As a result of this procedure, a gain was recognized on the company's income statement. b.Mrs. Devlin, the president of the company, purchased an automobile for her son using the company's money. The company's accountant recorded the expenditure as salaries expense. c.Playground Equipment Corporation reported income from operations of $5,000,000 for the current year. During the year, Devlin settled and paid a $5,000,000 class action lawsuit against the company resulting from damages incurred from the sale of defective products. The settlement was reported as a miscellaneous expense with no footnotes provided. d.Playground Equipment is going to issue additional common stock next year. In order to improve its income, the company switched from the LIFO inventory cost flow method to FIFO. The company did not disclose the accounting change. Comparative financial statements were prepared. e.The company made $3,000,000 of expenditures to expand a building that originally cost $5,000,000. The expenditures are expected to benefit operations over the building's remaining useful life of ten years. The expenditures were expensed as maintenance. Required: For each of the above items, list the accounting assumption(s), convention(s), or principle(s) that is (are) being violated.